How To Get a Savings Account

Steps To Open a Savings Account

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A savings account is a financial tool that can help you achieve long-term goals by providing a safe and easily accessible place to keep your money. Banks and credit unions offer savings accounts that provide FDIC protection as well as modest interest to help you grow your funds.

Whether you want to save for a specific goal or establish an emergency fund, getting a savings account can be an important step toward financial health. Learn how to get a savings account by comparing features at different banks, then applying the best fit for your needs. Here are features to consider, details on different types of accounts, and how to apply for them.

Key Takeaways

  • A savings account helps you separate the money you want to save from your day-to-day spending cash.
  • You can get a savings account with a bank or credit union, either in person or online.
  • Savings accounts at most banks or credit unions provide up to $250,000 in FDIC protection per account.
  • Opening a savings account is generally a straightforward process that can be done in minutes.

Should I Get a Savings Account?

Having a savings account can provide a number of benefits. First, it allows you to separate money you want to save and money you spend on daily or monthly expenses. Keeping your money in a savings account helps you avoid spending it impulsively, which may happen if your savings and spending funds are combined into one account such as your checking account.

A savings account provides a secure place to store money for goals such as building a cash cushion in an emergency fund or saving for major expenses such as a downpayment on a house or a vacation. Money in savings accounts receives FDIC protection of up to $250,000 per account. That means even if the financial institution fails, you won’t lose your money.

Savings accounts have the benefit of helping you grow your money. Most savings accounts pay interest. Although, keep in mind that earnings on savings accounts are significantly less than the potential earnings with other investment types, such as stocks and bonds.

Comparing Savings Account Features

Before opening an account, know that savings accounts offer various features and terms depending on the lender.

Choosing the right bank or credit union for your account can help you save money and find the best services for your needs. Compare multiple banks by checking the terms of their savings accounts on their websites. Look for savings accounts with little or no fees and higher interest rates.

Fees

Some banks may charge monthly maintenance fees if you don’t maintain a specific minimum balance in your savings account.

For example, suppose your bank charges a $5 fee when your account falls below a $200 minimum balance. You could lose $60 in one year for not meeting the requirement. Ask banks and credit unions about their fee policies. Some may even waive fees when your paycheck is directly deposited into your account.

Interest Rates

Earning interest on your money can help your savings grow faster. High-yield savings accounts offer much higher rates than traditional savings accounts. Typically, online banks offer the highest interest rates.

The APY, or annual percentage yield, is a measure of the total amount you earn in a year on the funds in your savings account based on the interest rate and compounding.

Other Features

When comparing banks, you may also want to consider whether they offer online banking or mobile apps. This makes accessing your account convenient and easy to manage and maintain. Some banks even offer other perks, such as cash bonuses, for opening your savings account and making a specific initial deposit amount.

Where To Get a Savings Account

Getting a savings account is fairly straightforward and you have multiple options for where to get one.

Visiting in Person at a Bank or Credit Union

Opening a savings account at a brick-and-mortar branch gives you the benefit of  personal service. You will have face-to-face interactions with a bank representative to assist you and provide immediate support. To get an account in person, fill out an application at the branch.

Visiting a physical branch can take more time than using online services, and branch hours are limited. Savings accounts with banks with physical branch locations can also have higher account fees and lower interest rates.

Online at a Bank or Credit Union’s Website

Many banks or credit unions have streamlined their application processes to make opening a savings account online quick and easy. Opening an account online can be more convenient than visiting a brick-and-mortar location. However, you won’t have an in-person representative to answer your specific questions.

Online at an Online-Only Bank

Online-only banks, which typically provide most of the same services as traditional banks, generally have higher interest rates and lower fees. You can open an online savings account instantly. However, downsides are that online banking is vulnerable to the risks of using the internet, and you won’t have face-to-face interactions for personalized help.

Applying To Open a Savings Account

After you’ve selected where to open your account, you can apply for a savings account in a few simple steps.

Gather Your Documents

Whether opening a savings account online or at a branch, you’ll need to prove your identity. Typically, you’ll need to provide documents such as a driver’s license or passport. You’ll also need your Social Security number, date of birth, and address.

Fill Out the Application

You must complete and submit an application to open a savings account. The bank’s review process is generally straightforward, and you can have an account open within minutes.

Fund the Account

Once the account is approved, your next step is to make your initial deposit. After that, you can fund your new account with either cash, check, or by making an electronic funds transfer (ETF) from another account.

Download the Mobile App

Many banks and credit unions offer apps to provide more convenience for banking services. Once your account is set up, consider downloading the bank’s mobile app. That way, you can easily monitor and manage your savings account.

Frequently Asked Questions (FAQs)

How old do you have to be to get a savings account?

You must be at least age 18 to get a savings account on your own in the U.S. You must also be a U.S. citizen and maintain a permanent U.S. address to open your own savings account. Minors are required to have a parent or legal guardian as a joint owner on the account.

Can you get direct deposit to a savings account?

Many banks will often encourage you to set up a direct deposit for your paycheck to automatically go into your savings account. As an incentive, they may even waive any account maintenance fees when you do.

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Article Sources

  1. Consumer Financial Protection Bureau. “Opening a Bank Account.”

  2. FDIC. “FDIC: Your Insured Deposits.”

  3. FDIC. “VI. Deposits — TISA Truth in Savings.”