How to Open a Savings Account in 6 Easy Steps April

Open a savings account in six steps

Opening a savings account is fairly easy, you just need to complete these six steps:

Compare your options and choose a bank

The first step is to choose a bank. U.S. Bank, Wells Fargo and Chase are just a few of the brick-and-mortar banks that offer savings accounts. If you don’t need to make deposits or withdrawals in person, consider an online account instead. Several online banks offer competitive interest rates.

When choosing a bank, consider your end goal. Some people use the ATM frequently, so they might choose a bank based on how many ATMs are in its network. If your goal is to maximize your savings, you may want to choose a financial institution that offers high-yield accounts. Convenience is another important consideration. If you plan to do your banking in person, look for a bank with several branches in your area.

Finally, don’t forget to compare banks according to their fees. Banks charge maintenance fees, check-writing fees and other fees based on account activity. Depending on how you use your account, these fees can add up quickly.

Gather the required documents to open your savings account

When you open a new savings or checking account, the bank has to verify your identity. Although it’s an extra step to complete, it does help prevent identity theft, so it’s worth the effort. You will need to provide either a driver’s license, passport or other government-issued ID. The name on your ID should match the one on your application.

Decide if you want to open a joint or individual savings account

Next, you’ll need to decide whether you want to open an individual account or a joint account. If you open an individual account, you’ll have complete control over your deposits and withdrawals. Opening a joint savings account makes it easier to share expenses with a partner, but it also gives you less control over what happens to your deposits. Think carefully before determining which type of account is best for your needs.

Prepare an initial deposit

Many banks offer bonuses for opening a new account and making a minimum deposit. For example, you may receive a $200 bonus if you open an account, deposit $10,000 and maintain that balance for at least 90 days. For this reason, it’s often in your interest to have some money set aside already, a savings calculator can help with this, to fund your account when you open it.

Submit your application

Now it’s time to submit your application. If you go with a brick-and-mortar bank, you may have to meet with a personal banker and fill out the paperwork in person. Online banks usually allow you to submit applications online.

Fund your new savings account

Finally, deposit your savings into the new account. Be sure to keep a receipt for your records, be it a physical receipt or a digital one saved to your computer, on a hard drive or in the cloud. If you deposit cash, the money should be available within minutes. If you deposit a check, you may have to wait a little for it to clear.

Things to consider when opening a savings account

Here are a few things to consider when deciding where to keep your savings:

Types of saving accounts you can open

Whether you plan to open a savings account online or in person, there are several savings account types to consider:

• Standard: A standard account allows you to work toward your financial goals without any extra bells and whistles. This type of account typically has a low minimum deposit requirement. You may even receive a debit card to make withdrawals easy.
• High-yield: A high-yield savings account comes with a higher interest rate, making it a little easier to achieve your savings goals.
• Money market: A money market account comes with an attractive APY. It’s similar to other savings accounts, but one of the key differences is that you usually get check-writing privileges.
• Student/child: Some banks offer student accounts or accounts for children. These accounts allow young people to gain experience in managing their money and learn to save from an early age.
• Specialized: Specialty accounts allow you to save money toward specific goals. For example, many banks offer Christmas club or vacation club accounts. If you open one of these accounts, you’ll put away a little money every month, making it easier to take a vacation or buy Christmas gifts.
• Share savings: A share savings account is the credit union version of a standard savings account. Once you open this type of account, you make money by earning dividends on your balance.

What do you need to open a savings account?

Whether you plan to open your account online or ask a banker for assistance, you’ll need to provide the following:

If you decide to open a joint account for your savings, you’ll also need to provide your co-applicant’s name, date of birth, Social Security number and contact details.

What to do if you can’t open a savings account

If you can’t open a traditional account, you have several other options.

The bank may deny your application if you have negative items on a ChexSystems report. ChexSystems is a consumer reporting agency that gathers information about your banking history. Financial institutions use this data to determine if you’re likely to overdraw your account or engage in other negative financial activities.

Early Warning Services prepares consumer reports for retailers, financial institutions and payment processors. Your bank may also deny your application if they find negative items on a report by Early Warning Services.

If negative items relating to you are found in reports by ChexSystems or Early Warning Services and you don’t recognize them, there’s a chance that you’ve been a victim of identity theft. Visit IdentityTheft.gov to learn how to report the theft and repair your credit.

Alternatives to a savings account

One of the best alternatives to a traditional account is a second chance account. This type of account is specifically for people with a complicated financial history. If you open a second chance account, you may have to pay higher fees than you would with a traditional account. There’s also a good chance your account will come with a lower APY than usual.

Another option is a certificate of deposit. If you open one of these accounts, you have to leave your money there for a specific amount of time. If you make an early withdrawal from a CD account, you may face a penalty or miss out on some of the interest you were to earn. Generally, the longer you leave your money in a CD, the higher your APY.

You can also use your money to buy savings bonds. When you buy a bond, you’re essentially giving the federal government a loan. In exchange, the U.S. Treasury pays you interest. If you invest in bonds, your APY will depend on the amount of your investment and the current interest rate.

Is it worth it to open a savings account?

It’s absolutely worth it.

You may get a higher APY with another type of account, but there’s much to be said for keeping some of your money in savings rather than risk it on investments, especially for an emergency fund. Maintaining a joint account is also one of the easiest ways to budget expenses with a partner. When you have a joint account, you can both see exactly what’s coming in and out, increasing transparency around you and your partner’s spending habits. Finally, opening this type of account allows you to earn interest, making it easier to reach your financial goals.