How to open a savings account

If your goal is to save money for a future emergency, a vacation, a down payment on a home, or to achieve other financial goals, you need a safe place to store it and help it grow. This is where savings accounts come into play. As one of the simplest tools for managing your money, a savings account keeps your cash safe while earning interest and keeping your funds accessible at any time.

While the average savings account earns just .40% in interest according to the Federal Deposit Insurance Corporation (FDIC), the best savings accounts are earning as much as 10 times that or more. When comparing savings accounts, be sure to look at the annual percentage yield (APY), as it is a key metric that can significantly impact your long-term savings growth. Many also come without a minimum opening balance or regular account fees, and the best accounts come with FDIC insurance (or NCUA insurance on credit union accounts) to protect your deposits.

If you’re wondering how to open a savings account, you should know that the process is easy, whether you apply in person or online. This guide will walk you through the simple, step-by-step account opening process, including the application steps, required information, and initial funding, so you can start saving for your future goals.

What do you need to open a savings account?

While requirements to open a savings account from online institutions, traditional banks, and credit unions vary, you typically need to have little more than identification and some basic personal information.

Start with this list:

• Government-issued identification, like a driver’s license or passport
• Proof of home address (utility bills, a lease agreement, etc.)
• Email address
• Phone number or other contact information
• Social Security number (SSN)

Many institutions also require you to deposit money as part of the application process. There is often a minimum opening deposit required, which can vary depending on the bank you’re opening an account with. Some savings accounts let you open an account with a starting balance of $0, whereas others have minimum requirements of $100, $500, or more.

If you’re opening an account for a child, a parent or guardian will typically need to co-sign, while non-U.S. citizens may be asked to provide additional immigration or residency documents. Other than these requirements, the process and requirements to open a savings account are pretty straightforward.

Step-by-step process to open a savings account

What is the first step you should take when you want to open a savings account? And what steps do you take after that? We outline everything required to open an account:

Step 1: Research and choose the right bank

Finding the best savings account starts with researching and comparing your options. Key factors to consider include interest rates, starting balance requirements, account fees, and special features like automatic transfers and accessibility through a mobile app. When comparing banks, consider whether they offer multiple savings accounts and evaluate the features and benefits of each to find the best fit for your needs. You also have to decide if you want a savings account with a traditional, brick-and-mortar bank or an online institution. While traditional banks and credit unions offer the convenience of in-person branches, online banks often provide higher interest rates and lower starting balance requirements.

Choosing to open your savings and checking accounts at the same bank can make managing your finances easier, as it allows for seamless transfers between accounts and may provide relationship benefits such as higher interest rates or fee waivers. Linking your checking account to your savings account can also help you avoid certain fees and make it easier to move money as needed.

If you plan to start building savings for goals that are several months or years away, you will likely want to look at high-yield savings accounts with better rates that can help your savings keep up with inflation.

Step 2: Gather your documentation

Once you decide on an institution, you can begin gathering the documents needed to open a savings account.

These include ID requirements for a bank account, like a driver’s license or passport, proof of where you live (bill with your name on it), your Social Security number (SSN), and your contact information.

Step 3: Complete the application process

The next step you’ll take is completing the savings account application, either in person or online. These applications ask for basic personal information, including your name, address, Social Security number, and employment details. If you’re opening an account with another person, a joint savings account application will require both applicants’ information and signatures, ensuring each party has access to the funds.

Another important step is designating a beneficiary, which determines who inherits the account if something happens to you. Savings account applications also include a Truth in Savings disclosure, which explains interest rates, fees, and other account terms. Take the time to read over the fine print shared with you carefully, as it outlines exactly how your account will operate.

Step 4: Fund your new account

Once your new savings account is open, you can take steps to move money into the account. This is typically done through an online transfer from another bank, a check from another account, a cash deposit, or by transferring funds electronically from linked or external accounts.

You can also link accounts, such as your checking account, to your new savings account for easier and faster transfers.

You’ll have to fund the new account with at least the minimum deposit for a savings account, which could be anywhere from $0 to $500 or more, depending on the bank. Also, be aware that the funds in your new account may not be available for use for a few business days. Making additional deposits over time can help maximize your savings growth.

Step 5: Set up account features and access

Once your new savings account is open and funded, it’s important to set up the features that will help you manage and grow your savings efficiently. Start by setting up online banking access, which allows you to log in securely with a username and password. Download your bank or credit union’s mobile app if available, enabling convenient mobile banking features such as mobile check deposits, account alerts, and biometric login options for added security.

You may also want to request a debit card, providing easy ATM access and simplifying account management. Additionally, consider establishing automatic transfers or direct deposits to ensure your savings grow consistently without requiring manual intervention. These digital tools can make it easier to stay on track with your savings goals and maintain regular contributions to your account.

Opening a savings account online vs. in person

The decision between an online bank and a traditional brick-and-mortar bank is really up to you, and it should all depend on your priorities. Here’s an overview of the advantages that can come with either type of bank.

Benefits of opening a savings account online

• Potential for higher interest rates: The biggest benefit of online savings accounts is the highly competitive interest rates they offer. While typical savings accounts pay an average of 0.40% APY, high-yield savings accounts can offer 10 times as much interest or more.
• May have no fees (or lower fees): Online banks tend to have lower overhead, and many pass those savings on to their customers in the form of accounts without any fees.
• Low minimum balance requirements: Online banks are also more likely to let you open a savings account with a $0 starting balance.
• Convenience and 24/7 availability: Online banks offer 24/7 access via the web, a mobile app, or both. These features make banking a breeze any time of the day or night.

Benefits of opening a savings account in person

• Simplified cash deposits and withdrawals: One of the biggest in-person banking benefits is the ability to deposit and withdraw cash. Many online banks don’t allow cash deposits or require you to make them through third-party stores.
• Get in-person assistance: Brick and mortar banks offer in-person assistance when you need it, which can be helpful if you have a problem with your account and you want to speak with someone face-to-face.
• Get to know your local banker: Traditional banks and credit unions also make it easier to build a relationship with the people you bank with, whereas online banks are much more impersonal.
• Access to additional services: Using a local bank makes it easier to access additional services like the purchase of money orders, setting up wire transfers or use of a safe deposit box.

Types of savings accounts compared

There are three main types of savings accounts to consider — traditional savings accounts, high-yield savings accounts, and specialty savings accounts. Here’s an overview of each account type, how they work, and their main advantages.

Traditional savings accounts

Traditional savings accounts are offered by banks and credit unions and provide a secure place to store your money while earning modest interest. These accounts typically provide easy access through branch visits, ATMs, and online banking, and they come with FDIC or NCUA insurance that protects your deposits for up to $250,000 per depositor, per institution.

Minimum balance requirements for traditional savings accounts vary, with some requiring a $0 minimum balance and others requiring you to have $1,500 or more on deposit to avoid monthly fees.

High-yield savings accounts

High-yield savings accounts are designed to help your money grow faster; thus, they often offer significantly higher interest rates. The majority are insured by the FDIC or NCUA for up to $250,000 per depositor, per institution, as well. However, most high-yield accounts are offered by online banks, which can pass on savings from lower overhead costs in the form of higher APYs.

Access to funds in high-yield accounts is usually offered through online banking, mobile apps, and linked checking accounts. Unlike traditional banks, many high-yield accounts have limited or no physical branches to visit for in-person help.

Minimum balance requirements for high-yield savings accounts also vary widely. Some accounts let you earn top interest rates with no minimum balance, while others require a few hundred dollars or more on deposit to avoid monthly fees.

Specialty savings accounts

Specialty savings accounts work differently depending on the account type, which can include money market accounts, certificates of deposit (CDs), college savings accounts, and more. These accounts can be offered by brick-and-mortar banks or online institutions, and their minimum deposit requirements, interest rates, and fee structures vary quite a bit.

Special situations when opening a savings account

While the process for opening most savings accounts is fairly cut and dry, specific rules can apply. For example, many people use a savings account as an emergency fund to cover unexpected expenses—it’s important to keep this fund highly accessible, ideally in a high-yield savings account, so you can access your money quickly in urgent situations. Additionally, consider the benefits of having multiple savings accounts to manage different financial goals or purposes, such as travel, home repairs, or education. As you learn how to open a bank account step by step, keep these special circumstances and tips in mind:

Opening a joint savings account

Most joint bank account rules are the same as they are for savings accounts opened by an individual. The main difference is that the funds can be accessed at any time by both parties on the account, and both parties are jointly responsible for any fees or charges that apply.

Once you know how to open a joint savings account, there are some additional details to understand:

• Depending on the bank, one person may be able to close the account without the other account owner’s consent.
• Each owner is responsible for any overdrafts or debts incurred on the account.
• Interest earned in joint savings accounts is usually reported under both account holders’ Social Security Numbers, which could have tax implications.
• Many joint accounts are set up as “joint tenants with right of survivorship,” meaning the surviving owner automatically inherits the funds if one account owner dies.

Opening a savings account for a minor

Types of savings accounts for kids include traditional savings accounts, the UTMA (Uniform Transfers to Minors Act) savings account, and the UGMA (Uniform Gifts to Minors Act) savings account. With any of these account types, an adult needs to be part of the process and actually be on the account with the minor.

Details to understand for savings accounts for minors include:

• With savings accounts for kids, a parent or guardian manages the account until the child reaches adulthood.
• The custodian has full control over deposits, withdrawals and account management until the minor comes of age.
• Interest earned is generally considered the minor’s income and may have tax reporting requirements, though small amounts may be tax-exempt.
• Some accounts may require naming a beneficiary or transferring ownership once the minor reaches adulthood.

Opening a business savings account

Many banks and credit unions also offer business savings accounts, which can be used by businesses or business owners who want a place to store excess funds. These accounts require additional documentation, including information on the business opening the account, like an Employer Identification Number (EIN) and the type of business structure.

More details about business savings accounts:

• The account must match your business type (sole proprietorship, partnership, LLC, corporation, etc.), and banks may require legal documents like Articles of Incorporation or a partnership agreement.
• Only individuals authorized by the business should deposit or withdraw funds. Changes in ownership or management may require updating the signatory authority.
• Businesses typically need an Employer Identification Number (EIN) from the IRS to open a business savings account, although personal Social Security numbers can be used for sole proprietorships.

Frequently asked questions about opening a savings account

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

You typically need to be 18 years old to open a savings account on your own. If you’re below the age of 18, you’ll need a parent or guardian to open an account with you.

Can you open a joint savings account online?

Yes, most banks let you open a joint savings account online.

What is the first step you should take when you want to open a savings account?

The first step to opening a savings account is comparing banks and account options. Make sure to compare savings accounts based on their advertised interest rates, monthly fees, minimum deposit requirements, and fine print.

Can you open two savings accounts?

Yes. There’s no legal limit on the number of savings accounts you can have.