Opening a savings account is an easy and low-cost way to save money. There are a few things you need to know before you go to the bank or start the process online. So, if you’re wondering how to open a savings account, read on…
How to Open a Savings Account
First off, you need to know exactly what a savings account is, so you can decide if this is the right kind of account for you.
What is a Savings Account?
A savings account is an account opened with a financial institution that pays interest and is usually classified as “liquid”, which means the money can be transferred to other accounts and used for withdrawals.
What You Need to Open an Account
First, banks are available all over the place and you can usually open a savings account without much hassle.
However, there are some things you need to be aware of before opening an account.
For example, sometimes banks require a minimum deposit in order to get started (usually around $50 dollars).
In order to open a savings account, you will need to fill out an application, as well as have identification of some kind.
The bank’s representative will review your application and your identification, and then they will decide whether or not to give you an account.
If you already have money in the bank, this process may be slightly easier, but if you do not have any money anywhere else or at any other bank, it will be a little more difficult to open an account.
Before You Open a Savings Account Compare your Options
You should always compare your options before making a big decision.
Find the best interest rates, check the fees, make sure you can access your money easily and easily withdraw money from an ATM or at the bank.
All of these things are important when looking for a good savings account.
Know the Minimum Deposit Requirement
Usually, banks require a certain amount of money to open an account.
This is usually around $50 but could be more or less depending on where you live and which bank you decide to go to.
If the bank does require a deposit they will usually allow you about two weeks to get that initial deposit in order to open your account after you have applied for it, and this should give you plenty of time.
Gather the Required Documents
After you have decided on a bank to use, and you have called the branch and found out that they do require a deposit, then you will need to gather up the documents that are necessary to open an account.
The first document you will need is your social security number or social security card.
Your Driver’s License or some state-issued ID that includes your picture is also needed to open a savings account.
This is because it gives the bank information about you, including your address and proper identification of yourself, depending on the type of license you have.
There are federal banking requirements called “Know Your Client.” These regulations require that the bank can verify who you are before they open any account in your name.
This wasn’t always the case, but these requirements were put into place to combat money laundering.
Can I Open a Savings Account Online?
Yes, you can open an account online.
However, there are some rules you must follow when doing this.
Although not every bank allows you to open accounts online, most do allow this if you browse the options and read the fine print posted on their websites.
You may still have to fax or mail in copies of your documents before the account is actually open.
Choose a Joint or Individual Account
Next, you will need to decide whether or not to open a joint savings account or an individual one.
Joint accounts are best if you plan on using this savings account with another person, but otherwise, it may be better to have an individual account if you don’t want anyone else to have access to your bank account.
How to Choose the Best Savings Account
Some banks have very high fees, even if you do not use your account that much.
Look at each bank carefully and see what they offer, including any fees or charges that may be involved with opening an account.
Make sure to check for the interest rates as well because some savings accounts offer you higher interest rates than others will.
You should also look at which banks are in your area and how easily accessible they are from where you live.
If you plan on using an ATM a lot, then it would be better to choose a bank that has ATMs close to where you live or work.
Keep in mind that you cannot withdraw money from a savings account more than six times in one month.
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Check the Interest Rate the Bank is Offering
Once you have chosen a bank, it is important to make sure that the interest rate is high enough.
You can do this by looking at all of the rates the bank has to offer.
Compare them to other banks and see which one will offer you a higher interest rate.
The truth is, interest rates for savings accounts are terrible in the United States. Most of them are under 1 percent.
If you can find an account with an interest rate higher than this, then grab it.
How to Choose an Account that Best Suits Your Needs
While choosing a savings account, it is important to choose an account that will suit your needs best.
If an account has high fees or charges, it would be better for you not to go with this account so that you are not wasting your money.
If you plan to keep a higher balance in your account, then you should check for savings accounts that offer higher interest rates due to your balance.
Just know that if you go under the required minimum balance then you will be charged a fee.
So, if you can deposit the minimum balance when you open the account and don’t plan to remove any money and instead grow your balance, you might consider a Money Market Account.
If not, steer clear of any account that has a minimum balance requirement.
What to Do if You Can’t Open a Savings Account
If you’ve had issues in the past such as bounced checks then you might not be able to open a savings account.
You can ask for a second chance account if you’ve had issues such as bounced checks in the past.
It’s not guaranteed that the bank will let you open an account. If you are turned down, go to another bank to see if they will work with you.
How to Build Up Your Savings Once You Have An Account
Now that you have a savings account, the real challenge is to start putting money into it.
If you don’t already have an idea in mind for how much money you want to save each month, then make sure that you figure that out now.
The best thing to do would be to determine all of your expenses and then set aside part of your expendable income into a savings account.
If you have direct deposit for your paycheck you should be able to instruct your employer to deposit part of your paycheck into your savings account.
This will automate your savings and make it easier to meet your savings goals.
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To Sum it All Up:
Opening a savings account is pretty easy as long as you haven’t had past banking issues. You can do it online or at your local branch. You’ll need your driver’s license or other state ID with a photo and your social security number. You’ll also need a check, so you can deposit money into the account.