Knowing how to open a savings account is knowing how to make your money grow. Cash in a savings account typically pays interest – potentially close to 0.50%, which is better than the national average savings rate of 0.06%. Ready to start? Here are the steps to follow, along with tips on how to find the best option.
How to open a savings account
1. Choose how to apply. Depending on the institution, you can apply online, by phone, in person, or even by posting an application. If you are applying online, the process can take 10-20 minutes.
2. Gather your ID. For the application, you will likely need to provide your Social Security number (or tax identification number) and information from a government-issued ID, such as a driver’s license or passport number.
3. Provide contact details. In addition to your ID number, expect to enter your contact details, including your first and last name, your address – usually you must be based in the United States – and your phone number. You may also be asked for information, including your email address and date of birth.
4. Select a single or joint account. Inform the institution if you are going to open the account on your own or with someone else. You will need the information from the previous steps for anyone else whose name appears on the account.
5. Accept the terms and conditions. This is where the bank asks you to confirm that you have read the disclosure documentation outlining the charges, liabilities, and how interest is calculated on the account. Ideally, you have selected an account that generates high rates and low or low monthly service fees. This is your chance to recheck.
6. Choose the amount of your deposit. If you open an account online or over the phone, you can transfer funds by providing the routing and account number of an existing bank account. If you open an account in person, you can present a check to the cashier. Some establishments will also allow you to mail a check or schedule a bank transfer.
Many banks require a minimum initial deposit, often $ 25 to $ 100, but others do not have a minimum deposit requirement. Even if you don’t have to fund your account when you first open it, it’s best to deposit money as soon as possible. This way you can start earning interest sooner.
7. Submit your application. You can get a receipt in a matter of minutes when you apply online, but it can take anywhere from two to five business days for the bank to verify your information, open the account, and grant you access.
Once your account is open, you can set up direct deposit and schedule automatic transfers from verification to savings. Making regular savings deposits can help you build up your bank balance with little extra effort.
How to choose the best savings account
The best savings accounts charge low fees and earn high interest rates. It can help your balance to grow faster. The average savings account only earns 0.06% APY, but some high yield accounts earn a lot more. If you deposit $ 10,000 and leave it alone for a year, your money would earn almost $ 50 in a high yield account with 0.50% APY, compared to about six dollars in an account that earns the average rate.
It is worth shopping around. Look beyond large institutions with thousands of branches. Online banks often offer high APYs with minimal fees. Many of them also have top-notch mobile apps that make it easy to manage your money on the go. See the great options in NerdWallet’s list best savings accounts.
Can I open a savings account online?
Yes. Opening an account online can be easier than going to a bank branch or calling a representative. Based on the steps above, you will want to have all of your documentation available to complete your application.
What to do if you can’t open a savings account
Sometimes a bank may not approve an application. Problems such as unpaid bank charges and bad checks in a previous account may be reported to a consumer reporting agency, such as ChexSystems, and banks may take this information into account when reviewing an account. request.
Customers who have a ChexSystems file and cannot open an account may want to view “Second chance” chequing accounts. These are not savings accounts and usually don’t pay high rates, but they do provide the opportunity to build a good banking history. If successful, you may be able to open a regular bank account in about 12 months. Read NerdWallet’s article on what to do if you have a ChexSystems registration to learn more.