How to Open a Savings Account: Step by Step

Margarette BurnetteFebruary 26, 2020
How to Open a Savings Account: Step by Step

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Knowing how to open a savings account means knowing how to make your money work for you. Cash in a savings account typically earns interest — potentially near 2.00%. Ready to get started? Here are the steps to take, along with tips on finding the best option.

How to open a savings account

1. Choose how to apply. Depending on the institution, you could apply online, by phone or in person. If you apply online, the process will probably take 10 to 20 minutes.

2. Gather your identification. For the application, you will likely need to provide your Social Security number and information from a government-issued ID, such as a driver’s license or passport number.

3. Provide contact details. Along with your ID number, expect to enter your contact information, including your first and last name, address — typically, you must be based in the United States — and phone number. You may also be asked for information including your email address and date of birth.

4. Select a single or joint account. Let the institution know if you will be opening the account by yourself or with someone else. You’ll need the information from the previous steps for anyone else whose name will be on the account.

5. Accept the terms and conditions. This is where the bank asks you to confirm that you read disclosure documentation describing fees, liabilities and how interest is calculated. Ideally, you have selected an account that earns high rates and has no or low monthly service charges. This is your chance to double-check. (You can see NerdWallet’s list of accounts with the best savings rates to compare).

6. Choose your deposit amount. If you’re opening an account online or on the phone, you can transfer funds by providing the routing and account number from an existing bank account. If you’re opening an account in person, you can present a check to the bank teller. Some institutions will also let you mail a check or schedule a wire transfer. Many banks require a minimum initial deposit, often from $25 to $100, but others have no minimum deposit requirement. Even if you don’t have to fund your account when you first open it, you’re better off depositing money sooner rather than later. That way, you’ll be able to start earning interest sooner.

7. Submit your application. You’ll likely get an acknowledgment within minutes when you apply online, but it may take between two and five business days for the bank to verify your information and officially open the account. Once your account is open, you can set up direct deposit and schedule automatic transfers from checking to savings. Making regular savings deposits can help you build your bank balance with little extra effort.

How to choose the best savings accounts

The best savings accounts charge few fees and earn high interest rates. This can help your balance grow faster. The average savings account earns just 0.05% annual percentage yield, or APY, but some high-yield accounts earn nearly 20 times that rate. If you deposit $5,000 and leave it alone for a year, your money would earn nearly $100 in a high-yield account with a 1.80% APY, compared to about $5 in an account that earns the average rate.

It pays to shop 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 easier to manage your money on the go. See great options in NerdWallet’s list of best savings accounts.

Can I open a savings account online?

Yes. Opening an account online may be easier than traveling to a bank branch or calling a representative. Per the steps above, you will want to have all of your documentation available to finish your application. Here’s a comparison of three savings accounts that you can open online.

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

Sometimes a bank may not approve an application. Issues such as unpaid bank fees and bounced checks in a past account may be reported to a consumer reporting agency, such as ChexSystems, and banks may consider this information when reviewing an application.

Customers who have a ChexSystems file and can’t open an account may want to look into “second chance” checking accounts. They are not savings accounts and typically don’t pay high rates, but they do offer a chance to establish 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 record to learn more.

It does not take a huge effort to build a cash cushion. Open a savings account, deposit funds and commit to putting away cash on a regular basis. Your balance will grow over time, and you will ensure your hard-earned money is working hard for you.

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