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Updated on Monday, August 31, 2020
Opening a savings account is one of the first steps you can take to building a secure financial future – and the process is often quick and convenient.
After determining which savings account is right for you, simply gather the necessary documents, fill out an application and fund your account. Then, you can start stashing cash away and – ideally – earn interest while you’re at it.
How to open a savings account in 5 steps
In general, you’ll follow these steps to open a savings account — though note the order of the steps may vary:
1. Choose the best savings account for you
The first step in opening a savings account can be the toughest: Selecting which account is right for you. Factors you should keep in mind when shopping for a savings account include:
- FDIC insurance: The most critical component of your savings account is that it offers FDIC insurance. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 in the case that your bank fails. You can use the FDIC’s BankFind tool to ensure that your bank offers FDIC insurance.
- Fees: The top savings accounts do not charge monthly maintenance fees, so it pays to shop around. Other fees to be aware of include excess withdrawal fees, stop payment fees, returned item fees, paper statement fees and inactivity fees. Don’t forfeit any of your hard-earned savings to fees that are easily avoidable.
- APY: To get the most for your money, prioritize high-yield savings accounts. Many banks – notably online-only banks – offer competitive rates that can climb above 1%.
To get started on your search for the perfect savings account, check out our top picks for savings accounts.
2. Gather your documentation for your savings account
Once you’ve selected an account, you can begin the application process. Most financial institutions give customers the choice of applying and opening a savings account either online or in person at a branch. The entire process of opening a savings account is relatively speedy – in fact, it should only take around 30 minutes.
When applying for a savings account, you will need to come prepared with the required documentation. In general, most financial institutions require the following documentation and information for opening a savings account:
- Date of birth
- Phone number
- Email address
- U.S. driver’s license or state ID number
- Social Security number
- Minimum required deposit
Some financial institutions might also require you to confirm that you are a U.S. citizen or a permanent resident and that you are at least 18 years old. If you are opening an account as a non-U.S. citizen, financial institutions will typically require you to present the following additional documentation:
- Taxpayer identification number (TIN)
- A passport number or alien identification number
- A government-issued ID issued by a foreign country
- Proof of your physical address (like a utility bill)
3. Choose a joint or individual savings account
When applying for a savings account, you will often be required to choose between an individual savings account or a joint savings account. If you opt for a joint savings account, you will be required to provide the personal information and necessary documentation for each account holder.
Remember, selecting a joint account over an individual savings account comes with its own set of implications. With a joint account, each account holder can deposit or withdraw money from the account, and each co-owner of the joint account is insured up to $250,000 each. It’s crucial to be on the same page when it comes to money management before you open an account together.
4. Fund your savings account
Your savings account may require a minimum opening deposit, which can range from $1 to over $10,000, though there are also many savings accounts that do not require any minimum opening deposit. When opening your savings account, you will need to make your minimum deposit if it is required.
Financial institutions will typically allow you to fund your savings account in the following ways:
- Transfer funds from a verified existing bank account
- Deposit a check
- Make a wire transfer
- Use a credit card, debit card or prepaid card, usually up to a certain dollar amount
5. Submit your application
The final step of opening a savings account is to submit your application. After your application is submitted, it can take one to two business days to be processed.
Then, your financial institution will reach out to you about whether your application was approved and provide you with next steps. You will typically be provided with account opening documents, either electronically or by mail.
How to use your savings account
Once you’ve successfully opened your savings account and started stashing cash in it, you might be scratching your head in terms of what to actually do with the account. Instead of just mindlessly saving money, the most effective ways to use a savings account include:
- For an emergency fund: Everyone needs an emergency fund that they can use for unexpected expenses – like if you were to lose your job or have to cover an unexpected medical bill. Since one of the core components of an emergency fund is that it needs to be a liquid account that offers easy access to your cash, your newly opened savings account is a great candidate. A solid emergency fund has enough money to cover three to nine months of living expenses.
- For a rainy day fund: Unlike your emergency fund, a rainy day fund is often used for more predictable, one-off expenses, such as home maintenance, broken appliances and last-minute travel expenses. Your savings account can certainly serve this purpose.
- For a specific, short-term goal: Savings accounts are great vessels for saving money for a smaller, short-term goal, such as a wedding or an upcoming vacation. However, if you’re saving for longer-term goals – like retirement or college – you have better options beyond a standard savings account, such as a 401(k) or 529 plan, respectively.
Savings Account FAQ
To open a savings account, you will typically need to provide the following:
- Personal, identifying information, such as your name, date of birth and address
- A U.S. driver’s license, state ID number or a passport number and alien identification number
- Your Social Security number or taxpayer identification number
- Any funds for a required minimum opening deposit
Two potential alternative options to a savings account are money market accounts and certificates of deposit (CDs). With a money market account, the biggest differentiators are interest rates and minimum balance requirements. Compared to savings accounts, money market accounts tend to have higher interest rates, but also require a heftier minimum balance.Like a savings account, CDs give you the opportunity to earn interest, but, unlike a savings account, you are usually not allowed to withdraw your funds from a CD before a certain date (or you risk paying a hefty penalty). Additionally, with CDs, you are typically only allowed to make a one-time deposit. In return, CDs often reward depositors with fixed, higher rates than savings accounts.