Whether you want to save for a specific goal or establish an emergency fund, getting a savings account can be an important step toward financial health. Learn how to get a savings account by comparing features at different banks, then applying the best fit for your needs. Here are features to consider, details on different types of accounts, and how to apply for them.
Should I Get a Savings Account?
Having a savings account can provide a number of benefits. First, it allows you to separate money you want to save and money you spend on daily or monthly expenses. Keeping your money in a savings account helps you avoid spending it impulsively, which may happen if your savings and spending funds are combined into one account such as your checking account. A savings account provides a secure place to store money for goals such as building a cash cushion in an emergency fund or saving for major expenses such as a downpayment on a house or a vacation. Money in savings accounts receives FDIC protection of up to $250,000 per account. That means even if the financial institution fails, you won’t lose your money.
Comparing Savings Account Features
Before opening an account, know that savings accounts offer various features and terms depending on the lender. Choosing the right bank or credit union for your account can help you save money and find the best services for your needs. Compare multiple banks by checking the terms of their savings accounts on their websites. Look for savings accounts with little or no fees and higher interest rates.
Fees
Some banks may charge monthly maintenance fees if you don’t maintain a specific minimum balance in your savings account. For example, suppose your bank charges a $5 fee when your account falls below a $200 minimum balance. You could lose $60 in one year for not meeting the requirement. Ask banks and credit unions about their fee policies. Some may even waive fees when your paycheck is directly deposited into your account.
Interest Rates
Earning interest on your money can help your savings grow faster. High-yield savings accounts offer much higher rates than traditional savings accounts. Typically, online banks offer the highest interest rates.
Other Features
When comparing banks, you may also want to consider whether they offer online banking or mobile apps. This makes accessing your account convenient and easy to manage and maintain. Some banks even offer other perks, such as cash bonuses, for opening your savings account and making a specific initial deposit amount.
Where To Get a Savings Account
Getting a savings account is fairly straightforward and you have multiple options for where to get one.
Visiting in Person at a Bank or Credit Union
Opening a savings account at a brick-and-mortar branch gives you the benefit of personal service. You will have face-to-face interactions with a bank representative to assist you and provide immediate support. To get an account in person, fill out an application at the branch.
Online at a Bank or Credit Union’s Website
Many banks or credit unions have streamlined their application processes to make opening a savings account online quick and easy. Opening an account online can be more convenient than visiting a brick-and-mortar location. However, you won’t have an in-person representative to answer your specific questions.
Online at an Online-Only Bank
Online-only banks, which typically provide most of the same services as traditional banks, generally have higher interest rates and lower fees. You can open an online savings account instantly. However, downsides are that online banking is vulnerable to the risks of using the internet, and you won’t have face-to-face interactions for personalized help.
Applying To Open a Savings Account
After you’ve selected where to open your account, you can apply for a savings account in a few simple steps.
Gather Your Documents
Whether opening a savings account online or at a branch, you’ll need to prove your identity. Typically, you’ll need to provide documents such as a driver’s license or passport. You’ll also need your Social Security number, date of birth, and address.
Fill Out the Application
You must complete and submit an application to open a savings account. The bank’s review process is generally straightforward, and you can have an account open within minutes.
Fund the Account
Once the account is approved, your next step is to make your initial deposit. After that, you can fund your new account with either cash, check, or by making an electronic funds transfer (ETF) from another account.
Download the Mobile App
Many banks and credit unions offer apps to provide more convenience for banking services. Once your account is set up, consider downloading the bank’s mobile app. That way, you can easily monitor and manage your savings account. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
