The main places to open a savings account

You can open a savings account at a traditional bank, a credit union, or an online bank. Each type works differently and offers different advantages depending on what matters to you — whether that's having a physical location you can visit, lower fees, or higher interest rates on your money.

A traditional bank is a brick-and-mortar institution with branches in your town or city. You can walk in, talk to someone in person, and deposit cash or checks directly. Examples include Bank of America, Wells Fargo, Chase, and local or regional banks. These banks typically charge monthly fees unless you keep a minimum balance, but they offer the convenience of physical locations and ATMs.

A credit union is a member-owned financial institution that often offers better interest rates and lower fees than traditional banks. You become a member when you open an account. Credit unions are smaller and more community-focused — you might find one through your employer, your school, or your neighborhood. The downside is fewer ATMs and branches than big banks, though many credit unions share ATM networks with each other.

An online bank exists only on the internet — no physical branches. Banks like Ally, Marcus, and Discover operate this way. They typically offer the highest interest rates on savings accounts and charge no monthly fees because they have lower overhead costs. The trade-off is that you cannot deposit cash in person; you deposit by transferring money from another account or by mailing a check.

Key Takeaways

  • Traditional banks offer in-person service and ATM access but often charge monthly fees unless you maintain a minimum balance.
  • Credit unions are member-owned and usually offer better interest rates and lower fees, though they have fewer locations than big banks.
  • Online banks pay the highest interest rates and charge no monthly fees, but you cannot deposit cash in person.
  • You will need a government-issued ID and proof of address to open an account at any type of institution.
  • Some banks and credit unions offer accounts designed for people new to banking, with lower or no minimum balance requirements.

Traditional banks and what to expect

Walking into a traditional bank to open a savings account is straightforward. You bring your ID and proof of address (a utility bill, lease, or government document with your name and current address), and a banker will walk you through the process. They will explain the account terms, including the interest rate the bank will pay you on your balance, any monthly fees, and the minimum balance required to avoid those fees.

The advantage of a traditional bank is that you can deposit cash when ready and speak to someone if you have questions. You also have access to thousands of ATMs, both at your bank's branches and through ATM networks. The disadvantage is cost — many traditional banks charge $5 to $15 per month if your balance drops below a set amount, often $500 to $2,500. Some accounts waive the fee if you set up direct deposit of your paycheck.

If you are new to banking or have a thin credit history, ask the bank about second-chance accounts or basic savings accounts. These are designed for people rebuilding their financial history and typically have no minimum balance requirement and lower or no monthly fees.

Credit unions and membership requirements

To open a savings account at a credit union, you first need to become a member. Membership is usually based on where you live, where you work, or what organization you belong to. For example, some credit unions serve only people who work for a specific employer, live in a specific county, or attend a specific school. Others are open to anyone in a geographic area.

To find a credit union you can join, start with the CO-OP Network or Shared Branch locator on the Credit Union National Association website, or search "credit unions near me." When you find one, call or visit and ask about membership requirements. Once you are a member, opening a savings account works much like at a traditional bank — you bring your ID and proof of address, and the credit union explains the account terms.

Credit unions typically offer better interest rates than traditional banks and charge lower fees. Many have no monthly maintenance fee at all. The trade-off is that they have fewer branches and ATMs, though most credit unions participate in shared branching networks, meaning you can conduct transactions at other credit unions' branches even if they are not your bank.

Online banks and how deposits work

Opening a savings account at an online bank is the fastest process — you can do it entirely on your phone or computer in about 10 minutes. You will need your ID, proof of address, and a bank account at another institution (to transfer money in for your first deposit). The online bank will verify your identity electronically and send you account details when ready.

Online banks pay significantly higher interest rates than traditional banks or credit unions because they have no physical locations and lower operating costs. They also charge no monthly fees. The main limitation is that you cannot deposit cash directly. To add cash to your account, you either transfer money from another bank account you own, mail a check, or use a service like MoneyGram or Walmart to transfer cash (though this usually costs a small fee).

Online banks are a good choice if you already have another bank account, do not need to deposit cash regularly, and want the highest interest rate on your savings. They are less practical if cash deposits are important to you or if you prefer talking to someone in person about your account.

What documents you need to bring

Every bank and credit union will ask for the same basic documents when you open a savings account. You will need a government-issued photo ID — a driver's license, passport, state ID card, or military ID. You will also need proof of your current address, which can be a utility bill, lease agreement, mortgage statement, or government document dated within the last 60 days.

Some institutions may also ask for your Social Security number or Individual Taxpayer Identification Number (ITIN). If you do not have a Social Security number, ask whether the bank can open an account using your ITIN instead — many can. Bring originals or certified copies of your documents; banks typically will not accept photos or photocopies.

For online banks, you upload photos of your documents through their website or app instead of bringing them in person. Make sure the photos are clear and show all four corners of the document.

Comparing fees and interest rates

The cost of a savings account varies widely depending on the type of institution and the specific account. Traditional banks often charge monthly maintenance fees ranging from $5 to $15 if you do not maintain a minimum balance. Credit unions typically charge lower fees or none at all. Online banks almost never charge monthly fees.

Interest rates — the money the bank pays you for keeping your savings there — also vary. As of now, online banks typically offer rates between 4% and 5% annually, while traditional banks and credit unions often offer less than 1%. This means that $1,000 in an online bank might earn $40 to $50 per year, while the same $1,000 in a traditional bank might earn $5 or less. Over time, this difference adds up.

When comparing accounts, look at both the monthly fee and the interest rate. A free account with a low interest rate might be better than a low-fee account with an even lower rate. Many banks publish their current rates and fees on their websites, or you can call and ask.

Special accounts for people new to banking

If you are opening your first savings account or returning to banking after a long gap, some banks and credit unions offer accounts specifically designed for you. These accounts often have no minimum balance, no monthly fee, and simpler terms than standard accounts.

Traditional banks sometimes call these basic savings accounts or second-chance accounts. Credit unions may offer starter savings accounts. Online banks generally do not have special beginner accounts because their standard accounts are already straightforward and low-cost.

Ask the bank or credit union directly whether they have an account for people new to banking. These accounts are designed to help you build a banking history without the risk of monthly fees eating into your balance.

Frequently Asked Questions

Can I open a savings account without a Social Security number?

Yes. If you have an Individual Taxpayer Identification Number (ITIN) instead, most banks and credit unions will open an account using that. Call ahead to confirm the institution accepts ITINs, because policies vary. You will still need a government-issued ID and proof of address.

What is the difference between a savings account and a checking account?

A savings account is meant for money you want to keep and grow over time — the bank pays you interest. A checking account is for everyday spending, with a debit card and checks. Many people have both. This guide focuses on savings accounts, but the process for opening either type is similar.

Do I need to have another bank account to open an online bank account?

Yes, for your first deposit. Online banks cannot accept cash deposits, so you need to transfer money from another account you own. After that, you can deposit by mailing checks or using other transfer methods, depending on what the bank offers.

What happens if I do not have proof of address?

Call the bank or credit union and explain your situation. Some institutions accept alternative documents like a lease agreement, utility bill in someone else's name at your address, or a letter from a shelter or social service agency. Policies vary, so ask what they can accept before you visit.

Which type of account is best for someone just starting out?

A credit union or online bank is usually the best choice for beginners because they charge no monthly fees and offer better interest rates. If you need to deposit cash regularly, a credit union is better than an online bank. If you rarely use cash, an online bank offers the highest interest rate.