The main places to open a savings account
You can open a savings account at a traditional bank, a credit union, an online bank, or sometimes through your employer. Each type has different fees, interest rates, and minimum balance requirements. The best choice depends on whether you want in-person service, low fees, higher interest rates, or a combination of those things.
Traditional banks (Chase, Bank of America, Wells Fargo, and regional banks in your area) have physical branches where you can deposit cash and speak to someone in person. Credit unions are member-owned nonprofits that often charge lower fees and pay higher interest, but you must meet membership requirements to join. Online banks (Ally, Marcus, Discover, and others) have no physical locations but typically offer the highest interest rates and lowest fees because they have fewer overhead costs.
Key Takeaways
- Traditional banks offer in-person service and ATM access but often charge monthly maintenance fees and pay lower interest rates on savings.
- Credit unions typically charge fewer fees and pay higher interest, but you must meet membership requirements such as working in a specific industry or living in a certain area.
- Online banks pay the highest interest rates and charge the fewest fees, but you cannot deposit cash in person or speak to someone face-to-face.
- Compare the interest rate, monthly fees, minimum balance requirement, and ATM access before opening an account anywhere.
- You will need a government-issued ID, proof of address, and your Social Security number to open an account at any institution.
Traditional banks: when you need a physical location
A traditional bank makes sense if you deposit cash regularly, need to speak with someone in person, or want a wide network of ATMs. Banks like Chase, Bank of America, Wells Fargo, and regional institutions have branches in most towns and cities. You can walk in, deposit cash, withdraw money, and ask questions about your account without logging into a website.
The trade-off is cost. Most traditional banks charge a monthly maintenance fee (typically $5 to $15) unless you meet conditions like keeping a minimum balance or setting up direct deposit. Interest rates on savings accounts are usually low — often 0.01% to 0.05% annually — meaning your money grows very slowly. If you keep a small balance and rarely use the account, these fees can outpace any interest you earn.
If you already have a checking account at a bank, opening a savings account there takes minutes. You can do it online, by phone, or in person. The bank already has your ID and address on file, so the process is faster than opening at a new institution.
Credit unions: lower fees and higher interest if you may have access to
Credit unions are nonprofit institutions owned by their members. They typically charge lower fees, pay higher interest on savings, and offer more flexible lending terms than traditional banks. However, you must meet membership requirements to join. Common requirements include working in a specific industry, living in a certain geographic area, being related to a current member, or belonging to a particular organization.
To find a credit union you can join, use the CO-OP Network locator or the Shared Branch locator on the Credit Union National Association website. Search by your employer, location, or organization. Once you confirm you are may be able to access, contact the credit union directly to open an account. You will need the same documents as you would for a bank: government-issued ID, proof of address, and your Social Security number.
Interest rates at credit unions vary widely, but many pay 0.25% to 0.50% or higher on savings accounts, which is significantly better than traditional banks. Monthly fees are often waived entirely or charged only if your balance falls below a certain threshold. If you may have access to for membership, a credit union is usually worth the effort to join.
Online banks: the highest interest rates and lowest fees
Online banks operate entirely through websites and mobile apps. They have no physical branches, which means lower operating costs and higher interest rates for you. Banks like Ally, Marcus, Discover, Wealthfront, and others typically pay 4% to 5% annually on savings accounts (rates change based on the Federal Reserve's decisions, so check current rates before opening). Monthly fees are rare or nonexistent.
The main limitation is that you cannot deposit cash in person. You can transfer money from another bank account, set up direct deposit from your employer, or mail a check. Withdrawals happen through transfers to another account or by requesting a check. If you rarely use cash and are comfortable with digital banking, an online bank usually offers the best financial outcome.
Opening an account at an online bank is straightforward. Visit the bank's website, provide your ID, proof of address, and Social Security number, and link a bank account for transfers. The whole process takes 10 to 15 minutes. You will receive a confirmation email and can start using the account when ready, though transfers between banks typically take one to three business days.
Employer-sponsored savings programs and payroll deduction
Some employers offer savings accounts or savings programs through a partner bank or credit union. These accounts are sometimes called employee savings plans or payroll savings accounts. Money is deducted directly from your paycheck and deposited into the account, which makes saving automatic and removes the temptation to spend the money.
Ask your employer's human resources or benefits department whether they offer a savings program. If they do, they will provide the details, including the interest rate, fees, and how to enroll. If your employer does not offer one, you can set up automatic transfers from your paycheck to a savings account at any bank or credit union — most institutions allow you to do this for free.
What you need to open an account anywhere
Regardless of where you open a savings account, you will need three things: a government-issued photo ID (driver's license, passport, or state ID), proof of your current address (a utility bill, lease, or bank statement dated within the last 60 days), and your Social Security number. Some institutions may ask for additional information, such as your employment status or annual income, but these three documents are the standard requirement.
If you do not have a Social Security number, some banks and credit unions will open an account using an Individual Taxpayer Identification Number (ITIN) instead. Call ahead to confirm before visiting or explore online. If you do not have a government-issued ID, you may be able to use a passport or a state ID card. Again, calling ahead saves time.
Comparing accounts side by side
| Type | Interest Rate | Monthly Fee | Minimum Balance | Cash Deposits | In-Person Service |
|---|---|---|---|---|---|
| Traditional Bank | 0.01% to 0.05% | $5 to $15 (often waived) | $0 to $500 | Yes | Yes |
| Credit Union | 0.25% to 0.50%+ | $0 to $5 (often waived) | $0 to $300 | Yes | Yes |
| Online Bank | 4% to 5%+ | $0 | $0 to $25 | No | No |
Rates and fees change frequently. Before opening an account, visit the institution's website or call to confirm current terms. The difference between a 0.05% rate and a 4.5% rate is substantial: on $5,000, you would earn $2.50 per year at a traditional bank versus $225 per year at an online bank.
Frequently Asked Questions
Can I open a savings account online if I do not have a bank account already?
Yes. Online banks do not require you to have an existing account. You will need to link a bank account for transfers, but many online banks allow you to mail a check or set up a wire transfer instead. Contact the bank to ask about options if you do not have another account to link.
What is the difference between a savings account and a money market account?
A money market account typically pays higher interest than a savings account but limits how many withdrawals you can make per month. A savings account has fewer restrictions on withdrawals. For most people, a regular savings account is simpler. If you want to learn more about money market accounts, contact the bank directly.
Do I need a minimum balance to open a savings account?
Minimum balance requirements vary by institution. Many banks and credit unions allow you to open an account with $0 and charge a monthly fee only if your balance falls below a certain amount. Online banks often have no minimum balance at all. Check the specific institution's requirements before opening.
Can I open a savings account if I have bad credit?
Yes. Banks and credit unions do not check your credit score to open a savings account. They may check ChexSystems, a banking history database, to see if you have had problems with previous accounts, but a savings account does not require a credit check. If you have been denied in the past, ask why and contact another institution.
How long does it take to open a savings account?
Online, it takes 10 to 15 minutes. In person at a bank or credit union, it takes 15 to 30 minutes. You can usually start using the account the same day, though transfers from other banks take one to three business days to complete.