You don't have to have a savings account, but most people find one useful
No law requires you to open a savings account. You can live without one, keep cash at home, use a checking account only, or rely on prepaid cards. But a savings account solves a specific problem: it's a place where your money earns a small amount of interest while you're not using it, and it's separate from the account you spend from every day. That separation matters more than the interest does.
The real question isn't whether you must have one—it's whether you have a reason to use one. If you never have money left over after bills, a savings account won't help. If you do have money left over but nowhere to put it except under a mattress or a jar, a savings account protects it and makes it slightly grow.
Key Takeaways
- No law or bank requires you to open a savings account; you can manage money without one.
- A savings account's main purpose is to keep money separate from your spending account and earn interest on it.
- If you have no money left over after expenses, a savings account won't solve that problem.
- Some banks require a minimum opening deposit or minimum balance to keep a savings account open, so check before you open one.
- You can build savings using other tools—a second checking account, a prepaid card, or cash—if a traditional savings account doesn't fit your situation.
When a savings account actually makes sense
A savings account works best if you have money left over most months and want to keep it safe and separate. The separation is the real benefit. If your checking account is where you pay bills and buy groceries, a savings account is where money sits until you need it for something bigger—a car repair, a medical bill, or a move.
Banks pay you interest on savings account balances, which means the bank pays you a small percentage of your balance each month. The amount is usually small—often less than one percent per year—but it's money you didn't have before. A checking account usually pays no interest at all.
The other reason to have a savings account is that it creates a barrier between you and your money. If you keep everything in one checking account, it's straightforward to spend money you meant to save. A separate account makes you think twice before moving money over.
Minimum deposits and monthly fees
Before you open a savings account, ask the bank about two things: the opening deposit and the monthly fee. Some banks require you to deposit a certain amount when you open the account—this might be $25, $100, or more. If you don't have that much right now, you can't open that account yet.
Many banks also charge a monthly fee to keep a savings account open, usually between $2 and $5 per month. Some banks waive the fee if you keep a minimum balance in the account—often $500 or $1,000. If you can't keep that balance, you'll pay the fee every month, which eats into any interest you earn.
Before opening an account, compare what different banks charge. Some banks, especially online banks and credit unions, have no monthly fee and no minimum balance requirement. Those are usually better for people who are just starting to save.
What happens if you don't have a savings account
If you don't open a savings account, you can still manage money. You might keep cash at home, use only a checking account, or use a prepaid card. Each option has a trade-off.
Cash at home is completely under your control, but it earns no interest and can be lost or stolen. A checking account lets you pay bills and use a debit card, but most checking accounts pay no interest either. A prepaid card works like a checking account but doesn't connect to a bank, so you don't build a banking history.
The main risk of not having a savings account is that you have nowhere to put money if you do save it. That doesn't mean you can't save—it just means you have to find another place to keep it.
Using a second checking account instead
Some people open a second checking account at a different bank and use it like a savings account. They move money into it when they have extra, and they don't use the debit card or checks for that account. It works because the money is separate and harder to spend on impulse.
The downside is that a second checking account usually has a monthly fee, just like a savings account, and it earns no interest. So you're paying to keep money separate without getting the interest benefit. But if your bank charges high fees on savings accounts and low or no fees on checking accounts, this might be cheaper.
Building savings without a traditional account
If you can't open a savings account right now—because you don't have the opening deposit, or the monthly fee is too high, or you don't have a bank account at all—you can still save money. It just requires more discipline.
Some people use a prepaid card and load money onto it when they want to save. The money sits on the card and doesn't get spent because the card isn't connected to their regular spending. Others use a savings app that holds money separately and makes it slightly harder to access. A few people still use the old method: a jar or envelope where they keep cash.
None of these methods earn interest, and some are less safe than a bank account. But they all work if your goal is just to keep money separate from your daily spending.
How to decide if you need one
Ask yourself three questions. First: do I have money left over after I pay my bills and buy what I need? If the answer is no, a savings account won't help you right now. Focus on your income and expenses first.
Second: if I do have money left over, where do I put it? If you have nowhere to put it except your checking account or a jar, a savings account solves that problem. Third: can I afford to open and keep one? Check the opening deposit requirement and the monthly fee at banks near you or online. If the fee is too high or the opening deposit is more than you have, look for a bank or credit union with lower costs.
If you answered yes to all three, a savings account is worth opening. If you answered no to any of them, wait until your situation changes, or explore the other options described above.
Frequently Asked Questions
Can I have a savings account without a checking account?
Yes. You can open a savings account by itself at most banks. You won't be able to pay bills directly from it or use a debit card, but you can deposit money and let it sit. Some banks make it easier to move money between accounts if you have both, but you don't have to have both.
What's the difference between a savings account and a money market account?
A money market account usually pays slightly higher interest than a savings account, but it often requires a larger opening deposit and minimum balance. It may also limit how many times you can move money out per month. For most people just starting to save, a regular savings account is simpler.
Do I need a savings account to build credit?
No. A savings account doesn't build credit because the bank isn't lending you money. A checking account doesn't build credit either. You build credit by borrowing money (through a credit card or loan) and paying it back on time. A savings account is useful for saving money, not for building credit.
What if my bank charges a monthly fee I can't afford?
Switch to a different bank. Many online banks and credit unions charge no monthly fee on savings accounts and have no minimum balance. You can open an account at a different bank without closing your current one, so you can try a new bank before you decide to move all your money.
Can I open a savings account online?
Yes. Most banks let you open a savings account online without visiting a branch. You'll need to provide your name, address, Social Security number, and a way to make your opening deposit (usually a debit card or transfer from another account). The whole process usually takes 10 to 15 minutes.