You do not have to have a savings account

No law requires you to own a savings account. You can live, work, and manage money without one. Banks do not have the power to force you to open an account, and no government agency will penalise you for not having one.

What matters is what you are trying to do. If you want to receive a paycheck by direct deposit, your employer will ask for a bank account — but you could use a checking account instead. If you want to earn interest on money you are holding, a savings account is one way, but not the only way. If you straightforward want to keep cash safe, you have other options. The real question is not whether you need a savings account in general, but whether one solves a specific problem you actually have.

Key Takeaways

  • No law or regulation requires you to open or maintain a savings account at any point in your life.
  • Direct deposit from an employer typically requires a bank account of some kind, but does not have to be a savings account.
  • If you want to earn interest on money you hold, savings accounts are common but not the only option — money market accounts, certificates of deposit, and some checking accounts also pay interest.
  • If you want to keep cash physically safe without a bank, you can use a safe deposit box at a bank without opening an account there, though this does not earn interest.
  • Some people manage money entirely in cash and never open a bank account; the trade-offs are convenience versus security and the inability to build a banking history.

When an employer or service requires a bank account

Many employers use direct deposit and will ask you to provide a bank account number and routing number. This is a business choice, not a legal requirement — some employers still issue paper cheques. If your employer requires direct deposit and you do not have an account, you will need to open one to receive your pay.

The account does not have to be a savings account. A checking account works just as well for direct deposit, and many checking accounts have no monthly fee. Some employers are flexible about timing: if you tell them you are opening an account, they may wait a pay period or two while you do. Others will issue a paper cheque for the first pay period if you ask.

Government benefits — Social Security, unemployment insurance, tax refunds — can be deposited directly into a bank account, but the government will also mail a cheque if you do not provide account details. The cheque takes longer to arrive and you will need to cash it somewhere, but it is not forbidden.

What you lose by not having a savings account

The main loss is interest. If you keep money in a savings account, the bank pays you a small percentage of that balance each month. Current rates vary — as of early 2024, online savings accounts pay between 4 and 5 percent annually, while traditional bank savings accounts often pay less than 1 percent. If you keep $5,000 in cash under your mattress instead of in a savings account paying 4.5 percent, you lose roughly $225 per year in interest you could have earned.

The second loss is security. Cash in your home can be stolen, lost in a fire, or damaged. Money in a bank account is insured by the FDIC (Federal Deposit Insurance Corporation) up to $250,000 per account holder per bank. If the bank fails, you get your money back. If your house burns down, the cash is gone.

The third loss is convenience. Without a bank account, you cannot set up automatic bill payments, you cannot receive direct deposit, and you cannot transfer money electronically. You will need to pay bills by cheque, money order, or in person. This takes more time and often costs money — money orders typically cost $1 to $5 each.

The fourth loss is banking history. Banks and lenders use your account history to decide whether to lend you money and at what interest rate. If you have never had a bank account, you have no history, which can make it harder to get a mortgage, car loan, or credit card later.

Alternatives if you do not want a traditional savings account

If you want to earn interest but do not want a traditional savings account, a money market account works similarly but often pays slightly higher interest. A certificate of deposit (CD) locks your money away for a set period — three months, one year, five years — and pays higher interest in exchange. You cannot withdraw the money early without a penalty, but if you know you will not need it, a CD pays more than a savings account.

Some checking accounts also pay interest, though usually at lower rates than savings accounts. If you need to access your money frequently, an interest-bearing checking account might suit you better than a savings account.

If you want physical security without a bank account, you can rent a safe deposit box at a bank. This is a small locked box inside the bank's vault where you can store cash, documents, or valuables. You pay an annual fee — typically $25 to $200 depending on the box size — but you do not need to open a bank account to rent one. The box does not earn interest, but it is more find than keeping cash at home.

How to open a savings account if you decide you want one

If you decide a savings account makes sense for you, the process is straightforward. You will need a government-issued ID, proof of address (a utility bill or lease), and usually a small opening deposit — often $0 to $100, depending on the bank. Some banks require a minimum balance to avoid monthly fees; others do not.

You can open an account in person at a bank branch, or online through a bank's website. Online banks often have no monthly fees and pay higher interest rates because they have lower overhead costs. Traditional banks offer in-person service and may have ATMs near you, but often charge monthly fees and pay lower interest.

Once the account is open, you can deposit money by cheque, cash, or electronic transfer. The bank will give you a debit card and online access so you can check your balance and move money. You can set up automatic transfers to move money from checking to savings on a schedule — for example, $50 every payday — to build the habit of saving.

Unbanked and underbanked populations

Roughly 5 to 6 percent of U.S. households do not have a bank account at all. Another 20 percent have a bank account but also rely heavily on cheque-cashing services, payday loans, or money orders — these are called underbanked households. People choose not to bank for many reasons: distrust of banks, past negative experiences, language barriers, lack of documents required to open an account, or straightforward because they have never needed one.

If you are unbanked and want to stay that way, you can. If you are unbanked and want to change that, many banks now offer accounts with no minimum balance and no monthly fee, which makes the barrier to entry lower than it used to be. Some credit unions and community banks also work with people who have no banking history or a damaged banking history.

Frequently Asked Questions

Can I get a job without a bank account?

Yes, but many employers use direct deposit and will ask for a bank account. Some will issue a paper cheque instead if you request it. Ask during the hiring process whether the employer offers cheque payment as an option. If they do not, you will need to open an account before your first payday.

What if I do not have an ID or proof of address to open a savings account?

Some banks require both; others are more flexible. Credit unions and community banks sometimes work with people who lack standard documents. Call ahead and ask what documents the bank will accept. You may be able to use a passport, tribal ID, or other government-issued ID in place of a driver's license.

Do I need a savings account to build credit?

No. A savings account does not build credit history. Credit cards, loans, and payment history build credit. A bank account is separate from credit. You can have excellent credit without a savings account, and a savings account without any credit history.

What happens to my savings account if I do not use it?

Nothing happens automatically. The account stays open and your money stays there, earning whatever interest rate the bank pays. Some banks charge a monthly fee if the balance falls below a minimum, so check your account agreement. If you want to close the account, you can withdraw the money and tell the bank to close it.

Is my money safe in a savings account if the bank fails?

Yes, up to $250,000 per account holder per bank. The FDIC insures deposits, so if the bank goes out of business, you get your money back. If you have more than $250,000, only the first $250,000 is insured at that bank — you would need to split the rest across other banks to insure it all.