What you need to open a savings account
To open a savings account, you will need a government-issued photo ID, proof of your current address, and your Social Security number. Most banks and credit unions also ask for an initial deposit, which ranges from zero dollars at some online banks to $25 or $100 at traditional branches. Some institutions waive the deposit requirement if you set up direct deposit from your employer or another regular income source.
Proof of address typically means a recent utility bill, lease agreement, or government document with your name and current street address. If you do not have one, some banks accept a bank statement or mortgage document instead. Call ahead to ask what your specific bank or credit union accepts—policies vary by institution.
If you do not have a Social Security number, you can open an account using an Individual Taxpayer Identification Number (ITIN) at most banks, though some credit unions have different rules. Bring whatever identification documents you have and ask whether the institution can work with your situation.
Key Takeaways
- You need a photo ID, proof of address, and a Social Security number or ITIN to open most savings accounts.
- Initial deposits range from zero to $100 depending on the bank or credit union, and some waive the deposit if you set up direct deposit.
- Online banks often have lower minimum deposits and higher interest rates than brick-and-mortar branches.
- The account opening process takes 15 minutes to an hour in person, or 10 to 20 minutes online.
- Once your account is open, you can deposit money by transfer, direct deposit, check deposit, or cash at a branch.
Where to open an account: banks versus credit unions
Banks and credit unions both offer savings accounts, but they work differently. Banks are for-profit institutions that serve anyone who meets their requirements. Credit unions are member-owned cooperatives that typically offer lower fees and higher interest rates, but membership is usually limited to people who work in a certain industry, live in a certain area, or belong to a certain organization.
If you are may be able to access for a credit union, it is often worth joining—credit unions tend to have no monthly maintenance fees and pay higher interest on savings. If you are not may be able to access for a credit union, or if you prefer the convenience of many branches and ATMs, a traditional bank works fine. Online banks (which have no physical branches) usually offer the highest interest rates and the lowest fees, but you cannot deposit cash in person.
To find a credit union you may be may be able to access to join, search the CO-OP Network or Alliant Credit Union's locator tool. To compare banks and online banks, look at their current interest rates, monthly fees, and minimum balance requirements on their websites.
The account opening process in person
If you open an account at a branch, bring your photo ID, proof of address, and Social Security number. Tell the banker you want to open a savings account. They will ask you to choose a username and password for online banking, and they will explain the account's interest rate, monthly fees, and minimum balance requirements.
You will sign paperwork that confirms you understand the account terms. The banker will then process your initial deposit (if required) and give you a debit card, a checkbook (if you requested one), and your account number. The whole process usually takes 30 to 60 minutes. Your account is active when ready, though it may take one to two business days for your initial deposit to show in your balance.
If you are opening an account for a child under 18, you will need to be present as the parent or legal guardian. Some banks require a second form of ID or additional documentation for minors. Ask the bank about their specific requirements when you call to schedule an appointment.
Opening an account online
Online banks let you open an account from your computer or phone without visiting a branch. You will enter your name, address, date of birth, Social Security number, and employment information. The bank will verify your identity by asking security questions based on your credit history, or by requesting a photo of your ID.
The entire process takes 10 to 20 minutes. Once your account is open, you can fund it by transferring money from another bank account, setting up direct deposit from your employer, or mailing a check. Some online banks also let you deposit checks by taking a photo with your phone.
The main drawback of online banks is that you cannot deposit cash in person. If you receive cash regularly and need to deposit it, a traditional bank or credit union is a better choice. If you mostly use direct deposit or transfers, an online bank's higher interest rates make it worth the trade-off.
What happens after you open the account
Once your account is open, you can start depositing money. Direct deposit from your employer is the easiest method—your employer sends your paycheck straight to your account, and it usually arrives one to two business days before payday. To set up direct deposit, give your employer your bank's routing number and your account number. Both appear on the bottom left of a check, or you can find them in your online banking portal.
You can also transfer money from another bank account using your online banking portal or mobile app. Transfers between accounts at the same bank are when ready. Transfers between different banks take one to three business days. If you need money faster, you can visit a branch and deposit cash or a check in person.
Your bank will send you a monthly statement showing all deposits, withdrawals, and interest earned. You can view this statement online or request a paper copy. Review your statement each month to catch any errors or unauthorized activity.
Interest rates and how they affect your savings
A savings account earns interest, which means the bank pays you a small percentage of your balance each month. The interest rate varies by bank and changes based on what the Federal Reserve does with its benchmark rate. Online banks typically offer higher interest rates than traditional banks—sometimes two to three times higher—because they have lower operating costs.
Interest is usually compounded daily or monthly, which means you earn interest on your interest. The longer your money sits in the account, the more it grows. For example, if you deposit $1,000 in an account earning 4% annual interest compounded monthly, you will earn about $40 in the first year (not exactly $40, because the rate compounds). If you leave it for five years without touching it, you will earn significantly more.
When you compare banks, look at the Annual Percentage Yield (APY), not just the interest rate. The APY tells you the real return you will get after compounding. A bank advertising a high rate but charging monthly fees may actually pay you less than a bank with a slightly lower rate and no fees.
Monthly fees and how to avoid them
Many traditional banks charge a monthly maintenance fee (usually $5 to $15) to keep a savings account open. Credit unions and online banks rarely charge this fee. Some banks waive the fee if you maintain a minimum balance, set up direct deposit, or keep a linked checking account open.
Other fees to watch for include overdraft fees (charged if you withdraw more than your balance), ATM fees (charged if you use an ATM outside the bank's network), and inactivity fees (charged if you do not use the account for a long time). Read the fee schedule on the bank's website or ask the banker to explain all fees before you open the account.
If your bank starts charging a fee you do not want to pay, you can close the account and move your money to a different bank. There is no penalty for closing a savings account, and you can open a new one at any time.
Frequently Asked Questions
Can I open a savings account if I have bad credit?
Yes. Savings accounts do not require a credit check. Banks may check ChexSystems (a banking history database) to see if you have had problems with previous accounts, but a low credit score will not stop you from opening a savings account. If you have been denied in the past, ask the bank why and whether you can open an account now.
How much money do I need to open a savings account?
It depends on the bank. Many online banks have zero minimum deposit. Traditional banks usually require $25 to $100. Credit unions vary. Some banks waive the minimum if you set up direct deposit. Check the specific bank's website or call to ask about their current requirement.
What is the difference between a savings account and a checking account?
A savings account is designed for money you want to keep and grow. A checking account is designed for money you spend regularly. Savings accounts earn interest and usually limit how many withdrawals you can make per month. Checking accounts rarely earn interest but let you write checks and use a debit card freely.
Can I open a savings account for someone else?
You can open a joint account with another adult if you both go to the bank together with ID. You can open an account for a minor only if you are their parent or legal guardian. You cannot open an account in someone else's name without their knowledge or permission.
How long does it take to open a savings account?
In person at a branch, 30 to 60 minutes. Online, 10 to 20 minutes. Your account is active when ready, but deposits may take one to three business days to appear in your balance depending on the deposit method.