Nearly 71% of Americans have a savings account for their emergency fund.
Saving accounts are a great way to monitor your spending, protect your savings, and slowly grow your money. Perhaps you’re eager to open a savings account but you don’t know how to find the savings account for you.
Sounds like you? If yes, you’ve come to the right place. Here’s how to open a savings account.
What Is a Savings Account?
Before you ask yourself “do I need a savings account?”, it’s important to understand what it is. Many banks offer savings accounts where you store funds while earning interest over time. Note that you can also withdraw your savings when needed.
Why You Should Open a Savings Account
There are many reasons why you should open a savings account. For instance, many people open an account when they’re saving for a major purchase like a house or car.
Another reason is saving for a vacation. You’ll be able to enjoy your getaway more when you’re not slipping into debt. Simply transfer money from your salary into the savings account and watch your funds grow.
Further, saving accounts guarantees you an emergency stash so you can take care of issues quickly. Around 26% of Americans don’t have emergency funds which are problematic if your car breaks down or you face a major expense. To avoid this, open a savings account so you’re ready when a problem arises.
Things to Consider When Choosing a Savings Account
Before you find out where to open a savings account, you must know what to look for. Not all saving accounts are made equal so be mindful before signing the dotted line. When comparing options, you should consider:
The most important aspect of your saving account is the interest rate.
Remember, the higher the interest rate then the faster your funds grow. So, for example, you have $20,000 to pour into your savings account at a bank that pays 0.10% APY (annual percentage yield) so over a year, you’ll receive $20 in interest. But if you choose a bank that offers 1.10% then you’ll earn $110 instead so choose wisely.
When browsing different types of saving accounts, factor in the bank’s fees. Some institutions charge monthly maintenance charges unless you meet certain requirements. This includes making a specific number of transactions or keeping a balance above a threshold amount.
If you deposit $600 in your savings account and the bank charges a $5 monthly fee then, by the end of the year, you’ll end up with $540. But this is contradictory because you want to save and not worry about banks eating your funds.
Shop around because you’ll save more. Although it’s tempting to choose a large bank, many smaller ones have higher interest rates and fewer fees so it’s a better deal.
Why You Should Open a Savings Account
You understand the importance of a savings account, familiarized yourself with key financial tips, and found the perfect deal. Congrats! Now, here’s how to finally open your account.
Gather Required Documents
Regardless of whether you’re opening a savings accounts online or at a branch, you’ll need several documents to prove your identity. For a smooth process, bring along a government-issued ID (e.g. driver’s license), social security number, and contact details. You must also show your bank account number and routing number so you can fund your account.
Accept the Terms and Conditions
This is a crucial part of the process so make sure you thoroughly read the document. This will detail the monthly fees, liabilities, and how interest is calculated. Double-check that you’ve chosen the right option because, ideally, you want high rates and low monthly service charges.
Choose Your Deposit Amount
You’ll need a deposit account to open your savings. If you’re opening an account online or on the phone then transfer your desired amount by providing the routing and account number of your current bank account. Otherwise, hand over a check to the bank teller or schedule a wire transfer.
The deposit often ranges between $25 to $100 while others may not have a minimum requirement. Put a small amount in initially so you can earn interest sooner.
Submit Your Application
The next stage is submitting your application with all the fields filled in. Opening a saving account takes around 10 minutes but it can vary between banks. Once it’s been approved, you can make additional deposits and withdrawal within a day or two.
Set up Online Banking
Most banks have online banking so you can access and track your funds on-the-go. It’s also wise to download the mobile app so you can manage your account and possibly set up a budget so you can see where you’re overspending. Also, many apps work with multiple financial institutions, useful if you have several accounts.
How to Access Your Savings Account
If you want physical cash, then you can make unlimited withdrawals from an ATM or in the bank. You can also transfer a portion of your savings into a checking account by contacting customer service or using your bank’s app.
It’s also possible to move funds from your savings account to a different bank but this often takes several business days. Or ask your bank to print a check using money from your savings accounts if you’re making a day payment on a house or a car.
That’s How to Open a Savings Account
Hopefully, you now know how to open a savings account.
Take time comparing options so you find one with high-interest rates and low monthly fees. Then gather the required documents, choose your deposit amount, and submit your application. Make sure you constantly manage your savings account via a banking app so you can watch your funds grow. Good luck!
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