How To Open A Savings Account (2024)

A savings account is a safe space for holding your money and also a perfect way to start preparing for your financial future. It is typically used to set aside funds for specific purposes, like emergencies or a down payment on a home.

When you open a savings account, the bank pays you interest—expressed as APY (annual percentage yield)—on your balance. The interest rate is set by the bank or credit union and depends on the type of account you open. You deposit more money into your savings account as you continue to build toward your goals.

The account may come with restrictions. For instance, your bank or credit union may limit your withdrawals to six per statement period. Go over the limit, and you could face a fee.

If you’re looking to open a new savings account, here’s how to do it.

4 Steps To Open a Savings Account

To open a savings account, you must submit an application. Depending on the bank or credit union, you may have the option to apply in person, by phone, via mail or online.

1. Provide details and documentation.

Whether you’re opening the account online or in person, the financial institution will need:

• Government-issued ID, such as a Aadhaar card, PAN card and driving license
• Date of birth
• Mailing address
• Email address
• Phone number
• Two-passport size photographs (Latest)

2. Choose a single or joint account.

Tell the institution whether you’ll open a savings account by yourself or a joint account with another person, such as a spouse or child. If you open a joint account, your co-signer will usually need to be present and provide their own personal details.

3. Prepare an initial deposit.

Some savings accounts require a minimum deposit to open an account. Generally, only brick-and-mortar banks accept cash deposits, while most online savings accounts let you deposit checks or transfer funds from a linked bank account.

4. Submit the application.

Agree to the bank’s terms, and allow the institution to review your information. Once your application is approved and the account is open, you can set up direct deposit or automatic transfers from your checking account.

Types of Savings Accounts You Can Open

Financial institutions typically offer the following types of savings accounts.

Standard or Regular Savings Accounts

Standard accounts are available at most banks and credit unions. The interest rate varies from 2.75% to 2.90%, depending on the available balance and the bank. These basic accounts typically don’t offer the best interest rates.

High-Yield Savings Accounts

High-yield savings accounts are usually offered by online banks or credit unions, but they can also be found at some brick-and-mortar institutions. High-yield accounts come with more attractive APYs than standard savings accounts.

Specialty Savings Accounts

These accounts are either designed for specific savings goals or for a specific type of person. For example, kids’ and student savings accounts are designed to teach children, teens and students the importance of saving. Generally, interest rates on specialty savings accounts are low compared to high-yield savings accounts.

Other specialty savings accounts are designed for putting money aside for retirement, health care and even holiday shopping. The accounts usually have low or no maintenance fees, but the bank may restrict who can use the accounts and when they can make withdrawals.

How To Open a High-Yield Savings Account

The main benefit of a high-yield savings account is a higher interest rate, so your first step should always be researching your options to find the best rate available. Make sure to pay close attention to minimum deposit requirements, monthly fees and any balance requirements to earn the full APY.

You’ll often find the best rates at online banks. However, some credit unions offer highly competitive rates as well—just keep in mind these institutions may have a membership requirement to open an account, so you’ll have to apply for membership first.

From there, you’ll submit an online or in-person application and deposit your initial balance.

How To Choose a Savings Account

When picking a savings account, consider your end goal and think about the type of account that would be best for your money and lifestyle. Do you want to be able to spend from your savings, or would you prefer to leave your deposits untouched so they can accrue more interest? Do you have a specific reason for saving?

Other important considerations include the interest rate, minimum balance requirement, fees, accessibility of the institution, and whether it offers tax benefits.

All of these factors can help you select the savings account that would benefit you the most.

Can I Open a Savings Account Online?

Most banks and credit unions let you open a savings account online, although some still require you to apply in person. Keep in mind that rates and terms might vary for accounts opened online versus in-branch, so read the terms carefully.

Should I Open a Savings Account?

Savings accounts allow you to separate the money you want to save from your everyday spending while taking advantage of interest and other benefits. Consider any monthly fees or balance requirements before deciding if a savings account is worth it. Monthly fees can eat into your savings, but a free savings account with favorable terms is usually worth it.

Why Would I Be Denied a Savings Account?

Every bank or credit union has its own system for evaluating account eligibility, but common reasons for being denied a savings account include instances when an institution is unable to verify your identity or if you owe overdue fees on another account with the same bank or credit union.

If you’re denied a savings account, the bank will provide you with a notice citing the specific reason. If you find out that negative marks on your consumer reports are the reason for your denial, check your reports for errors and dispute any inaccurate information.