Steps for Setting Up a Savings Account: A 7-Point Guide

Steps for Setting Up a Savings Account: A 7-Point Guide

Opening a High-Yield Savings Account: A Comprehensive Guide

Savings accounts serve as a reliable place for depositing your emergency funds or money set aside for short-term financial goals. These accounts are offered by numerous banks and credit unions across the U.S., enabling you to grow your savings through the interest earned.

Here's a step-by-step guide to opening a savings account:

Step 1: Choosing the Right Bank

Before opening your account, ensure you select the appropriate bank for your needs. Consider features such as:

• Competitive annual percentage yield (APY)
• Low or no minimum balance requirement
• Low or no monthly fee
• Convenient access to fee-free ATMs
• Accessibility of branches
• Offerings of online and mobile banking services
• Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) insurance coverage

Some banks provide multiple savings account options. Compare them using the aforementioned criteria, and take note of any unique features specific to each account.

Mary Hines Droesch, Head of Product for Consumer and Small Business Products at Bank of America, advises considering a savings account that aligns with your priorities and goals. For example, if you're building a savings habit, opt for an account that automates the process for you.

Step 2: Gathering Required Documents

You'll need the following information and documents when opening a savings account in person or online:

• Government-issued identification (e.g., a driver's license or passport)
• Social Security number
• Date of birth
• Address (and proof of address if your ID states a previous address)
• Contact information
• Bank account information to fund your new account, if applicable

You may need to lift a credit freeze if you have one in place before opening a new bank account.

Step 3: Choosing a Joint or Individual Account

Open an individual account for personal savings, or a joint account with a spouse or child to share access. Joint accounts offer benefits such as easier access to funds and higher FDIC insurance coverage (up to $500,000 instead of $250,000).

Step 4: Completing the Application

Filling out the application and submitting all required information typically leads to quick approval, within minutes to a few business days.

Step 5: Funding Your Account

Some accounts need an initial deposit to be opened, usually between $25 and $100. You can typically deposit money in cash or by check if opening the account in person, or electronically via mobile check deposit or transfer from a linked account.

Some savings accounts charge a monthly maintenance fee, which can dilute your savings. To avoid this fee, ensure you maintain a minimum balance above a set threshold or meet other requirements.

Step 6: Adding a Beneficiary

Designating a beneficiary ensures your money goes to the intended recipient upon your death. Although a joint owner will receive sole ownership upon your passing, naming a beneficiary is essential to account for any unforeseen circumstances.

Step 7: Making a Savings Plan

Opening a savings account is the foundation for your savings journey. To maximize its potential, create a savings plan by setting specific goals, setting a budget, and automating monthly or bi-weekly transfers from your checking account to your savings account.

Can You Open a Savings Account Online?

Most banks and credit unions allow online banking, including opening new accounts. Online-only banks often offer the best savings account options due to low minimum balances, low or no maintenance fees, and high APYs. However, those preferring in-person banking might find brick-and-mortar banks more convenient.

Choosing the Best Savings Account

When searching for a high-yield online savings account, consider factors like:

• APY: A higher APY allows your savings to grow faster.
• Fees: Avoid accounts with monthly maintenance fees that can eat into your savings.
• Early closeout fees: Some banks charge a fee for closing an account within the first 90 to 180 days.
• FDIC or NCUA insurance: Ensure the bank or credit union is insured up to the legal limit.
• Reason for saving: Your savings and bank choice can depend on your saving objectives (e.g., building an emergency fund or saving for a specific goal).

What to Do if You Can't Open a Savings Account

If your savings account application is denied, it could be due to unpaid bank fees, a history of bounced checks or negative ChexSystems reports. You can request a disclosure report to find out why, and dispute any errors you find. Consider banks offering second-chance accounts if your banking history is causing issues. These accounts typically provide standard checking account features, but require maintaining good account standing for a set period to upgrade to a standard checking or savings account.

Bottom Line

Savings accounts play a vital role in achieving financial goals and building emergency funds. By considering various options, including local banks, online banks, and competitive interest rates at minimal cost, you can maximize the growth of your savings. Taking the time to shop around can help you reap the greatest returns on your money.

1. With numerous banks and credit unions offering savings accounts, personal-finance enthusiasts can find an account that fits their priorities and goals, such as an account that automates the savings process if building a financial habit is the focus.
2. The banking-and-insurance industry provides various options for high-yield savings accounts, with some online banks offering the best savings account options due to low minimum balances, low or no maintenance fees, and high APYs, while those preferring in-person banking might find brick-and-mortar banks more convenient.

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