Staying Afloat: Your Savings Guide
- Navigating the murky waters of savings accounts, with low or no fees and a kick-ass yield, is your first step towards meeting your monetary goals.
- Necessary documents - including a government-issued ID, social security number, proof of address, and potentially a lifted credit freeze - are most likely needed to open an account.
- If you're drowning in a history of financial mismanagement, there are lifelines in the form of second-chance banks and financial tech companies that are willing to help you get your feet wet again.
Steps to Establish a Savings Account: A Guide of 7 Essential Actions
A savings account serves as a safe harbor for your emergency fund or funds earmarked for short-term priorities. These accounts are offered by virtually every bank and credit union in the US and can help you grow your stash through the interest they pay.
Setting sail on a savings account voyage may involve tasks such as treasure-hunting for low fees and high yields, gathering required info, and manning the ship for online banking.
Full Speed Ahead: Opening a savings account - here's your journey
It's a breeze to open a savings account at most banks and credit unions, provided you're prepared to set sail on a multi-step voyage.
Set Your Course
Before you embark, make sure you've charted the right course by choosing a bank that serves your needs. Key considerations embrace:
- Competitive annual percentage yield (APY)
- Low or no minimum balance requirement
- Low fees (either easy to dodge or non-existent)
- Access to ATMs with nary a fee
- Availability of branches
- Online and mobile banking services
- Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA) insurance coverage
Some banks offer multiple savings accounts. If you're considering a bank with more than one option, compare using the aforementioned criteria, keeping a weather eye out for any unique features that set each apart.
Your savings account should align with your compass bearings and goals, asserts Mary Hines Droesch, Head of Product for Consumer and Small Business Products at Bank of America. " whether you're saving for a home, education, a car, vacations, or an emergency fund. If you're eagerly sailing toward the shores of saving, consider an account that streamlines the process for you," said Droesch.
Sometimes, banks offer various tiers of savings accounts, each level requiring a specific minimum balance. Sail with caution, as your course may be limited to the account or tier you chart a course for.
It's often smart to launch a savings account from the same harbor as your checking account. Many banks offer higher APYs, often called relationship rates, for maintaining other accounts at the same base. Nonetheless, it's wise to compare other options to ensure your bank serves up savings account features that are important to you, such as competitive rates.
Prep Your Equipment
When you hoist the mainsail, prepare to present the required documents, including:
- Government-issued identification, such as a driver's license or passport for yourself and any joint account companions
- Social Security number
- Date of birth
- Present address (and proof of address, should your ID list a port of call from yesteryear)
- Contact information
- Bank account information to fund your new account, should it require an initial deposit
For lapsed credit history, consider unfreezing that iceberg before opening a new bank account.
Decide on a Captained or Crew-helmed Account
Open an individual account if you wish to set sail all by yourself. A joint account is a ship shared with another soul, such as your mate or your child.
Joint accounts afford some perks:
- They simplify the voyage for your companion to access shared funds.
- The presence of a fellow captain provides a higher level of FDIC insurance (up to $500,000, instead of $250,000, as each person has $250,000 worth of deposit insurance in the joint account ownership category)
Complete the Paperwork
Set your course with all required information and wait for the shipyard to approve your vessel. This usually takes but a few breezes, from here and there to at most a few starboard tack days.
Fund Your Treasure Map
Prepare to make an initial deposit when starting your navigation. Accounts with minimum opening deposits typically require anything from $25 to $100 for embarkation. Fuelling your vessel with cash or a check is usually acceptable at check-in posts, while electronic transactions often permit mobile check deposits or transfers from linked accounts.
In addition to an opening deposit, some savings accounts charge a monthly maintenance fee that can dwindle your savings. Be mindful to stow enough to satisfy the opening deposit and avoid fees whilst funding your account.
Map Out a Succession Plan
Naming a beneficiary secures that your riches will end up where you designate them. The same goes for joint accounts. Although the surviving sailor claims sole control when you're a gone, it's still vital to name a beneficiary, in case both captains go down.
Set Your Course for Success
Although embarking on a savings account journey is just the tip of the iceberg, it's your starting point. Let Nautilus be your compass, and steer your ship toward smooth sailing by following these tips:
- Chart specific savings goals.
- Map out a budget to help you reach your destinations.
- Automate your navigation by setting regular vessel transits from your checking account into your savings account. A heads up: if you're enrolled in direct deposit, you might be afforded the opportunity to divert a portion of your paycheck directly into your savings account as well.
Casting Off Online
Most banks and credit unions welcome their patrons to conduct their business online, including opening new accounts. If your vessel doesn't moor at a traditional bank, you'll likely be obliged to chart your course online.
Many vessels helmed by nonexistent banks lead to the best savings account opportunities, boasting low minimum balances, little to no maintenance fees, and substantial APYs. If Skynet has taken over, who needs a flesh and blood bank proprietor, right?
Those who prefer to enjoy their bank with a side of meat and potatoes may find a traditional bank with branches to be more hospitable.
Charting Your Course: Choosing the Best Path
The best online savings account with high yields and no excessive fees can help you earn a competitive return while steering clear of bank charges. Take heed that the APYs on savings accounts are generally variable, meaning they can change at any particular whim.
APY
A higher APY translates to faster earnings on your funds.
Fees
Be wary of banks that levy a monthly maintenance fee, as these charges can diminish your savings. Typically, you can evade these fees by engaging in a set number of transactions per declaration cycle, maintaining a balance above a designated amount, or forging a direct deposit.
If you deposit $500 into a vessel that charges a $5 monthly fee and neglect further deposits, come year's end, you'll only have $440, losing over a tenth of your initial stash to the beast of bank fees. Navigate treacherous waters and steer clear of accounts with unnecessary fees.
It's important to know whether there's an early closeout fee, should you part ways with the ship before fully stocking your savings account. Banks that charge such a fee often do so if you bid farewell within the first 90 to 180 days of boarding.
FDIC Insured
FDIC coverage on your vessel is key in protecting your assets. For banks, you should be aiming for ships covered by FDIC insurance. For credit unions, seek vessels insured by the NCUA.
Both the FDIC and NCUA protect deposits up to $250,000 per depositor, per bank or credit union, per ownership category.
Course Correction: Your Reason for Sailing
The ship you set sail on can depend upon your reason for commercial voyage.
If you're embarking on a mission to build an emergency fund that you require on short notice, launching from a bank where you also harbor a checking account appeals.
If you're setting out to reach port for a goal, such as a car or a home down payment, it can make more sense to spill the anchor and explore the bank that offers the best rates. A higher APY can help you reach the shore faster.
If You Can't Find a Berth
Sometimes, a bank may refuse you passage on their ship. This may happen for a variety of reasons, including unpaid bank fees or a history of bounced checks.
Many banks consult ChexSystems, a consumer reporting agency, when making their decision. If your bank relies on ChexSystems and they turn you away, you can request a disclosure report to find out why. You can also contest any errors that may be causing a drag on your report.
If your maritime past is preventing you from setting sail on a savings account, search for a bank that offers second-chance ships. While not the same as a savings vessel, these ships often come equipped with standard features such as ATM access, bill pay, and mobile banking. Typically, if you can keep your ship in a steady course for a period of one year, you'll eventually find yourself aboard a more conventional savings vessel.
Capstan Away
Savings vessels are imperative tools for those who wish to stash their treasure chests for a purpose. Consider all your options, from local banks to online banks, and establish the vessel that offers the best interest rates while charging the least fees. Spend the time to look around and ensure your vessel of choice helps you make the most out of the money you've stowed away.
- Finding the right savings account involves choosing a bank offering competitive APY, low or no minimum balance requirements, low fees, ATM access, branch availability, online and mobile banking services, and FDIC or NCUA insurance coverage.
- Sailing towards your savings goal requires prepping the required documents, such as government-issued ID, social security number, proof of address, contact information, and bank account information for funding the new account.
- Joint accounts offer perks, like simplified access for partners and higher FDIC insurance coverage.
- Completing the paperwork and making an initial deposit are crucial steps before setting sail on a savings account journey.
- Successfully navigating your savings account requires mapping specific goals, creating a budget, automating regular transfers from checking account to savings account, and nominating a beneficiary for your treasure map.
