One of the first steps to building a strong financial foundation may be opening a savings account. Whether you’re saving up for a long-term milestone, building an emergency fund or simply trying to incorporate sound financial habits into your life, a savings account can possibly be a useful tool for reaching your financial goals. Let’s take a walk through the account-opening process and learn about the things you need to know about how to open a savings account.
Steps to opening a savings account
Before opening a savings account some minor preparation and a little research can go a long way.
1. Choose your bank
Taking time to research different banks and credit unions in your area may be a helpful first step in finding a financial institution with the right savings account for your financial goals. Highlighting financial institutions with a good reputation for customer service, as well as other factors such as interest rates and fees can help you narrow down institutions most likely to suit your needs.
2. Pick a savings account type
There are several types of savings accounts to choose from, ranging from traditional savings accounts to certificates of deposit (CD) accounts and others. Considering what you’re saving for and how much flexibility you need in accessing your funds can be prime considerations for choosing the savings account type for you. For example, traditional savings accounts are typically well-suited for a range of savings goals, while CD accounts might be better oriented for longer term savings.
3. Understand terms and conditions
Carefully reading and understanding the terms and conditions of the savings account you choose can help you make an informed decision. This can help you know any fees that may be associated with the account, as well as key considerations like the savings account’s annual percentage yield (APY), minimum balance requirements and other details before moving forward.
4. Get your documents in order
What do you need to open a savings account? Financial institutions typically require personal information and key documentation in order to open a savings account. You’ll likely need a government-issued photo ID (such as a driver’s license or passport) and proof of address. Some banks require your Social Security or Individual Taxpayer Identification Number. Getting copies of these documents together in advance and keeping them on hand can help ensure you have what you need to open a savings account.
5. Prepare an opening deposit
Many savings accounts require an opening deposit to open the account. This may be outlined in the terms and conditions of your chosen account. Getting this amount ready can help you stay prepared for the account-opening process.
6. Apply
Once you’ve chosen a bank, savings account type, gathered your documents and prepared your opening deposit, you’re ready to open a savings account. This can typically be done online, or in person at a bank branch.
7. Start saving
Once your account is open, you can start making regular deposits and growing your savings. Setting up automatic transfers from your checking account can help make saving more convenient.
Can I open a savings account online?
Many banks and financial institutions offer the option to open a savings account online through their website or mobile app. The process for opening a savings account online may vary slightly depending on the bank or institution, but it generally involves similar steps as mentioned above, and you’ll likely need to complete and send these documents electronically. As with savings accounts that are opened at a bank branch, opening a savings account online may sometimes require an opening deposit as well.
Additional savings account options
After picking the best bank to open a savings account with, it may be worth taking a closer look at two other types of savings accounts to choose from beyond your traditional savings account.
CD accounts
A CD account is a type of deposit account that typically offers a higher interest rate and leaves the money in the CD account for a fixed time period called a term. CD accounts typically have a fixed interest rate and don’t allow for additional deposits during the term of the CD. If you need to access the funds before the maturity date, an early withdrawal penalty may apply. Contact your bank for more information on their CD products.
High-yield savings accounts
A high-yield savings account, on the other hand, is a type of savings account that typically offer a higher interest rate. These accounts may have slightly different terms and conditions, such as higher minimum balance requirements. These are typically offered by online-only banks that do not have the overhead costs of a brick-and-mortar institution. While Chase doesn’t currently offer a high-yield savings account, you can explore our Education Center to learn more about personal banking and other options.
Both alternatives to a traditional savings account may offer higher returns on deposits but may also have penalties for early withdrawal or higher fees. Carefully understanding the terms and conditions before you open a savings account of any type can help you make informed decisions.
In summary
With a better understanding of the different types of savings accounts and steps involved in opening one, you can make an informed decision about which account is right for you. Whether you choose to open a traditional savings account, a CD account or a high-yield savings account, remember to carefully review the terms and conditions and consider your financial goals and needs. With a little planning and discipline, a savings account can be an important tool for building financial stability and security.
