How To Start a Savings Account: A Step-by-Step Guide

You can open a savings account in only a few minutes if you have all of your information ready. Choose a bank or credit union, fill out the application, and provide your ID and a deposit if required. With a savings account, you can start building a nest egg for your future. 

Read on to learn how to start a savings account and the benefits of doing so.

Key Takeaways

• You can open a savings account in minutes. Most applications take just a few minutes online once you have your ID, Social Security number and funding source ready.

• Opening deposits are usually small. Some banks require a minimum opening deposit ranging from $0 to $100, and some let you open an account with as little as $5.

• Your money is protected up to $250,000. Deposits at banks insured by the Federal Deposit Insurance Corporation (FDIC) are generally covered up to $250,000 per depositor, per insured bank, per ownership category. Deposits at credit unions insured by the National Credit Union Administration (NCUA) are generally covered up to $250,000 per member, per insured credit union, per ownership category.

• You'll typically need two forms of identification. Most banks and credit unions ask for a government-issued photo ID plus a second item such as your Social Security card or a bill with your name and address.

• Account type shapes your rate. High-yield and online-only accounts tend to offer higher annual percentage yields (APYs) than traditional branch accounts, though some require a minimum balance.

• Automating deposits builds the habit. Setting up a recurring transfer from each paycheck can help you grow savings without thinking about it.

Summary generated by AI, verified by MoneyLion editors

Should I Start a Savings Account?

Opening a savings account can help you manage your day-to-day finances while also preparing for the future. Your money can grow and you can avoid taking on high-interest debt like credit cards if a sudden expense comes up.

Here are some examples of the best ways to use your savings account funds:

• An emergency fund

• Major purchases, such as a new car

• Vacations

• Unexpected medical expenses

What You Need To Open a Savings Account

• A government-issued ID

• A Social Security number (SSN) or tax identification number (ITIN)

• Proof of address

• An opening deposit amount, if required

How Much Money Do You Need To Open a Savings Account?

Some banks may require an initial minimum deposit to open a savings account. You may find some that will let you open an account with as little as $5. A typical range is between $25 and $100, though you may even see some accounts that allow $0 to start. The key is to keep adding.

If you regularly receive a paycheck through direct deposit from your employer, consider asking them to send an amount to your savings account every time you get paid. You may not notice the funds being deducted from your paycheck and you'll be happy that you stashed that money in the bank.

Automate Your Savings

One thing you can do to build up your savings is to set up automatic deposits. Automatic transfers make saving seamless. You don't have to actively monitor it, so it's essentially out of sight, out of mind.

You can do this in the following ways:

1. Split up your paycheck when you have direct deposit set up, or

2. Schedule a recurring transfer from your checking into your savings account.

You could start small — imagine saving $10 from each paycheck. If you're paid biweekly, that could be an extra $260 a year. The goal isn't to create a huge amount of savings with this method, but instead to build up the consistency and habit of saving.

What Type of Savings Account Should You Open?

If you prefer in-person service, consider a traditional savings account at a bank with physical branches. If you want to earn and compound interest, consider a high-yield savings account or an online bank that tends to offer competitive rates.

Is MoneyLion Save a Good Option?

MoneyLion Save is a high-yield savings account that offers up to 3.88%* APY for MoneyLion One members and 2%* APY for nonmembers. You don't need a minimum deposit to open an account and there are no fees for earning interest. You can use the MoneyLion app to send funds between Save and MoneyLion Spend so you can get the cash you need. With Save, you can earn interest while also growing your savings.

7 Steps To Open a Savings Account

Ready to open a savings account? Here's how to start saving money in seven simple steps. 

1. Choose How To Apply

Decide whether you'd prefer to open a savings account online, by phone, in person or by mailing an application. Different banks have different options, but online is usually the fastest process. Opening a savings account online might even be more convenient than going into a bank branch or calling a branch, depending on your preference.

2. Provide Proof of Identification

Bank applications will usually require you to provide your Social Security number or tax ID number, information from a government-issued ID and more. Without an SSN or ITIN, you may only be able to open a no-interest account.

3. Provide Your Contact Info

Along with your identity documents, you’ll also have to provide your personal contact information, such as your full name, home address, date of birth and more. 

4. Select a Single or Joint Account

If you're married, you may choose to open an account with your spouse. You can also open an account with another family member, for example, or a partner you live with. For joint savings accounts, the other person will need their ID and contact information as well. 

5. Accept the Terms and Conditions

Banks have a number of terms and conditions you'll need to go through in order to understand what you’re signing up for. Always look within the details for fees and when you might have to pay them.

6. Choose Your Deposit Amount

If you're opening a savings account online or by phone, you should be able to transfer funds with a routing number and account number from an existing bank account. If you're opening your account in person, you can use cash or a check. Not all savings accounts require an initial opening deposit, but make sure to read the terms before signing up just in case. 

7. Submit Your Application

If you apply online, your account may be fully set up within minutes. However, some banks can take a few days to verify your information. 

Once you get it set up, you may find that a savings account is a great way to save money.

FAQ

Can I open a savings account with bad credit or a ChexSystems flag?

Yes, you can open a savings account with bad credit, since your credit score isn't evaluated when opening an account. However, many banks may review your banking history via ChexSystems, so unpaid overdraft fees or an account closed with a negative balance could be seen as red flags. If that's the case, there are second-chance banking accounts available. You can also consider banks or credit unions that don't use ChexSystems.

What's the difference between a savings account and a money market account?

Both savings accounts and money market accounts earn interest on your cash. Money market accounts can offer different features, though, such as the ability to write checks or use a debit card. Savings accounts are a bit simpler — you store funds so you can save up for an emergency or something unexpected.

Can I open a savings account for my child or teen?

Yes, you can open a savings account for your child or teen. The steps are similar to opening one for yourself, as you'll need to provide identification for yourself and your child, along with dates of birth, addresses and SSNs. There are a variety of bank account options specifically designed for kids and teens, along with custodial accounts and accounts for minors that may offer features such as zero fees and customizable controls for you as a parent.

Do I need to keep a minimum balance to avoid fees?

Each bank and account has different requirements. Some savings and checking accounts don't require a minimum balance to keep the account open. On the other hand, some banks may charge a fee if you don't maintain a minimum balance. It's good to double-check the fee schedule with your bank.

How long does it take for my money to be available after I fund a new account?

ACH transfers usually take one to three business days. Cash deposits may be available immediately.

Key Terms

• Savings account: A deposit account that holds money you don't plan to spend right away and typically earns interest over time.

• Annual percentage yield (APY): The yearly rate of return on your savings, including compound interest. A higher APY means your money grows faster.

• High-yield savings account: A savings account, often from an online bank, that pays a notably higher APY than a traditional branch account.

• Traditional savings account: A basic savings account offered by brick-and-mortar banks and credit unions, usually with easy branch access but lower rates.

• Minimum opening deposit: The amount of money some banks require to open an account, often $0 to $100.

• FDIC insurance: Insurance provided by the Federal Deposit Insurance Corporation that covers bank deposits up to $250,000 per depositor, per bank, per ownership category.

• NCUA share insurance: The credit union equivalent of FDIC coverage, insuring deposits up to $250,000 per member, per credit union, per ownership category.

• ChexSystems: A reporting agency that tracks your banking history, such as unpaid overdrafts, which banks may review when you apply for an account.

Sources

• FDIC. Understanding Deposit Insurance.

• NCUA. Share Insurance Coverage.

• Consumer Financial Protection Bureau (CFPB). Opening a Checking or Savings Account.

• CFPB. Checklist for Opening a Bank or Credit Union Account.

Summary generated by AI, verified by MoneyLion editors