The main places to open a savings account

You can open a savings account at a traditional bank, a credit union, an online bank, or a brokerage firm. Each type has different fees, interest rates, and minimum balance requirements. The choice depends on whether you want in-person service, low fees, high interest rates, or some combination of those.

Traditional banks are the most common option — they have physical branches where you can deposit cash and speak to someone in person. Credit unions are member-owned cooperatives that often charge lower fees and pay higher interest, but you must meet membership requirements. Online banks have no physical locations but typically offer the highest interest rates and lowest fees because they have fewer overhead costs. Brokerages like Fidelity and Schwab also offer savings accounts, usually paired with investment services.

Key Takeaways

  • Traditional banks offer in-person service and ATM networks, but often charge monthly fees and pay lower interest rates than online alternatives.
  • Credit unions typically charge fewer fees and pay higher interest, but require you to join and may have limited branch access depending on membership.
  • Online banks pay the highest interest rates and charge the lowest fees, but you cannot deposit cash in person or speak to someone face-to-face.
  • You will need a government-issued ID, proof of address, and your Social Security number to open an account at any institution.
  • Interest rates and fees change frequently, so comparing rates across institutions before opening an account can save you money over time.

Traditional banks and what they offer

A traditional bank is a for-profit institution with physical branches in your area. You can walk in, deposit cash, withdraw money, and speak to a banker about your account. Most traditional banks are insured by the Federal Deposit Insurance Corporation (FDIC), which means your deposits up to $250,000 are protected if the bank fails.

The trade-off is cost. Many traditional banks charge a monthly maintenance fee — typically $5 to $15 — even if you maintain a minimum balance. Interest rates on savings accounts are usually low, often 0.01% to 0.05% annually. However, if you need to deposit cash regularly, have questions about your account, or prefer face-to-face banking, a traditional bank may be worth the fees.

Large national banks like Bank of America, Wells Fargo, and Chase have thousands of branches and ATMs nationwide. Smaller regional banks may offer better rates and lower fees but have fewer locations. Before opening an account, check whether the bank has branches or ATMs near your home or workplace.

Credit unions as an alternative

A credit union is a nonprofit organization owned by its members. To open an account, you must join the credit union, which usually requires meeting a membership criterion — working for a specific employer, living in a certain area, or belonging to a particular organization. Membership is often free or costs a small one-time fee.

Credit unions typically charge lower fees than traditional banks and pay higher interest rates on savings accounts. Many credit unions charge no monthly maintenance fee at all. Interest rates vary by credit union but often range from 0.05% to 0.25% or higher, depending on the account type and your balance.

The downside is access. Credit unions have fewer branches and ATMs than large banks. However, most credit unions participate in shared branching networks and ATM alliances, which means you can use other credit unions' branches and ATMs without extra fees. To find a credit union you can join, search the CO-OP Network or Alliant Credit Union's branch locator online.

Online banks and their advantages

An online bank exists only on the internet — there are no physical branches. You open an account, deposit checks by taking photos with your phone, and manage everything through a website or app. Online banks have much lower operating costs than traditional banks, so they pass those savings to customers through higher interest rates and lower fees.

Online savings accounts typically pay 4% to 5% annual interest, depending on the current market and the bank. Most online banks charge no monthly maintenance fee and have no minimum balance requirement. Popular online banks include Ally, Marcus by Goldman Sachs, Discover Bank, and American Express Personal Savings. All are FDIC-insured, so your money is protected the same way it would be at a traditional bank.

The main limitation is that you cannot deposit cash in person. If you receive cash regularly and need to deposit it quickly, an online bank may not work for you. Some online banks partner with retailers like Walmart or CVS to allow cash deposits, but this is not universal. Check the bank's deposit options before opening an account.

Brokerages and investment-linked savings

Investment brokerages like Fidelity, Charles Schwab, and E*TRADE offer savings accounts as part of their services. These accounts are useful if you already invest with the brokerage or plan to start investing. The interest rates are competitive with online banks, and the accounts are FDIC-insured.

The advantage is convenience — you can move money between your savings account and investment accounts without transferring between different institutions. The disadvantage is that these accounts are designed for people who are also investing, so the interface may feel complicated if you only want to save. If you have no interest in investing, a dedicated online bank or credit union is usually simpler.

What you need to open an account

Every bank and credit union requires the same basic documents to open a savings account. You will need a government-issued photo ID (a driver's license, passport, or state ID card), proof of your current address (a utility bill, lease, or bank statement dated within the last 60 days), and your Social Security number.

Some institutions also ask for your employment information or a second form of ID. If you are opening an account online, you may need to verify your identity by uploading photos of your documents or answering security questions about your credit history. The process usually takes 10 to 15 minutes.

If you do not have a Social Security number, some banks and credit unions will open an account using an Individual Taxpayer Identification Number (ITIN) instead. Call ahead to confirm the institution accepts ITINs before you visit or apply online.

Comparing rates and fees before you choose

Interest rates and fees change frequently, sometimes weekly. Before opening an account, spend 10 minutes comparing rates across at least three institutions. Use websites like Bankrate, DepositAccounts, or the banks' own websites to see current rates.

Pay attention to whether the interest rate is may provide or promotional. A promotional rate may be high for the first three months, then drop to a much lower rate. Read the fine print to understand when the rate changes and what the regular rate will be.

Also check the fee structure. Some banks charge a monthly maintenance fee but waive it if you maintain a minimum balance or set up direct deposit. Others charge no fee at all. Calculate the total cost over a year — a $10 monthly fee at one bank might outweigh a slightly lower interest rate at another.

Frequently Asked Questions

Can I open a savings account online if I do not have a physical address?

Most banks require a current mailing address to open an account. If you are homeless or living temporarily, some credit unions and online banks may accept a shelter address, a PO box, or a friend's address with written permission. Call the institution directly to ask what they accept.

What is the difference between a savings account and a checking account?

A savings account is designed for storing money and earning interest; most have limits on how many withdrawals you can make per month. A checking account is designed for frequent spending and bill payments, with unlimited withdrawals and usually a debit card. Many people have both.

Do I need a minimum balance to open a savings account?

Most online banks and many credit unions have no minimum balance requirement — you can open an account with $1. Traditional banks often require $100 to $500 to open an account, and some charge a fee if your balance drops below a certain amount. Check the specific bank's requirements before applying.

Is my money safe in an online bank?

Yes, if the online bank is FDIC-insured. The FDIC insurance protects your deposits up to $250,000 regardless of whether the bank has physical branches. Check the bank's website or call to confirm it is FDIC-insured before opening an account.

Can I switch banks after I open a savings account?

Yes. You can close your account at any time and move your money to another bank. Some banks charge a fee to close an account early, so check the terms before opening. You can also keep accounts at multiple banks if you want to compare rates or have backup access to your money.