Start with your current bank or credit union

The easiest place to open a savings account is where you already bank. If you have a checking account at a bank or credit union, you can walk in, call, or log into your online account and request a savings account in minutes. Your bank already has your identification and address on file, so the process moves faster than starting from scratch somewhere new.

Ask what types of savings accounts they offer. Most banks have a basic savings account, a high-yield savings account (which pays more interest), and sometimes a money market account. The person helping you can explain the differences in interest rates, minimum balances, and monthly fees for each one. If your current bank's rates are low, you now have a baseline to compare against other places.

Key Takeaways

  • Your current bank or credit union is the fastest route because they already have your information and can open an account the same day.
  • Online banks typically offer higher interest rates than brick-and-mortar banks, but you cannot deposit cash in person and customer service is phone or email only.
  • Credit unions often have lower fees and better rates for members, especially if you join through an employer or community group.
  • Compare the interest rate, minimum balance requirement, and monthly fees across at least three places before deciding.
  • You can open multiple savings accounts at different banks to take advantage of different rates or to separate money by purpose.

Compare rates at online banks

Online banks — banks with no physical branches — usually pay higher interest rates on savings accounts than traditional banks. They have lower overhead costs because they do not maintain buildings and staff, so they pass some of that savings to you in the form of better rates. Banks like Ally, Marcus, and Discover offer savings accounts with interest rates that change based on the Federal Reserve's decisions, but they are typically higher than what a local bank offers.

The trade-off is that you cannot walk into a branch or deposit cash directly. You transfer money in and out through electronic transfers from another bank account, or you mail a check. Customer service happens by phone, email, or chat — not in person. If you are comfortable managing money online and do not need to deposit cash regularly, an online bank can be a good fit.

To compare rates, visit the websites of several online banks and look for their current annual percentage yield (APY). This number tells you how much interest your money will earn in a year. Rates change frequently, so check the date the rate was posted. A rate from three months ago is not current.

Look into credit unions

Credit unions are member-owned financial institutions that often have lower fees and better rates than banks. You become a member by joining — sometimes through your employer, sometimes through a community group, sometimes by living in a certain area. Once you are a member, you can open a savings account just like at a bank.

Credit unions vary widely in size and what they offer. A large credit union like Navy Federal or Vanguard Federal may have rates and features similar to online banks. A smaller local credit union might have a lower interest rate but offer more personal service or lower minimum balances. Call or visit the credit union's website to see what savings accounts they offer and what the current rates are.

To find credit unions you might join, use the CO-OP Network locator or the Alliant Credit Union finder. These tools let you search by employer, location, or membership group. If you are not sure whether you are already a member through your job, ask your HR department — many employers have a credit union partnership.

Check what your employer offers

Some employers partner with banks or credit unions to offer savings accounts to employees, sometimes with a higher interest rate or lower fees as part of the deal. Ask your HR or benefits department whether your company has a banking partnership. If it does, you may be able to open an account with a special rate or waived fees.

Even if your employer does not have a banking partnership, they may offer payroll deduction for savings. This means you can have a portion of your paycheck automatically transferred to a savings account at any bank. Payroll deduction makes it easier to save because the money moves before you see it in your checking account.

Use comparison tools to see rates side by side

Websites like Bankrate, DepositAccounts, and NerdWallet let you enter your preferences — such as minimum balance and whether you want an online or in-person bank — and see a list of accounts ranked by interest rate. These tools update frequently as rates change. You can see the current APY, any monthly fees, and the minimum balance required to open the account.

When you use a comparison tool, look at the date the rates were last updated. Rates change weekly or even daily, so a rate from last month is not reliable. Click through to the bank's website to confirm the rate before you open an account. Some comparison sites earn a commission when you open an account through their link, but the rate you get is the same whether you go through the site or directly to the bank.

Understand the differences that matter to you

As you look at different accounts, three things usually matter most: the interest rate (APY), the minimum balance, and the monthly fee. A high interest rate does not help if you have to keep $10,000 in the account to avoid a $15 monthly fee. A low minimum balance does not help if the interest rate is so low that you earn almost nothing.

Think about how much money you plan to keep in savings and how often you will add to it. If you are saving $50 a month and plan to keep $500 in the account, a bank that requires a $1,000 minimum balance will charge you a fee every month. If you are saving $500 a month and plan to keep $5,000 in the account, a higher interest rate matters more than a low minimum balance.

Also consider whether you need to deposit cash. If you do, an online bank will not work for you — you will need a bank with branches or a credit union that accepts cash deposits. If you never deposit cash and do everything online, an online bank's higher rates might be worth the inconvenience.

Open an account and start moving money

Once you have decided where to open a savings account, the actual process takes 10 to 20 minutes. You will need your Social Security number, a government-issued ID, your current address, and your phone number. If you are opening an account at your current bank, you may only need to provide your ID and sign a form.

If you are opening an account at a new bank, you will need to link it to an existing bank account so you can transfer money in. The bank will ask for your routing number and account number from your current checking account. Once the accounts are linked, you can transfer money electronically — usually within one to three business days.

After the account is open, set up automatic transfers if you want to save regularly. Most banks let you schedule a transfer from your checking account to your savings account on the same day each week or month. This removes the decision-making and makes saving automatic.

Frequently Asked Questions

Can I have savings accounts at more than one bank?

Yes. Many people open accounts at multiple banks to take advantage of different interest rates, to keep money separate by purpose, or to have backup access if one bank has a problem. There is no limit to how many savings accounts you can have. Just make sure you can track all of them and remember where your money is.

What is the difference between APY and interest rate?

APY (annual percentage yield) includes the effect of compound interest — interest earned on your interest. A regular interest rate does not. Banks always show you the APY, which is the number that matters for comparing accounts. A 4.50% APY means you will earn that much in a year if you do not add or remove money.

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

Some banks require a minimum balance to open an account, and others do not. If a bank requires $500 to open but you only have $100, you cannot open an account there. Many online banks and credit unions have no minimum balance to open, though some charge a fee if your balance drops below a certain amount.

How long does it take to open a savings account?

At your current bank, you can open an account in person in 10 to 20 minutes. Online, it usually takes 5 to 10 minutes to complete the application, but the account may not be fully active for one to two business days. At a credit union, it depends on whether you are already a member — if you are, it is as fast as a bank; if you are not, you may need to join first.

What happens if I close a savings account?

You can withdraw all your money and close the account at any time with no penalty. The bank will not charge you for closing. If you have automatic transfers set up, make sure to cancel them before you close the account so money does not try to transfer to a closed account.