What You Need to Open a Savings Account

To open a savings account at a bank or credit union, you will need a government-issued photo ID, proof of your current address, and your Social Security number. Most banks also ask for an initial deposit, which ranges from zero dollars at some online banks to $25 or $100 at traditional branches. You can bring these documents in person to a branch, or complete the process online if the bank offers it.

Proof of address can be a utility bill, lease agreement, or recent bank statement with your name and address printed on it. The document usually needs to be dated within the last 60 days. 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, though options are more limited.

If you are under 18, a parent or legal guardian must be present and will typically be listed as a co-owner on the account. Some banks have separate teen savings accounts with different rules and lower or no monthly fees.

Key Takeaways

  • You need a photo ID, proof of address dated within 60 days, and your Social Security number to open an account at most banks and credit unions.
  • Initial deposits range from zero at online banks to $25 or $100 at brick-and-mortar branches, and some accounts have no monthly fee while others charge $5 to $15 per month.
  • Online banks typically offer higher interest rates on savings but no physical branch to visit, while traditional banks offer in-person service but lower rates.
  • You can deposit money by direct deposit, ATM, mobile app, or in-person at a branch, depending on the bank's services.
  • If you have a history of overdrafts or closed accounts, you may need to use a second-chance banking program or credit union instead of a traditional bank.

Types of Savings Accounts and What They Cost

A standard savings account is the most common type. You deposit money, earn a small amount of interest, and can withdraw whenever you need to. Interest rates vary widely — online banks often pay 4% to 5% annually, while traditional banks may pay 0.01% to 0.5%. The difference matters: on $1,000, you might earn $40 to $50 per year at an online bank versus less than $5 at a traditional bank.

Monthly maintenance fees range from zero to $15, depending on the bank and account type. Some banks waive the fee if you keep a minimum balance (often $500 to $2,500) or set up direct deposit. Others charge the fee regardless. Read the fee schedule before opening an account — a bank with no monthly fee and 4% interest is worth more than one with a $10 fee and 0.1% interest, even if the second bank is your local branch.

A money market account is a hybrid between a savings account and a checking account. It usually pays higher interest than a savings account but may require a larger minimum balance and limits how many withdrawals you can make per month. These are useful if you have a larger sum you want to keep separate and accessible but do not need to touch frequently.

A certificate of deposit (CD) is not a savings account but a related product. You agree to leave money untouched for a set period — 3 months, 1 year, 5 years — and in return the bank pays you a higher interest rate. If you withdraw early, you pay a penalty. CDs are for money you know you will not need during that time.

Where to Open an Account: Banks vs. Credit Unions vs. Online

A traditional bank has physical branches where you can deposit cash, speak to a person, and get a debit card immediately. Interest rates are usually low (0.01% to 0.5%), and monthly fees are common. Use a traditional bank if you deposit cash regularly, need in-person help, or want to keep your money at a place you can walk into.

A credit union is a nonprofit organization owned by its members. Interest rates are often higher than traditional banks, fees are usually lower, and customer service is typically more personal. You must be a member to open an account — membership is based on where you work, where you live, or a group you belong to. Credit unions are a good choice if you are a member and want better rates than your local bank offers.

An online bank has no physical branches but offers the highest interest rates (currently 4% to 5% on savings accounts) and usually no monthly fees. You manage everything through a website or mobile app, and deposits happen through transfers from another bank or mobile check deposit. Online banks are best if you rarely need cash, do not mind managing money digitally, and want to maximize interest earned.

Some people use more than one: a traditional bank or credit union for everyday checking and cash deposits, and an online bank for savings to earn higher interest.

How to Deposit Money Into Your Savings Account

Direct deposit is the fastest way to move money in. Your employer or a government agency (like Social Security or the IRS) sends your payment directly to your account. You provide your bank's routing number and your account number to your employer or the agency, and the money arrives on payday without you doing anything. This is also how many banks waive monthly fees.

Transfers from another bank take 1 to 3 business days. You log into your new savings account online and enter the routing number and account number of your old bank, then request a transfer. The money moves automatically. This is how most people move money between their own accounts.

ATM deposits work at banks and credit unions with ATM networks. You insert cash or a check into the machine, and it is added to your account. Some ATMs accept deposits 24 hours a day. Online banks do not have ATMs, but some partner with ATM networks or credit unions to let you deposit at partner locations.

Mobile check deposit lets you photograph a check with your phone and send it to the bank through the app. The check is usually added to your account within 1 to 2 business days. Most banks and credit unions offer this now.

In-person deposits at a branch are the slowest but most straightforward. You hand cash or a check to a teller, and it is added to your account immediately (for cash) or within 1 business day (for checks).

Minimum Balance Requirements and Fees to Watch For

A minimum balance is the smallest amount you must keep in the account to avoid a monthly fee or earn interest. Common minimums are $500, $1,000, or $2,500. If your balance drops below the minimum, the bank charges a fee (usually $5 to $15 per month) until you bring it back up. Some banks have no minimum at all.

Read the account agreement to find the exact minimum for your account. If you cannot maintain a high balance, choose an account with no minimum or a low one ($100 or less). Online banks and many credit unions have no minimum.

Other fees to watch for include overdraft fees (charged if you withdraw more than you have, though savings accounts rarely overdraft), ATM fees (charged if you use an ATM outside the bank's network), and inactivity fees (charged if you do not use the account for a long time, usually 12 months or more). Most banks waive inactivity fees if you keep a small balance or set up direct deposit.

Compare the total cost: a bank with a $10 monthly fee and 0.1% interest costs you more over a year than a bank with no fee and 4% interest, even if the first bank is more convenient.

If You Have Banking Problems in Your History

If you have closed accounts, unpaid overdrafts, or a record in ChexSystems (a banking history database), traditional banks may deny you. Do not give up — you have other options.

Credit unions often have looser policies than banks and may open an account for you even with a difficult history. Call a few credit unions in your area and ask if they work with people who have had banking problems.

Second-chance banking programs are designed for people rebuilding their banking history. Banks like Chime, LendingClub, and some regional banks offer these accounts with lower fees, no overdraft fees, and no ChexSystems check. Interest rates are low, but the account helps you prove you can manage money responsibly.

Prepaid debit cards are not savings accounts, but they work similarly: you load money onto a card and spend it. They do not build banking history the way a real account does, but they are an option if you cannot open a savings account anywhere else.

If you are denied, ask the bank why. If it is because of ChexSystems, you can request a copy of your report for free and dispute errors. Errors are common and can be removed.

How Interest Works and Why It Matters

Interest is money the bank pays you for letting them use your money. The rate is expressed as an annual percentage yield (APY). If your account has a 4% APY and you keep $1,000 in it for a year without touching it, you earn $40. If the APY is 0.1%, you earn $1.

Interest is usually compounded daily or monthly, meaning you earn interest on your interest. The more often it compounds, the more you earn, though the difference is small at low balances. At high balances or high rates, compounding adds up.

Interest rates change. Online banks raise and lower their rates based on what the Federal Reserve does. If rates drop, your bank will pay you less. If rates rise, your bank will pay you more. Check your account statement monthly to see what rate you are earning.

The difference between a 0.1% account and a 4% account is enormous over time. On $5,000 over 5 years, you earn $25 at 0.1% versus $1,100 at 4%. That is why choosing a high-interest account matters, even if it is online-only.

Frequently Asked Questions

Can I open a savings account without a Social Security number?

Yes, if you have an Individual Taxpayer Identification Number (ITIN). Some banks and most credit unions will open an account with an ITIN instead. Call ahead to confirm the bank accepts ITINs, because not all do. You will still need a photo ID and proof of address.

What happens if I do not use my savings account for a long time?

Most banks charge an inactivity fee if you do not make a deposit or withdrawal for 12 months or longer. The fee is usually $5 to $10 per month. Some banks waive the fee if you keep a minimum balance or set up direct deposit. Check your account agreement for the exact policy.

Can I have more than one savings account?

Yes. Many people have multiple accounts at different banks to earn different interest rates, keep money separate for different goals, or take advantage of different features. There is no limit to how many accounts you can open, though each bank may have its own rules about how many accounts you can hold with them.

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

A savings account is for money you want to keep and grow with interest. A checking account is for money you spend regularly — it comes with a debit card and checks. Savings accounts limit how many withdrawals you can make per month (usually 6), while checking accounts do not. Interest rates on savings accounts are higher, but checking accounts offer more convenience for daily spending.

Do I need to keep a certain amount of money in my savings account?

Only if your account has a minimum balance requirement. If it does, you must keep that amount in the account or pay a monthly fee. If your account has no minimum, you can keep any amount, even $1. Check your account agreement to see if a minimum applies to you.