Opening a savings account is a quick and easy process. In most cases, you can do it from your home. To make the process even easier, make sure you have all the documents and information needed to open a savings account.
Checklist: What you need to open a savings account
Before you compare accounts at different banks and credit unions, here’s what you’ll need for your application:
- Government-issued ID: A driver’s license or passport.
- Social Security Number: Some banks will accept an Individual Taxpayer Identification Number (ITIN) if you don’t have a Social Security number.
- Date of birth.
- Contact information.
- Bank account information: Many banks will require an initial deposit, so have your account and routing number from your checking account.
Things to consider when opening your savings account
Consider a few key factors to find a savings account that will fit your needs and help you grow your money.
Most institutions insure up to $250,000 in an individual savings account in the unlikely event that the institution fails.
When you save, you pay yourself. Depending on where you open a savings account, the bank or credit union will also pay you, too, with interest.
We’re currently in a low interest rate environment, so you aren’t going to earn a big return on your savings account. However, online banks represent the best option for your earning potential. In fact, these banks without physical branches pay 25 to 50 times more than the savings rates at the biggest banks in the country.
Think of it this way: You’re walking down the street, and you see a penny, a dime and a quarter. If you can only pick up one, it won’t be the penny.
You will likely have a range of saving needs. With that in mind, compare the functionality of different savings accounts.
For example, some banks offer the convenience of creating sub-savings accounts that can make a big difference with your mental accounting. One sub-account might be named “vacation fund” while another is “tuition fund.” This can help you distinguish between saving for different purposes.
Read Bankrate’s bank reviews to compare banks and some of the helpful features they offer.
Expert advice: How to maximize your savings account
Make putting money into your savings account part of a regular routine. Ask your employer to direct deposit a portion of your regular paycheck into your savings account, or automate monthly transfers from your checking account. Either way, you’ll benefit from a set-it-and-forget-it strategy that allows you to save without even thinking.
If you’re young and start saving between 10 and 15 percent of your paychecks, you’re going to set yourself up for success in the long run. As your earnings increase over the course of your professional career, that 10 to 15 percent amount becomes more meaningful and allows you to save a significant chunk of money.
It’s also important to identify unexpected opportunities to grow your savings. Those can be big chunks like a tax refund or a gift, or they can be as small as the money you save by using coupons. Anytime you wind up with some surprise cash, it’s time to think about how to put it away — instead of how to spend it.
Finally, regularly re-evaluate your needs. Know that the base layer of your savings — your emergency fund — should evolve, depending on your age. A buffer of six months of expenses will have a different number when you’re a single 20-something than when you’re 55 with kids in college. The target for your saving will always be moving. Make sure you’re adjusting your strategy to maintain the cushion you need to cover any unplanned costs.
Greg McBride, CFA, is Bankrate’s chief financial analyst. As a personal finance expert, he is regularly quoted in the media for his in-depth commentary and practical advice to consumers.