What happens when you open a savings account

Opening a savings account means you walk into a bank or credit union, or visit their website, and give them your name, address, and Social Security number so they can set up a place to hold your money. The bank runs a background check (usually through ChexSystems, a banking history database), you sign some paperwork that explains the account rules, and within a few minutes to a few hours you have an account number and can start depositing money. The bank then pays you a small amount of interest on whatever balance you keep in the account—the rate varies by bank and changes over time.

You do not need to have a checking account first, you do not need to be employed, and you do not need a large opening deposit. Most banks let you open a savings account with $0 to $25, though some require $100 or $500. The whole process takes longer to explain than to do.

Key Takeaways

  • You can open a savings account in person at a branch or online through a bank or credit union website, and both routes take less than an hour.
  • You will need a government-issued ID, your Social Security number, and proof of your current address (a utility bill or lease works).
  • Banks run a background check through ChexSystems; if you have unpaid overdrafts or fraud on record at another bank, some banks will deny you.
  • Most savings accounts have no monthly fee, but some charge a fee if your balance drops below a minimum amount—read the fee schedule before you open.
  • The interest rate a bank pays you changes based on what the Federal Reserve does, so the rate you see today may be different in six months.

What documents you need to bring or have ready

You need three things: a government-issued photo ID (a driver's license, state ID card, or passport), your Social Security number, and proof that you live at the address you give the bank. A utility bill, lease agreement, or recent bank statement with your name and address on it counts as proof of address. If you are opening the account online, you can upload photos of these documents or type in the information and the bank will verify it electronically.

If you do not have a Social Security number yet—because you are a non-citizen or an immigrant—some banks and credit unions will open an account using an ITIN (Individual Taxpayer Identification Number) instead. Call ahead to ask, because not every bank offers this option. If you do not have a photo ID, a few banks will accept a combination of other documents, but this is rare; your best option is to get a state ID card from your DMV first.

Opening an account in person at a branch

Walk into any branch of the bank or credit union you choose during business hours. Tell a teller or the person at the desk that you want to open a savings account. They will take you to a desk, ask for your ID and Social Security number, and have you fill out an account application form—usually two or three pages. The form asks your name, address, phone number, employment status, and annual income. You do not have to be employed to open an account; you can write "unemployed" or "student" and move forward.

The bank will then run a ChexSystems check, which takes a few minutes. If you have never had a banking problem before, you will pass. If you have unpaid overdraft fees from another bank or a history of fraud, the bank may deny you or offer you a second-chance account (which has higher fees and stricter rules). Once the check clears, you sign the account agreement, choose a PIN for your debit card if the bank offers one, and you are done. You walk out with a temporary debit card or a card number you can use immediately, and a permanent card arrives by mail in five to ten business days.

Opening an account online

Go to the bank or credit union website and look for a button that says "Open an Account" or "Sign Up". You will fill in your name, address, phone number, and Social Security number on a form. The bank will ask you to upload a photo of your ID and proof of address, or you can type in the information and let them verify it. Some banks use video verification—you hold your ID up to your camera and they confirm it is really you.

The ChexSystems check happens in the background while you wait, usually within a few minutes. Once it clears, you create a username and password, and your account is active. You can log in and see your account number right away. A debit card arrives by mail in five to ten business days, but many online banks let you use your account number to set up direct deposit or transfers before the card shows up, so you do not have to wait to start using the account.

Understanding the account agreement and fee schedule

Before you sign or click "agree", the bank gives you two documents: the account agreement (which explains how the account works and what the bank can and cannot do) and the fee schedule (which lists every charge the bank might impose). Read the fee schedule first, because that is where surprises hide.

Look for these fees: a monthly maintenance fee (most savings accounts have none, but some charge $5 to $10 if your balance falls below a minimum); an overdraft fee (which applies only if you have a debit card linked to the account and try to spend more than you have); an inactivity fee (charged if you do not make a deposit or withdrawal for several months—rare, but it happens); and a fee to close the account early (most banks have none). Write down the minimum balance requirement, if there is one, and the interest rate the bank is currently paying. Both of these numbers will change, but knowing the starting point helps you track whether the account is still worth keeping.

What to do after your account is open

Once your account is active, you can start putting money in. The easiest way is to set up a direct deposit from your employer or a government benefit (like Social Security or unemployment). You give your employer or the benefit office your account number and routing number—both are on the checks the bank sends you, or you can find them in your online banking portal. Money then goes straight into your account on payday, usually within one business day.

If you do not have direct deposit, you can deposit cash or checks in person at a branch, at an ATM (if the bank has one), or by taking a photo of a check with your phone and uploading it through the bank's app. Some banks also let you transfer money from another bank account you own. Set up online banking so you can check your balance anytime and see when deposits clear. Most banks let you do this the same day you open the account.

What happens if the bank denies you

If the ChexSystems check shows unpaid overdraft fees or fraud, the bank may say no. This does not mean you can never have a bank account. You have two options: apply to a different bank (some are more lenient than others), or open a second-chance savings account, which is designed for people with banking problems on their record.

A second-chance account usually has a higher monthly fee ($5 to $15), a lower interest rate, and a minimum balance requirement. But it is a real savings account—your money is safe and insured by the FDIC (Federal Deposit Insurance Corporation) up to $250,000. After you keep the account in good standing for six months to a year, you can often switch to a regular savings account with lower fees. If you were denied because of an error in your ChexSystems file, you can dispute it for free through the ChexSystems website.

Frequently Asked Questions

Do I need a checking account before I can open a savings account?

No. You can open a savings account on its own, without a checking account. Many people have only a savings account and no checking account at all. The two are separate products and you choose which ones you want.

What is the difference between a bank and a credit union?

Both hold your money safely and pay interest on savings accounts. Credit unions are nonprofit and owned by their members; banks are for-profit. Credit unions sometimes offer lower fees and better interest rates, but they may have fewer branches and ATMs. Both are insured by the FDIC or NCUA (National Credit Union Administration) up to $250,000, so your money is equally safe at either one.

Can I open a savings account if I am under 18?

Yes, but you need a parent or guardian to co-sign. You and the adult go to the bank together, both bring ID, and the adult's name goes on the account. Once you turn 18, you can remove the adult from the account if you want, though some banks require you to come in person to do this.

How long does it take to open an account?

In person, the whole process takes 15 to 30 minutes. Online, it takes 10 to 20 minutes. Your account is active immediately, but your debit card arrives by mail in five to ten business days. You can start using the account before the card arrives if you set up direct deposit or transfers.

What if I want to close the account later?

Call the bank or go to a branch and ask to close the account. They will ask why (they do not require a reason), give you the remaining balance, and close it. Most banks have no fee for closing. If you have a debit card, they will deactivate it. Make sure you have moved any money you want to keep to another account first.