It’s fairly easy to open a savings account, but the rules of how each account works depend on the financial institution and account type. Customers can consider many factors when choosing accounts, including interest rates, charges for holding the account, and fees. Prospective account holders may also need to provide some documentation and possess a minimum deposit.
There are many types of different savings accounts: student accounts, standard accounts at banks or savings and loan companies, and accounts tied to investments like money market accounts, where interest rates may rise or fall. If consumers are only interested in making a bit of interest on their money, but want access to it at all times, they might also consider an interest earning checking account, though typically interest rates are lower.
Undoubtedly, the simplest method to open a savings account of most types is to use the same bank with which a person already has a checking account. If the person doesn’t have a checking account, he could do a little research to find banks or other financial institutions with the best interest rates, and choose the financial institute he likes most.
The first step to open a savings account is the initial deposit. The minimum deposit rate varies by bank, but most set this at about $100 US Dollars (USD). Also needed to open a savings account is documentation such as a social security card or proof of address. They may not need this to open a savings account if a person already has a checking account with the bank, and some financial institutions don’t require much supporting documentation.
Before opening a savings account, it’s important to understand any rules regarding withdrawal. Some banks charge a fee if the money is withdrawn within a specific time period, usually early in the life of the account. Other banks have no such rules and can even link a savings and checking account so people can move money from one to the other via Internet banking, or where any overdrawn check automatically draws on savings account funds. These two features are usually only available if both accounts are with the same financial institution.
Another important consideration is any fees that might be involved with holding the money or transactions. Fees reduce the amount of interest earned, so looking for accounts that don’t assess a monthly fee, unless the savings deposit is large, are worthwhile. Customers should additionally consider options for savings accounts that provide tax breaks. People who have access to company retirement plans like 401ks may want to consider these, instead, because they reduce taxable income and some employers match deposited funds, enhancing amount saved.
Most times when customers open a savings account, financial institutions make it simple. They want this business because they have access to the customer’s money to invest or lend. With a few easy steps, most people can quickly possess one of these accounts, though with forethought, consumers can choose the most financially advantageous account types.