What is a savings account? Why do I need one?

A savings account is one of the most basic types of bank account that can come in very useful for a number of purposes.

For one thing, it acts as a safe place for you to deposit any cash that you don’t need to use right away. In addition to keeping your money safe, you also earn interest on any money you deposit into the account. The interest rate is generally low but you could earn a lot if you have a higher balance. Besides, the interest, however low, adds up over time.

Any time you need money at short notice, you can withdraw the amount you need from your savings account. Withdrawals take less than a minute using your debit card at any ATM machine. Alternatively, you can visit the branch and withdraw the cash you need with a bearer’s check or a withdrawal slip.

Another benefit of having a savings account is that it qualifies you to apply for a secured credit card. This can help you build a solid credit score, paving the path for other financial opportunities. The bank in which you’ve opened the savings account will issue you a secured credit card based on your account. In this case, the balance in your savings account acts as the credit limit on the card.

If you’re in college and don’t have one yet, here’s what you need to know about opening your first savings account.

What do you need to open a savings account?

Opening a savings account is pretty straightforward but you will need some basic documentation to prove your identity.

The most important document you will need to open a savings account is a valid photo ID issued by the US government. You can submit your driver’s license or passport. You will also need to provide other personal information such as your Social Security Number, date of birth, and contact details.

If your current address is not listed on your government-issued ID, you will need to provide some other form address proof. Either a utility bill or a lease in your name is acceptable for this purpose.

One thing to remember is that the bank will not accept photocopies of your documents. Most banks will want to first see the original physical documents along with an attested photocopy. This is just to confirm that the photocopy is genuine. After checking both documents, the bank will keep the photocopy and return the original to back you

How to start a savings account

Once you have all the necessary documentation, opening a savings account is quick and simple. You could set up your savings account in less than an hour.

Here’s a quick step-by-step on how to open a savings account:

Step 1 – Compare banks & identify one that best suits your needs

It’s always a good idea to start by comparing different banks to identify the best one for you. Take a look at the interest rates being offered, minimum balance requirements, and transaction fees. You want to make sure that you pick the ideal bank for you based on your financial circumstances.

For example, if you only have small amounts of cash to deposit into the account, you want to make sure you choose a bank with a low minimum. If you can’t maintain the specified minimum balance, the bank can charge you a fee.

If you think you’ll be doing a lot of transactions through the account, choose a bank with low transaction fees. You don’t want to use up your savings on high transaction fees.

It’s always a good idea to choose a bank that has a branch located close to you. You want it to be convenient to visit if and when you need to. Sure, you can get most of your questions answered over the phone or by email. You can even deposit and withdraw funds through any ATM. But there may be times when you just need to visit the bank personally.

Now that you’ve identified a bank that best meets your needs, it’s time to submit your application.

Step 2 – Submit your application

You can open a savings account online or in person by visiting the bank. Many banks offer potential customers the convenience of being able to open an account online. However, if this is your first account, it is advisable to visit the bank branch and submit your application personally.

During a personal visit to the bank, someone will help you understand a few good practices when it comes to operating a savings account. This will ensure that you make the most of your account and avoid making any mistake that could cost you money.

At the bank, you will need to show the bank official your original government-issued identification, Social Security number, and email address as part of your application. You will also have to submit copies of all documents. The bank official will compare the originals and the copies. If they match, they will return the originals to you. The bank will process your application immediately and give you your unique savings account number right there and then.

If you are opening your savings account online, go to your preferred bank’s website and complete the application form. The process and required documentation are the same as above.

That’s it! That’s how to open a savings account. As you can see, it’s very simple and straightforward.

You’ve Opened a Savings Account – Now What?

Once you’ve opened your savings account, you need to fund it. Some banks require you to fund the account immediately after you’ve opened one. Others allow you to fund it as and when you have the money.

There are several different ways you can deposit money into your savings account. Choose any one that is most convenient for you.

Deposit funds as cash:

This is a great way to save all the cash you get as gifts on various occasions. You take the cash to the bank and fill out a deposit slip with your savings account number and amount of cash to be deposited. Then submit the cash and the slip to the teller. The teller will stamp one part of the slip and return it to you as an acknowledgment of having received the deposit. Some ATMs also allow you to deposit cash outside of banking hours.

Deposit funds as checks:

Somebody gave you a check as a gift or for some service? Take the check to the bank and fill out the deposit slip. On the deposit slip, you will need to fill out our savings account number and the check amount. Submit the check and filled-out slip to the teller, receive the acknowledgment, and you’re done. The funds will be deposited into your account within a day or two.

Some banks now allow customers to deposit checks through their mobile devices, saving them a trip to the bank. Check if your bank allows this.

Deposit funds electronically:

Online banking is the most convenient way to receive funds without even leaving your home. Opening an online account is easy once you have a savings account. You just need to complete a few formalities using your savings account number.

After you’ve got your account set up, you can ask anyone who owes you money to make an electronic deposit. The money they deposit will get transferred into your account automatically within the day.

Accessing Money from Your Savings Account

The best part about opening a savings account is the ease and speed with which you can access the money when you need it. One way is by filling out a withdrawal slip at the bank branch and submitting it to the teller. The teller will check the balance in your account and give you the cash within a few minutes.

You can also withdraw cash from any ATM using your debit card. Whether you choose to go to the bank or use an ATM, you will get the cash within minutes of requesting it.

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