The main places to open a savings account

You can open a savings account at a traditional bank, a credit union, an online bank, or a brokerage firm. Each type has different fees, interest rates, and account minimums. The best choice depends on whether you want to walk into a physical branch, how much money you plan to keep in the account, and what interest rate matters most to you.

Traditional banks are the most common option. They have physical locations where you can deposit cash and speak to someone in person. Credit unions are member-owned cooperatives that often charge lower fees and pay higher interest rates than banks, but you have to be a member to open an account. Online banks have no physical branches but typically offer the highest interest rates because they have lower overhead costs. Brokerages like Fidelity and Schwab offer savings accounts as part of a broader investment platform.

The choice between these options is not about which is objectively best—it is about which fits your habits. If you deposit cash regularly, you need a place that takes cash. If you want the highest possible interest rate and never need to visit a branch, an online bank works. If you want personal service and lower fees, a credit union may be the better fit.

Key Takeaways

  • Traditional banks, credit unions, online banks, and brokerages all offer savings accounts, each with different fee structures and interest rates.
  • Online banks typically pay the highest interest rates but have no physical branches where you can deposit cash in person.
  • Credit unions often charge lower fees and pay better rates than traditional banks, but membership requirements vary by location and employer.
  • You will need a government-issued ID, proof of address, and usually a starting deposit to open an account at any institution.
  • Comparing interest rates, monthly fees, and minimum balance requirements across institutions takes 15 to 30 minutes and can save you hundreds of dollars per year.

Traditional banks and what they offer

A traditional bank is a for-profit institution with physical branches. You can walk in, deposit cash, withdraw money, and speak to a banker about your account. Most people already have a relationship with a traditional bank because they use it for checking accounts or loans.

The trade-off is that traditional banks usually pay lower interest rates on savings accounts than online banks do. They also charge monthly maintenance fees more often, though many waive the fee if you keep a minimum balance or set up direct deposit. The minimum balance to open an account ranges from zero to several thousand dollars depending on the bank and account type.

If you already bank somewhere, opening a savings account at the same institution takes 15 minutes. You can often do it online, by phone, or in person. If you are starting from scratch, the largest banks (Chase, Bank of America, Wells Fargo, Citibank) have branches everywhere, but smaller regional banks sometimes offer better rates and lower fees.

Credit unions: membership requirements and how to join

A credit union is a nonprofit financial cooperative owned by its members. Credit unions typically charge lower fees, pay higher interest rates, and offer more personalized service than traditional banks. The catch is that you have to meet membership requirements to open an account.

Membership rules vary by credit union. Some are open to anyone who lives or works in a specific county. Others are limited to employees of a particular company, members of a union, or people who work in a specific industry. A few credit unions have very broad membership—for example, some allow you to join if you donate to a particular charity or live in any of several states.

To find a credit union you can join, use the CO-OP Network locator or the Shared Branch locator on the Credit Union National Association website. Search by your zip code or employer. Once you find one that accepts you, the application process is similar to a bank: bring a government-issued ID, proof of address, and an opening deposit (often $25 or less). Many credit unions now let you open an account online if you meet their membership criteria.

Online banks and their advantages and limitations

An online bank operates entirely through a website or mobile app—there are no physical branches. Because online banks have lower overhead costs, they pass savings to customers through higher interest rates and lower or zero monthly fees. The interest rates on online savings accounts are typically two to five times higher than rates at traditional banks.

The main limitation is that you cannot deposit cash in person. If you receive cash regularly and need to deposit it, an online bank alone may not work for you. However, many online banks partner with ATM networks so you can withdraw cash for free at thousands of locations. Some also let you deposit checks by taking a photo with your phone.

Opening an account at an online bank takes 10 to 20 minutes. You will need a government-issued ID, proof of address, and a way to fund the account—usually a transfer from another bank account. Popular online banks include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank. Compare their current interest rates and fee structures before choosing, because rates change frequently and vary by account balance.

Brokerages and investment-linked savings accounts

Major brokerages like Fidelity, Charles Schwab, and E*TRADE offer savings accounts as part of their investment platforms. These accounts often have competitive interest rates and no monthly fees. They make sense if you already invest with the brokerage or plan to start investing, because you can manage both your savings and investments in one place.

The downside is that brokerages are not banks, so their savings accounts are not covered by FDIC insurance in the same way. However, most major brokerages hold customer cash in FDIC-insured sweep accounts, so your money is still protected up to the FDIC limit. Read the fine print to confirm how the brokerage protects your deposits.

If you do not plan to invest, a brokerage savings account is not necessary. A traditional bank or online bank will serve you just as well. But if you are already a brokerage customer or interested in investing, opening a savings account there consolidates your finances in one place.

What you need to open an account

Nearly every bank, credit union, and online institution requires the same basic documents and information. Bring or provide a government-issued photo ID (driver's license, passport, or state ID card), proof of your current address (a utility bill, lease, or bank statement dated within the last 60 days), and your Social Security number or tax ID number.

Most institutions also require an opening deposit, though the amount varies widely. Many online banks and credit unions accept opening deposits as low as $0 to $25. Traditional banks often require $100 to $500. Some premium savings accounts require $10,000 or more, but these are not necessary for most people.

If you open an account in person, bring the original documents. If you open online, you will upload photos or scans of your ID and address proof. The process usually takes 10 to 30 minutes, and your account opens the same day or within one business day.

Comparing interest rates, fees, and minimums across institutions

The difference between a savings account paying 0.01% interest and one paying 4.5% interest is substantial. On $10,000, that difference is $449 per year. On $50,000, it is $2,245 per year. Interest rates change frequently, so check current rates before opening an account.

Use a rate comparison tool like Bankrate, DepositAccounts, or the FDIC's BankFind tool to see what different institutions are currently offering. Write down the interest rate, any monthly maintenance fee, the minimum balance required to earn that rate, and any other fees (overdraft fees, ATM fees, wire transfer fees). Compare at least three institutions before deciding.

Pay attention to the fine print. Some banks advertise a high rate but only pay it on balances above a certain amount. Others pay a promotional rate for three months and then drop to a much lower rate. Read the account terms carefully so you understand what you are actually getting.

Frequently Asked Questions

Can I open a savings account online if I do not have a bank account already?

Yes. Online banks do not require you to have an existing account anywhere. You will need a government-issued ID, proof of address, and a way to fund the account—usually a debit card or a transfer from someone else's bank account. Some online banks let you fund an account by mailing a check, though this takes longer.

What is the difference between a savings account and a money market account?

A money market account typically pays a higher interest rate than a savings account but requires a larger minimum balance and limits how often you can withdraw money. For most people, a regular savings account is simpler. Compare the rates and withdrawal limits at your institution to see if a money market account makes sense for your situation.

Is my money safe if I open an account at an online bank?

Yes, as long as the online bank is FDIC-insured. Check the bank's website or the FDIC's BankFind tool to confirm. FDIC insurance protects up to $250,000 per account holder per bank, so your money is safe even if the bank fails. Online banks are regulated the same way as traditional banks.

How long does it take to open a savings account?

Opening an account online typically takes 10 to 30 minutes. Opening in person at a branch takes 15 to 30 minutes. Your account is usually active the same day or within one business day. You can start depositing money and earning interest immediately.

Can I open multiple savings accounts at different banks?

Yes. Many people open accounts at multiple institutions to take advantage of different interest rates, features, or to organize money for different goals. Just remember that FDIC insurance covers up to $250,000 per account holder per bank, so if you have more than $250,000 in savings, spread it across multiple banks to stay fully protected.