Your main choices are traditional banks, credit unions, and online-only banks

You can open a savings account at a brick-and-mortar bank branch, a credit union, or an online bank. Each route has different hours, fees, and interest rates. A traditional bank gives you a physical location to visit and talk to someone in person. A credit union is a member-owned nonprofit that often charges lower fees and pays higher interest, but membership rules vary. An online bank has no physical branches but typically offers the highest interest rates and lowest fees because it has no building costs.

The choice depends on whether you want face-to-face service, how much you plan to deposit, and whether you care about earning interest on your balance. Someone who needs to deposit cash regularly might prefer a bank with branches. Someone who wants to maximize interest and rarely touches the account might choose an online bank. A credit union member might find the best combination of service and rates in one place.

Key Takeaways

  • Traditional banks, credit unions, and online banks all offer savings accounts, and each has different fees, interest rates, and service options.
  • You will need a government ID, proof of address, and usually a starting deposit to open an account, though minimums vary widely.
  • Online banks typically pay the highest interest rates but have no branches, while traditional banks offer in-person service but often charge monthly fees.
  • Credit unions are member-owned and often have lower fees and better rates than banks, but you must meet membership requirements first.
  • You can compare rates and fees online before visiting, and most banks let you open an account in person or through their website.

Traditional banks: branches, convenience, and monthly fees

A traditional bank is a for-profit company with physical branches in your area. You can walk in, talk to a teller, deposit cash, and ask questions about your account. Banks like Chase, Bank of America, Wells Fargo, and regional banks like PNC or US Bank fall into this category. They are open during business hours, usually 9 a.m. to 5 p.m. on weekdays and limited hours on Saturday.

The trade-off is that traditional banks often charge a monthly maintenance fee — typically $5 to $15 per month — unless you meet a minimum balance or set up direct deposit. Interest rates on savings accounts are usually low, often under 0.01% annually, meaning your money barely grows. However, if you need to deposit cash regularly, withdraw in person, or prefer talking to someone face-to-face, a traditional bank is the straightforward choice.

To open an account at a traditional bank, visit a branch with a government ID and proof of address. You will usually need to bring a starting deposit, though minimums vary — some banks require $25, others $100 or more. Many banks now let you start the process online and finish in the branch, or complete it entirely online if you have a valid ID and a way to verify your address.

Online banks: highest interest rates and lowest fees

An online bank exists only on the internet — no branches, no tellers, no walk-in service. Banks like Ally, Marcus, Discover, and Wealthfront offer savings accounts with interest rates that are often 10 to 20 times higher than traditional banks. As of early 2024, online banks were paying around 4% to 5% annually on savings accounts, while traditional banks paid closer to 0.01%. Online banks can offer these rates because they have no building costs and no tellers to pay.

The catch is that you cannot deposit cash in person. You deposit by transferring money from another bank account, mailing a check, or setting up direct deposit from your employer. Withdrawals happen the same way — you transfer money out to another account. If you need cash immediately or deposit cash regularly, an online bank is not practical. If you save money and rarely touch it, an online bank is usually the best financial choice.

Opening an online bank account takes 10 to 20 minutes. You provide your name, address, Social Security number, and government ID information through their website. Most online banks verify your identity instantly using a third-party service. You then link a bank account to transfer your starting deposit. Some online banks have no minimum deposit; others require $25 or $100 to start.

Credit unions: member-owned with competitive rates and lower fees

A credit union is a nonprofit financial institution owned by its members. Unlike banks, which exist to make profit for shareholders, credit unions return profits to members through lower fees and higher interest rates. Credit unions like Navy Federal, Connexus, and Alliant are open to the public or specific groups. Some credit unions are only for employees of a certain company, members of a certain profession, or people who live in a certain area.

Credit unions typically charge no monthly maintenance fee and pay interest rates that are higher than traditional banks but sometimes lower than online banks. They also offer in-person service at branches, though usually fewer branches than a major bank. If you are a member, you can usually deposit cash at a branch, call with questions, and get personal service.

To open a credit union savings account, you must first become a member. Membership requirements vary — some credit unions require you to work for a specific employer, others require you to live in a certain county, and some are open to anyone who joins. Visit the credit union's website to check membership rules. If you are may be able to access, you can usually join and open an account in person or online. You will need a government ID, proof of address, and a starting deposit, which is often $25 or less.

How to compare before you choose

Before opening an account, compare three things: interest rate, monthly fees, and access. Interest rate tells you how fast your money grows — an online bank paying 4.5% will earn you roughly $45 per year on a $1,000 balance, while a traditional bank paying 0.01% will earn you $0.10. Monthly fees reduce your balance over time, so a $10 monthly fee costs you $120 per year.

Access means how you deposit and withdraw money. If you need to deposit cash, you need a bank or credit union with branches. If you only transfer money electronically, an online bank works fine. If you want both high interest and in-person service, a credit union is often the middle ground.

Use websites like Bankrate, DepositAccounts, or NerdWallet to see current rates and fees at different banks. These sites let you filter by account type, minimum deposit, and features. You can also visit a bank's website directly to see its current rate and fee structure. Rates change frequently, so check the current rate the day you plan to open the account.

What you need to bring or provide

Most banks and credit unions require the same basic information to open a savings account. You will need a government-issued photo ID — a driver's license, passport, or state ID card. You will need proof of address, which can be a utility bill, lease, mortgage statement, or government mail dated within the last 60 days. Some banks accept a bank statement or credit card statement as proof of address.

You will need your Social Security number so the bank can verify your identity and report interest earned to the IRS. You will need a starting deposit, though the amount varies. Some banks require $0 to start; others require $25, $100, or more. If you are opening an account online, you will need access to another bank account to transfer your starting deposit, or you can mail a check.

If you are opening an account at a credit union, you may also need to show proof of membership — for example, an employee badge if the credit union is for employees of your company, or proof of residency if it is for people in your county.

Opening an account in person versus online

Opening in person takes 15 to 30 minutes. You visit a branch with your ID and proof of address, fill out a form, and hand over your starting deposit in cash or check. The bank verifies your information on the spot and gives you a debit card, which may arrive by mail in 5 to 10 business days. You can start using your account immediately, though you may not be able to withdraw money until your starting deposit clears.

Opening online takes 10 to 20 minutes and can happen at any time of day. You enter your information on the bank's website, upload photos of your ID and proof of address, and answer security questions. The bank verifies your identity using a third-party service, usually instantly. You then link another bank account and transfer your starting deposit. Your account is usually active within one business day, though the transfer of your starting deposit may take 1 to 3 business days.

In-person opening is better if you want to ask questions, prefer face-to-face service, or want to deposit cash immediately. Online opening is better if you want to open outside business hours, prefer not to visit a branch, or want to compare multiple banks before deciding.

Frequently Asked Questions

Do I need a minimum deposit to open a savings account?

Minimum deposits vary by bank. Many online banks and credit unions require $0 to $25 to start. Traditional banks often require $100 to $500. Check the bank's website for its current minimum before you visit or open online. Some banks waive the minimum if you set up direct deposit.

Can I open a savings account if I don't have a Social Security number?

Most banks require a Social Security number to open an account and report interest to the IRS. If you do not have one, some banks will accept an Individual Taxpayer Identification Number (ITIN) instead. Call the bank directly to ask whether it accepts ITINs, as policies vary.

How long does it take to open an account and start using it?

Online accounts are usually active within one business day. In-person accounts are active immediately, though your starting deposit may take 1 to 3 business days to clear. Debit cards typically arrive by mail in 5 to 10 business days, but you can usually withdraw money using your account number before the card arrives.

What is the difference between a savings account and a checking account?

A savings account is meant for money you want to keep and grow. A checking account is meant for money you spend regularly. Savings accounts usually pay interest and limit how many times you can withdraw per month. Checking accounts rarely pay interest but let you withdraw as often as you want and come with a debit card and checks.

Can I open multiple savings accounts at different banks?

Yes. You can open savings accounts at as many banks as you want. Some people open accounts at an online bank for high interest and a traditional bank for cash deposits. There is no limit to how many accounts you can have, though each account is separately insured by the FDIC up to $250,000.