How to Open a Savings Account

Financial tips for today’s consumers.

Let’s face it: saving money isn’t always a priority especially during these tough economic times. What savings you do have may be invested in stocks, bonds and other retirement vehicles, but having a readily accessible or liquid savings account is important too.

Certainly, interest rates are abysmally low, with those rates currently close to 0 percent. You won’t get rich by setting aside money nor will you able to keep up with inflation. What you will do is have money available to handle life’s goals and emergencies, giving you an available stash of cash to tap when most needed. Besides, you’ll also avoid using a credit card and dealing with high-interest rate payments on money you borrow.

Let’s take a look at how you can open a savings account:

1. Shop around. You don’t have to settle for earning 0.25 percent at your local bank. Credit unions typically pay a slightly higher interest, sometimes a full 1 percent higher than banks. You can also find better investing options with online banks including ING Direct, Ally Bank and EverBank just to name a few. We’re not endorsing any option, just sharing some choices with you.

2. Set your goals. What are your reasons for opening up a savings account? If it is to pour money in a Christmas fund, a vacation account or have rainy day savings, then know what you’re saving toward and how much money you’ll need. For example, if you spend $500 each year on Christmas presents, then you should save about $10 per week. Some banks, including online institutions such as ING Direct, allow you to open multiple savings accounts and create a name for each fund.

3. Open an account. Whether opened in person or online, you’ll need to show some identification, sign a signature card and make your first deposit. Your bank will explain what is needed to open your account. You shouldn’t be charged fees although a some financial institutions may limit the number of withdrawals you can make in a month or in a quarter.

Points to Ponder

Savings accounts offer no risk and are backed by the full faith of the United States government. If you have a larger amount of money you can deposit and you know that you won’t need to access your funds for at least 90 days, then a certificate of deposit is another option. Your money isn’t as liquid — penalties apply for early withdrawals — but your funds will earn you more money. Perhaps opening a savings account and a CD would be the best option for you.

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