Does it cost money to open a savings account?

If you’re looking for a way to safely store your savings while also allowing your money to grow through compound interest, a savings account could be for you. Savings accounts are ideal for things like building an emergency fund and saving for your goals. But before you open one for yourself, you’re probably wondering: Does it cost money to open a savings account? And if so, how much is it to open a savings account?

As you evaluate different savings accounts, take note of any initial deposit requirements, minimum balance rules, and potential fees before landing on the right one for you.

Understand the value of savings accounts

For all their simplicity, savings accounts provide many benefits to help you reach your financial goals. With a high interest rate savings account, for example, you can:

Keep your savings secure

When it comes to your savings, safety and security are often a top priority. If you open a savings account at a financial institution insured by the Federal Deposit Insurance Corporation (FDIC), you can rest easy. That’s because FDIC insurance protects up to $250,000 per depositor, per insured bank, per deposit ownership category, and that maximum applies for each bank you have an account with, as long as the bank is an FDIC member (Discover, a division of Capital One, N.A., is an FDIC member.)      

Another safety advantage: Money in a savings account isn’t affected by swings in the stock or bond markets. So you’ll never have to worry about market turmoil draining your account.

Watch the money in your savings grow

Your money doesn’t just sit in a savings account—it grows with the help of compound interest. Compound interest allows you to earn interest not only on your initial deposit but also on any interest that your account accumulates.

The power of compounding can lead to some significant gains down the road. For example, say you put $5,000 into a savings account today with a 3.75% annual percentage yield (APY), which compounds monthly. In 10 years, without putting additional money into the account, your savings will have grown to around $7,270. This assumes the interest rate stays fixed at 3.75%, but interest rates can and do change over time.

Using that same example, let’s say that instead of just letting your money sit there and grow, you add $100 to your account each month. In 10 years, you’d have around $21,800. That’s the power of compounding and diligent saving at work. (Feel free to experiment with the numbers using a compound interest calculator.)

Easily access funds in your savings account

Savings accounts provide account holders a convenient and accessible place to keep their money. Whether you’re managing your account from a computer, tablet, or mobile app, most financial institutions will allow you to move money into and out of your savings account with ease. Just make sure you know your bank’s withdrawal limits regarding your specific savings account. Exceeding those limits could lead to fees, which can eat into your savings.

Consider minimum deposit requirements

Some banks have a savings account minimum deposit, while others set a minimum balance threshold. Some banks even require both.

As you consider the savings account that’s right for you, make note of these two common requirements:

Minimum initial deposit

This is the minimum dollar amount needed to fund the savings account via the initial deposit. Choosing a bank without a minimum is always an option, though.

Minimum balance requirements

Sometimes banks will require you to maintain a minimum amount in your savings account. And if you don’t? You could get hit with a monthly fee on your savings account.      

If you’re just starting out on your savings journey, having to abide by any minimum requirements can make a difference. Pay close attention to make sure you open a savings account that’s the best fit for you.

Look out for savings account fees

When choosing a savings account, make sure you know about any savings account fees that could be triggered. Here are three to look out for:

Savings account withdrawal limit fee

In 2020, amid the pandemic, the Federal Reserve suspended Regulation D, which had limited transfers or withdrawals on savings accounts to six per month, according to Bankrate. While that means the federal government isn’t currently regulating the maximum number of withdrawals or transfers an account holder can make, individual banks may have their own rules and may impose a fee if you exceed their limits. 

If a financial institution does have savings withdrawal limit fees, you can avoid them by learning how many transactions (such as third-party transfers, bill payments, and bank transfers) your bank allows each month. 

Monthly maintenance fee

Be sure to look into what conditions could activate monthly savings account maintenance fees at your bank so you can avoid them. Or choose a bank that doesn’t have them at all.

Find the savings account that’s right for you

While everyone’s financial needs differ, it’s a good idea to keep some key features in mind when researching potential savings accounts. Here are a few tips as you make your decision:

Look for savings accounts with low (or no) fees

If you can, find a bank that doesn’t charge excessive fees (or, ideally, any). When you’re trying to build up your savings, savings withdrawal limit fees, insufficient funds fees, and savings account maintenance fees can add up quickly.

Seek an account with a high rate of return

Look for a savings account with a favorable interest rate so your money can grow as quickly as possible. High interest rate savings accounts can offer a significantly higher annual percentage yield than the national average.   

Assess the services offered

In these days of online banking, it’s all about convenience. So look for an easy-to-use mobile app, real customer service from real people, and other services that are important to you. 

Ready to open a high interest rate savings account with no fees or minimums?

Whether you’re trying to build an emergency fund or save up for a big goal, a savings account can help you get there. Now that you have a complete understanding of high interest rate savings account minimum deposits, fees, and interest rates, you’re ready to make the right decision for you.

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The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover, a division of Capital One, N.A., or its affiliates.