How to open an online savings account

Maggie Germano, a financial coach, switched to an online savings account many years ago.

The interest from her traditional savings account was growing slowly, making it difficult to see a lot of change. Occasional fees would also lower her savings.

Knowing that online accounts may have a higher interest rate than traditional savings accounts, Germano looked into online-only accounts to boost her savings. She’s now a supporter of online banking and suggests her clients make the switch as well.

“They can have fewer fees and more interest returns,” she says.

Opening an online savings account is a little different than walking into a bank branch, but the application process can still be quick and easy. If this is your first time opening an online account, you may have questions about where to start. These five steps can help guide you through how to open an online savings account:

1. Fill out the application. The application will usually ask for personal information to verify your identity and set up your account. This may include details such as your name, date of birth, address, phone number and email address. You will likely also need to give a tax identification number, such as a Social Security number.

2. Choose your account type. When opening a savings account online, you may have the choice between an individual account or a joint account. If you choose a joint account, each account holder may need to enter their personal information. Before opening a joint account, understand how shared ownership works and how it could affect each account holder’s finances.

3. Designate beneficiaries. If you open a savings account online, you can also choose who will receive the money from your account if you pass away, also called a beneficiary. Justin Chidester, a financial planner, says that with joint accounts, the account may automatically transfer to the joint account holder.

4. Fund the account. If the savings account has a minimum deposit requirement, you’ll need to add at least that amount when opening the account. You may be able to fund the account through a bank transfer, check deposit or wire transfer. Even if there is no minimum balance required to maintain an account, there may be a minimum dollar amount needed to initially fund a savings account via the first deposit. Keep in mind that not all banks ask for a minimum deposit. With those that do, you may be able to fund the account after you finish your application.

5. Set up your login information. If you haven’t already, you’ll need to create a username and password for your account. To help keep your personal information safe, choose a strong password with a mix of letters, numbers and special characters. Try not to use the same password across multiple accounts to help protect your information.

If you have questions about how to open an online savings account, a customer service team can usually help. You may be able to call, chat or email a representative for help. 

Before you open a savings account online, you may want to shop around to compare account options and features. Here are some things to look for when deciding which bank account to choose:

• FDIC insurance. You may come across these four letters when opening a savings account online, but what do they mean? The Federal Deposit Insurance Corporation, a government agency, will insure depositors up to $250,000 per depositor, per insured bank, per ownership category if an FDIC-insured bank fails. Ask the bank or use the FDIC’s BankFind tool to make sure your money will be protected by FDIC insurance.

• Minimum opening deposit. At the very least, you may have to deposit a certain amount of money to open a savings account online. The money might not need to stay in your account after it’s open, but the requirement could still limit your options. With a Capital One 360 Performance Savings account, there’s no minimum balance required to maintain your account.

• Monthly maintenance or account fees. You may have to pay a monthly maintenance or account fee if you don’t meet a certain amount of transactions or keep a certain number of money in the account. For example: an average daily balance or several direct deposits each month. However, Chidester says online accounts often don’t follow these rules. “With most online savings accounts, it doesn’t matter if you have $1 or $100,000. They won’t charge a fee for not maintaining a minimum balance,” he says. “You won’t find ‘maintenance’ fees either because your online account is low maintenance.” The good news: Capital One 360 Performance Savings accounts are fee-free. Add in no minimum balance requirements and you have more money in your wallet.

• Annual percentage yield (APY). If you’re looking to open a savings account online, you may have a short- or long-term savings goal in mind, such as growing an emergency fund, saving to buy a house or planning a vacation out of the country. Germano has multiple online savings accounts, one for each goal. As you compare accounts, pay attention to the annual percentage yield (APY), which is the amount of interest you can earn on your balance in one year, including the effects of compound interest. This is when you earn interest on top of interest you’ve already earned, helping your money grow faster over time. A higher APY can help your savings grow faster and put more money toward your financial goals.

• Overdraft fees. Typically, a savings account is linked to a checking account to cover overdrafts. In this scenario, if your checking account has insufficient funds to cover a transaction your bank can pull the amount needed from your savings account. You may be charged an overdraft fee in this case. Capital One does not charge overdraft fees on its 360 Checking account.

• Potential fees. Savings accounts may have other fees for different activities. These include fees for sending or receiving a wire transfer or other services. The fees can change depending on the bank and how you use your account. Thinking about your savings habits and possible costs will help you choose an account that fits your needs.

If you want to open a savings account online, take time to check out each bank’s website and mobile app. Make sure the digital tools are easy for you to use and that you feel comfortable accessing your account anytime, anywhere. A user-friendly mobile app can make managing your savings easier, whether you’re depositing a check or checking your balance. For example, you might consider Capital One’s top-rated mobile app.

After you figure out how to open an online savings account, there may be several ways to add money to your account. You may be able to transfer funds from another checking or savings account, mail a check or set up direct deposit through your employer. Some banks also allow you to deposit checks using their mobile apps by simply taking a picture of the check. These options can make it easier to grow your savings in a way that fits your life.

You can also withdraw money from an online savings account in similar ways. You may be able to transfer funds to a checking account, another savings account with the same bank or an account at a different bank. These transfer options can make it easier to access your money.

Some online banks may let you ask for a bank check when you need to access your money. You may also be able to use a wire transfer, though fees may apply each time. Some accounts may also limit the number of withdrawals you can make each month. Having easy transfer options can make managing your savings easier. With Capital One, it’s simple to move your money between your 360 Checking and 360 Performance Savings accounts whenever you need to. Note: Typically, our savings accounts permit no more than six (6) transfers per statement cycle to a third party or to any of your other deposit accounts at Capital One. There is no limit in the number of transfers that you may make into your account. However, we are currently not enforcing the transfer limits. You’ll be notified if we choose to reimpose these limits.

Opening a savings account online can be a great move for your short- or long-term financial goals. Not only are the accounts easy to open, but it’s also simple to log in and review your account information and start transfers between accounts.

“Determined savers like being able to look at their account balances to remind themselves of their savings goals,” Chidester says. “Especially with online savings accounts, once you accrue a bit more money, it’s nice to see interest payments roll in.” Online savings accounts may also have fewer or lower fees than traditional savings accounts. That means you wouldn’t need to worry as much about expenses cutting into your savings and holding you back.

With potentially fewer fees and no or low balance requirements, online savings accounts can make it easier to organize your savings. Chidester suggests that his clients think about opening multiple accounts and assigning each one a specific goal.

“It can be hard to take $50 out of an account marked ‘vacation’ to splurge on a night out,” he says. “On the other hand, in the heat of the moment, it’s not so hard to take $50 out of unmarked savings.”

Understanding how to open an online savings account can help you feel more confident as you begin the process. Here are some tips to help you get started:

• When comparing savings accounts, look at features like APY, fees and minimum balance requirements. Finding an account that matches your savings goals can help you make the most of your money.

• Be prepared when opening an account online. Have your personal information ready and the funds available to make any required opening deposit.

• Using digital banking tools like mobile apps and online transfers can help you stay connected to your savings wherever you are.

When thinking about whether you should open an online savings account, remember: It’s easy to start saving when there’s no minimum balance required. Luckily, you can open a Capital One 360 Performance Savings account with any amount.