Banking is more convenient than ever thanks to the advent of online banking, voiding the need to ever visit a teller in person. Setting up a bank account in person involves waiting in long lines and spending your entire afternoon talking to bankers about your needs. However, it’s possible to set up and maintain a savings or even checking account over the Internet, bypassing this time-consuming process altogether. This guide is designed to help you open your own online savings account.
If you’re ready to open an online bank account, find a secure place to connect to the Internet. Read? Let’s get started…
Step 1: Set Financial Goals
You want to secure a sound financial future; setting up an online savings account can help. However, you need to consider how exactly this account can help you with your goals. Ask yourself: Why have you decided to save money in the first place? What financial goals do you have in mind? Answering these questions can help you best decide where to open an account and how best to utilize it.
Once you’ve established a few goals—and how your savings account will fit into those goals—you then need to find a place where you can open an account. Now, there’s absolutely something a potential bank or credit union must have before you take your business there…
Step 2: Ensure That the Financial Institution is Insured by FDIC
Before you start an application with any financial institution, make sure that the bank is backed by the Federal Deposit Insurance Corporation (FDIC). The bank should provide information about their status with the FDIC, but you should also try using the FDIC’s online tool to check to see if they are insured, too.
So, just what is the FDIC anyway, and why is its backing so important?
To understand this backing, it’s firstly important to understand that banks and credit unions don’t just keep your money locked, untouched, in a vault. Rather, financial institutions invest your money to make themselves a profit, and they ensure that whatever amount was in your account originally is returned. This investment is why you can earn interest on your savings over time. Now, as anyone who invests knows, a financial market can quickly take a nosedive. When that happens, stocks lose value and poor investments can cost people lots of money—which can mean bad news for you, since your financial institution can’t pay back your account if they aren’t making a profit.
That is where FDIC insurance comes in handy.
You see, the FDIC insures your deposits up to $250,000. In other words, if something were to happen—such as market instability—your funds will be protected up to $250,000. So, working with a trustworthy financial institution backed by the FDIC will help you and your family rest easy at night. You’ll know that your money is safe in your online savings account to be withdrawn whenever you need to use it—even if the economy sours.
After confirming that a financial institution is FDIC-backed, you’re ready to move on to the next step…
Step 3: Other Items to Consider Before Choosing a Financial Institution
Besides FDIC-backing, there are various other items that you must consider before starting an application for an online savings account. Now, each financial institution will have their own regulations that you must obey, so be sure to conduct adequate research before you decide to work with any particular institution. You should find most relevant information in the frequently asked questions (FAQ) section of most banking websites. However, some of these items may be addressed in the actual application, and other items might require contacting a representative from the bank where you are considering opening an account.
For example, you’ll likely want to know if a certain institution requires a minimum balance. Some banks require a high minimum balance to open an account, but they may not charge you any other fees. Other banks charge a fee for opening accounts while not setting a minimum balance requirement. Others still may have no minimum balance and have you instead pay monthly or annual fees.
You should also consider the rate of interest on the savings account when you’re deciding between more than one financial institution. In other words, institutions will let you earn interest on the money sitting in your account; oftentimes, this amount is small. However, some places may offer better interest rates than other.
Other stipulations might include depositing a minimum amount of money on a regular basis. Other times, online banking is free when you are able to set up a direct deposit into your account. In this case, check with your employer to see if they are willing to send your checks to your bank account in the form of a direct deposit.
Besides factors like minimum balances and interest rates, you should also consider the location of your financial institution. After all, you want a place that will be easy enough for you to access, either at the actual institution or an ATM. You may also want to check if you will need to pay ATM fees; most online savings accounts give you an option to use a debit card to access funds through ATM vestibules.
Once you find a financial institution, compared its rates and offerings, and ensured it’s FDIC-backed, you’re ready to move on…
Step 4: Locate and Start the Application
You’re finally ready to fill out an application to open a savings account. First, though, you’ll need to locate the application itself. Most financial institutions make it easy for new customers to find out which accounts are available through links on their homepage. However, you might need to use the site’s search bar to find exactly what you are looking for; “online savings account” is a good search term to try.
Remember to be cautious about the results from your search. When you are entering important personal information on a web page, you must make sure that the page is trustworthy. After all, the type of information needed to open a bank account includes highly sensitive data, such as social security numbers and other personal information—which you do not want falling into the wrong hands.
If you still have issues attempting to find an application online, you can contact a representative from the institution for assistance.
When you finally locate the application, you’ll be able to fill it out in about 20-30 minutes. If you don’t have that time available right away, bookmark the application so you can quickly access it later. When you are ready to begin filling out the application, make sure you have all the necessary documents, such as identification cards and your social security number.
With this step complete, you’re finally ready to begin. Now, most applications start with an important first step…
Step 5: Choose the Right Type of Account
The type of online savings account that you choose will depend upon your financial goals. Compare the types of account that each financial institution offers, and be sure that you are aware of any fees behind opening the account.
Your current financial situation and your financial goals will dictate which account will suit you best. For example, if you are a college student, be sure to check for a student account with your financial institution. Student accounts are usually free, and they are designed to help you create attainable financial goals.
Once you’ve settled on the right account for you, you’ll next need to likely enter the following information…
Step 6: List Beneficiaries on Your Account
Unfortunate situations might occur that will require that someone else must take control of your funds, such as a debilitating medical condition or even death. If this unfortunate situation happens to you, your funds will be placed in the hands of your beneficiary. You will need to list any beneficiaries when opening your account.
While it’s always important to list beneficiaries, there are some instances when your funds will be sent to another individual instead. This is often the case with joint accounts where one party is incapacitated but not the other. In this case, the still-active party often retains full control of the account.
If no beneficiary is listed on the account, the money will usually be made available to the spouse or partner of the individual listed on the account. However, the account holder may wish to add another beneficiary to the account. If you feel that you will need assistance maintaining your funds in the near future, you may wish to let beneficiaries know about their potential responsibilities in maintaining your savings account.
With this step complete, perhaps the single most important one awaits you…
Step 7: Fund Your Savings Account
Make sure you have money ready to put into your savings account. In order to get started, you will need to initiate a transfer of funds to your new online savings account. Many banks have an app that works with your smartphone to allow you to upload an image of a check, for example. Other times, you may just need to route money from your current institution to your new one. This action will require that you know the institution’s routing number as well as your current account’s number, too. If you have only cold hard cash, however, you will need to visit the bank in person to deposit money into your account.
When you put money into your online savings account, it will still be available to you in the case of emergency. Just know that checks might take a few days to clear, and bank transfers will also take time to be completed. It’s important to remain focused upon your financial goals throughout this process. Remember: your goal is to save (and earn a little via interest) on the money that you are placing into your online savings account. To that end, you should be making frequent deposits in order to accrue more interest.
Once you have these major steps complete, it’s time to move on to another important part of the online banking set-up…
Step 8: Set up Login Information
This step is often towards the end of the application process, although it may be the first step for certain institutions. It’s extremely important that you don’t rush through this step. After all, it’s what will allow you to access this account in the future; a misstep here could mean getting locked out of your account or opening you up to potential cyber theft.
As with other logins, you’ll need a username and password. The financial institution will likely assign a username to your account that will be based upon your first and last name or the email address used to open the account. Then, you will need to set up a password. Make sure this password is secure, as an easy-to-guess password leaves you vulnerable to hacking. A random combination of letters, numbers, and special characters is often harder for people to guess. Some places even have you set a security question or two. Make sure these questions have answers that only you would know.
Be sure to find a safe place to store this information for future use. Your ability to recall your login information is crucial to accessing your online savings account, after all.
Never give out this login information to any individual. Even if someone tells you that they are from your financial institution, do not send out your information. Any credible financial institution will not ask for sensitive information over text or email, for example. It’s your job to make sure that you protect your security by reporting any phishing (spam) to the proper channels.
Once your login information is established and secured, it’s time to test out your new account…
Step 9: Test Your Online Savings Account
Congratulations on taking the time to submit an application and creating credentials to access your online savings account. These actions will pay off in the long run as you have a nest egg to fall back on. Now that all is said and done, though, you may wish to test out your new online savings account. This way, you can ensure that everything was set up properly. No matter what bank you’re working with, it’s possible that something went wrong in the process to prevent you from accessing your funds.
The first test? Log in to your online savings account through a secure wireless network. Enter the username and password that you’ve chosen in the application process. If you have any issues accessing your account, you may need to contact the customer service team at your financial institution. You may even be able to reset your password and username through the online portal itself.
In addition to testing your credentials, you should try making a small transfer. Deposit money into your account from another account, or withdraw a small amount of money from the account. This will show you how long the online banking system takes to update new balances.
Step 10: Link Your Savings Account to Your Checking Account
For future transactions and overdraft protection, it’s important to link up your checking and savings accounts. Now, you will need information from your checking account in order to link it to your savings account. Specifically, you will need the account number and routing number from your checking account. This information is highly sensitive, so make sure you don’t share it with anyone else along the way.
Once you have these two numbers, locate a form or page on the financial institution’s website in order to link your savings and checking accounts. The form might be available on one of the drop-down menus that appear on the homepage of your bank’s site; it should be labeled in such a way that it clearly lets you know that the page is about linking accounts. This step may even be as simple as adding a checking section to your personal banking account. If you have issues knowing where to link your accounts, contact an institutional representative.