7 mistakes to avoid while opening a savings account
A savings account is a prudent financial decision, and opening one has become as easy as ever. With efficient mobile apps and access to the Internet, one can open a savings account within minutes. But it still requires certain considerations, like knowing the minimum balance amount. Here are some mistakes one should avoid to not only ease the account opening process but also truly benefit from it in the long run:
1. Not keeping all documents ready
For a savings account, one must submit multiple documents and fill out the application form. This can be done either online or in the bank branch. Either way, one must prepare all these documents to avoid hassles or delays. If the institution cannot verify one’s identity properly, it may also lead to application rejection. These documents include government-issued IDs, which include passports, driver’s licenses, and others, and details like social security numbers, dates of birth, mailing and email addresses, and contact numbers.
Similarly, savings accounts can be single or joint, with slightly different opening processes. A single entity can easily open a savings account with the documents above. But for a joint account, the partner must be the co-signer, who must provide their details.
2. Not knowing the types of accounts and their requirements
There are several types of savings accounts, each with its own set of requirements and rules. Not knowing which type of account suits one’s financial needs can lead to unexpected fees, withdrawal restrictions, and other issues that may hinder long-term planning. Here are the different types of savings accounts:
- Standard savings accounts
This is common in all credit unions and financial institutions and offers the lowest interest rate among all. - High-yield savings accounts
They are most common in online banks or credit unions and can be ideal for those who want to maximize their interest earnings, which can go up to 5.50% APY (Annual Percentage Yield).