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). Remember that these require a relatively higher initial deposit and have some minimum balance thresholds in place.
• Money market accounts
  These give flexibility in accessing one’s funds through check, electronic transfer, or debit card, but one may face withdrawal limitations.
• Specialty savings accounts
  These are designed for particular purposes. Kids or students can have their own account to inculcate the habit of saving early, or one may open a specialty savings account, especially for retirement. Usually, these accounts have almost no maintenance fees, but withdrawals or transactions may be limited.
• Time deposits
  These are also known as certificates of deposit, or CDs, which earn a fixed interest rate for the account holder. However, one needs to leave the money in the account for a predetermined period. It is ideal for those with dormant funds.

3. Not comparing options
After narrowing down which type of savings account is best suited for one’s needs, it’s also important to research different banks and their offerings. Minor variations in features like fees, interest rates, deposit and withdrawal frequency limits, accessibility, customer service, and additional benefits like mobile banking, reimbursements, reward programs, and more can have a long-term impact on one’s financial goals. For example, those who need to make multiple monthly deposits may benefit from a high-yielding account that forgoes monthly charges on transactions. Some banks allow unlimited ACH transfers and mobile check deposits, while others charge a convenience fee for accessing ATMs. Comparing these features and matching them with one’s needs can help avoid disappointments later on.

4. Opting for a low-interest rate
The standard savings account is the simplest and fastest to open and operate, which can tempt individuals to settle for it. But these accounts often have the lowest annual interest rates, as low as 0.5%, which may hamper one’s financial growth. This is especially concerning when the inflation rate outpaces the interest rate. In such cases, the purchasing power of the money in these accounts diminishes fast. Ideally, one can benefit from a savings account with a 4.5% interest rate.

5. Not reading the fine print
One needs to thoroughly evaluate the terms and conditions of a savings account before opening one. These terms often spell out the withdrawal limits and fees, which may vary from one type of account to another and from one bank to another. For example, the cost of a standard savings account may go up to $10 per month. However, some banks may offer free accounts but put a minimum balance requirement in place. On the other hand, many national banks may charge over $25 for premium savings accounts. So, read the fine print before committing to an account.

6. Not checking international transaction authorization
The ones expecting multiple international trips in the future should ensure they can access their funds abroad and that their bank provides ATM access and withdrawals in other currencies.

7. Not checking the insurance clause
The Federal Deposit Insurance Corporation (FDIC) mandates many banks to insure the account holder’s $250,000. Suppose the bank goes under; one will get back a maximum of $250,000 as per their account balance. But if a bank does not offer this insurance, it’s best not to open a savings account with them.