How to Open a High-Yield Savings Account

1. Compare High-Yield Savings Accounts

You can find high-yield savings accounts at traditional banks, online-only banks or credit unions. When comparing different financial institutions and accounts, consider the following features:

Interest Rate

APY reflects the annual return on your savings, taking into account compound interest. High-yield savings accounts from online-only banks tend to offer the highest APYs.

Opening Deposit Requirements

Many high-yield savings accounts can be opened with no deposit; others require a deposit of $25 to $100 or higher to open the account.

Fees

Most high-yield savings accounts don't charge fees, but some do. Because bank fees can eat into your interest earnings, check for the following fees and make sure the account's features outweigh any potential costs:

• Monthly maintenance fees: These may be deducted from your balance.
• Minimum balance requirements: If your balance dips below the minimum required, you might be charged a fee or have your APY reduced.
• Overdraft fees: A balance below zero could result in an overdraft fee.
• Inactivity fees: Banks may charge fees if six months pass without you making any deposits or withdrawals.
• Returned item fees: Trying to cash a check that doesn't clear could result in a fee.
• ATM fees: Using an ATM that isn't in your bank's network could mean you're charged this fee.
• Excessive withdrawal fees: Some banks limit savings accounts to six free withdrawals per month.

Insurance

Look for a bank that is insured by the Federal Deposit Insurance Corp. (FDIC) or a credit union that is insured by the National Credit Union Association (NCUA). FDIC- and NCUA-insured financial institutions guarantee your account for up to $250,000 per account owner and account type.

Online Banking

See if the bank or credit union's online banking features suit your needs. For example, a mobile banking app gives you the flexibility to manage your account on the go. Some banking apps also include budgeting tools or the ability to monitor your credit score.

Checking Account

If you may need to quickly transfer funds from your savings account to a checking account, make sure the financial institution offers checking accounts. Otherwise, it could take one to five days to transfer money to a checking account at a different bank or credit union.

2. Gather Your Documents

Once you've selected the high-yield savings account you want, check the bank or credit union's website to see what documents are required to open an account. Whether you're applying in person or online, you'll typically need:

• Government-issued photo identification such as a driver's license, state ID card, military ID or passport
• A second type of identification, such as your birth certificate, Social Security number or Individual Taxpayer Identification Number (ITIN), or a bill that has your name on it
• Contact information, including your name, address, phone number and email address

3. Apply for the Account

Even traditional brick-and-mortar banks usually allow you to fill out an application for a savings account online. You can also make an appointment to visit the bank in person and complete an application. Have the necessary documents ready before you fill out the application.

Banks don't check your credit score or credit report when you apply for a savings account, so you don't need a credit history to open a bank account. However, banks will review your report from ChexSystems, a bank reporting agency that collects information about your previous bank accounts. If your ChexSystems report reveals a history of nonsufficient funds charges, overdrafts or unpaid bank fees, your application may be denied.

Depending on the bank or credit union, you may get an instant decision on your application and be able to use the account right away, or it may take a few days.

4. Make the Opening Deposit

You can make an initial deposit using cash if you're visiting a bank or credit union in person. You can also make the deposit by transferring money from an account at another financial institution. Have your account numbers and routing numbers ready; be sure there's enough money in the account from which you're making the transfer.

5. Set Up the Online Features of Your Account

Once your high-yield savings account is open, you can:

• Choose how to receive statements. You can save paper by opting for e-statements or choose to get statements by mail if you prefer.
• Set up account alerts. Using your bank's website or mobile app to set up account alerts helps you keep tabs on your savings progress and watch for potential fraud. You can generally choose to get email, text or push notifications for a wide range of situations—for example, when your account balance drops below a certain amount, when a deposit is made or when a transfer or ATM transaction occurs.
• Link your account. Connect your high-yield savings account to a checking account so that you can easily transfer money back and forth.
• Set up automatic deposits. Simplify savings by scheduling automatic transfers from your linked checking account to your high-yield savings account. Your employer may also offer the option to have part of your paycheck directly deposited into a savings account.
• Choose account beneficiaries. You can list a beneficiary who will inherit the account if you die.

The Bottom Line

A savings account doesn't involve debt payments, so account activity isn't reported to credit bureaus. But while it doesn't directly affect your credit score, a savings account can indirectly benefit your credit by providing a financial cushion that helps ensure you can pay your debts. For example, mortgage lenders typically review your liquid assets, including checking and savings accounts, to see if you have enough savings for at least two months' worth of mortgage payments.

Contributing to a high-yield savings account is one way to boost your financial health. Another is to keep an eye on your credit history and credit score. Consider signing up for free credit monitoring from Experian to get notified of key changes in your credit report that could signal fraud.