If you’re looking to open a savings account, you may have come across the term “minimum deposit.” What does this mean? How much should you expect to pay when setting up an account with a bank? Is there any way around it? Here’s how much do you need to open a bank account.
Different Banks Have Different Minimums
Most banks have a minimum deposit requirement, which is the lowest amount you can deposit into your bank account. The minimum is typically $1,000 or more. Some banks offer no-minimum savings accounts, while others may require a larger amount as a deposit.
Some online banks (and even some brick-and-mortar institutions) offer lower minimums to encourage you to open an account with them and help them attract new customers. For example, Ally Bank’s savings account has no minimum balance requirement.
Because different banks vary in their requirements, it’s important to look for the minimum on any account you’re considering opening before you apply for one and make sure it’s within your budget.
Minimum Deposits Vary Based on Account Type
The minimum deposit for a savings account will vary depending on your open account type. Some banks may offer higher or lower minimum deposits, while others may waive it altogether.
For example, if you open an interest-bearing savings account at Bank A with $5,000 in funds, the bank may deduct a portion of your earnings to make up for its lost revenue from not having the full balance to pay out interest on. Meanwhile, another bank might offer free checking accounts with no minimum deposit requirements and earn more money on each account holder’s savings.
Minimum Deposits Can Change Over Time
The minimum deposit requirement for a savings account can differ from bank to bank. When you open your savings account, the bank will likely ask for a certain amount of money as collateral in case something goes wrong with your account. However, as time goes on and you choose to stay with that particular bank, they may raise or lower their minimum deposit requirements based on how well they think they know you.
Some banks may even increase their minimum deposits to encourage new customers; this is especially common during sign-up periods when banks are trying everything they can think of to attract new business. As per experts by SoFi, “Understanding minimum deposit and minimum balance requirements can help you decide which checking and savings option to open and where.”
You May Be Able to Make a Small Deposit and Increase It Later
You can open an account with a small deposit, then make additional deposits later. If you want to avoid keeping your money in that bank, some will allow you to close the account if you don’t meet the minimum.
Some banks require at least $1 to open a savings account, but others may let you start with just $5 or even nothing, but don’t count on this option.
As you can see, a number of different factors go into determining the minimum deposit required for a savings account. First, even if there is an initial minimum deposit, it may be possible to increase this over time. With so much variation in terms of what different banks require and how long they keep these deposits in place before allowing customers to withdraw funds again, it’s important to do your research before setting up an account with any financial institution.