When it comes to managing your financial life, among the most important hubs are your bank accounts, but sometimes opening one can involve a minimum deposit. These accounts allow you to deposit funds, pay bills, transfer money, and save for everything from an emergency fund to the down payment on a house. Many financial entities may require a minimum deposit—an initial amount of money—in order to get started.
Fortunately, there are banks, credit unions, and other financial institutions that don’t require a minimum opening deposit so you can stash and spend your money even if you’re low on cash. Others may require one, sometimes in exchange for additional premium services.
It’s important to understand what a minimum deposit is, how it works, and how to open a bank account to get the most out of your money. We’ll explore those topics here.
What Is a Minimum Deposit?
A minimum deposit is the amount of money you need to open an account with a financial institution. It can also refer to the minimum balance you must maintain in order to receive certain perks or avoid fees.
Whether you’re starting a new checking or savings account, you’ll probably notice that some financial institutions may require a minimum opening deposit. But banks are competing for your business, so many financial institutions will waive minimum deposit requirements in order to entice first-time customers. Accounts that ask for a higher opening deposit tend to provide extra services.
How Do Minimum Deposits Work?
If you’re wondering why minimum deposits exist, let’s explain how they work. Some financial institutions need minimum deposits and balances to help pay for overhead expenses, such as administrative fees or direct deposit services. Having minimum deposits and balances helps banks and credit unions ensure that they are taking in enough money to lend to other customers. They also stand to profit from fees if account requirements aren’t met.
You might consider a minimum opening deposit as an entry fee into the world of checking and savings. Maintaining a required minimum amount allows you to stay in game, avoid fees, and keep the benefits outlined in your account agreement.
You may wonder if the opposite scenario applies: Is there a maximum limit to an initial opening deposit? That’s not usually the case. In fact, the bigger your opening deposit, the more benefits you may get. You may qualify for a better annual percentage yield (APY) when you deposit and maintain a higher amount of money in your account.
Still, it’s worth noting that you may be able to get perks even without a minimum opening deposit. Even with zero down or $25, banks and credit unions may offer a network of fee-free ATMs, incentives for using direct deposit, no minimum balance fees, and overdraft coverage.
Recommended: How to Set Up a Direct Deposit
Real World Example of a Minimum Deposit
Let’s say you want to open your first-ever checking or savings account. To do so, a bank may ask you for a minimum deposit. This could cost anywhere from $25 to $100 to open a standard checking account. Let’s say it’s $100 to open the account, and there is a minimum monthly balance of $100 as well in order to avoid fees. You would open the account with $100 in cash or via a transfer or check. Then, you would have to be sure that, as you are paying bills, you don’t dip below that $100 mark if you want to dodge account charges. So you would either need to meticulously balance your checkbook or use online alerts to warn you about when your funds were sliding down close to $100.
While $100 may be a common enough number for standard bank accounts, on the higher end, some premium accounts require significantly higher minimum deposits. There are investment accounts that require five-figure opening deposits. But these accounts typically include benefits such as oversight from a financial advisor who can help with estate and retirement planning.
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Types of Minimum Balance Requirements
When researching checking and savings accounts, keep in mind that there are typically two types of minimum balance requirements. Let’s clarify those terms, since they can sometimes be used interchangeably and cause confusion. They are:
Minimum Opening Deposits
When applying for a new checking or savings account, many credit unions and banks will ask you for an opening deposit. To pay this, you can use a check or money order, a debit card, or transfer money from an outside banking institution or an account at the same bank. Some financial entities require no minimum opening deposits at all.
Minimum Monthly Deposits
Some banks and credit unions may waive service fees and award higher interest rates if you make a minimum monthly deposit, say $500 or more, through qualifying direct deposits into your account. The amount required differs among financial institutions and types of accounts.
Be aware that some accounts might charge a fee if you slip below a minimum monthly balance. If you sign up for one of these accounts and want to avoid those charges, you need to take note of when your funds will be available. If you do opt for one of these accounts, you can often set up alerts on your bank’s app to let you know when your funds are slipping below a certain threshold.
Opening a New Account
Starting a new checking or savings account isn’t rocket science. Banks and other financial entities want to make the process as simple as possible in order to attract new customers. Nowadays, you don’t have to physically go into a bank to open a new account. With online banking services available, sometimes all it takes is a few clicks to get your account up and running.
Besides the minimum deposit requirement, there are a few steps to take to prepare for opening a new account.
Choose the Right Account
There are different kinds of checking and savings accounts. Which one you pick depends on your goals, lifestyle, and the perks you want out of the account. Consider these options before making your choice:
• Checking accounts. This is the place to store your money for everyday spending. You’ll be able to access it via a debit card, mobile banking services, and checks. Typically, these accounts offer no or very low interest, but high-yield checking accounts can give you a better rate. You’re most likely to find more competitive rates at online banks vs bricks and mortar ones.
• Savings accounts. If you are looking for a place to store your cash and make it grow, a savings account with a competitive interest rate can be a solid choice. With a high-yield savings account, you could potentially earn up to ten times more than the interest on a standard savings or checking account.
Some banks and financial services offer the best of both worlds — linked checking and savings accounts which can give you added convenience and other benefits.
When choosing any kind of account, be mindful about convenient perks and pesky fees. Here are some things to consider as you evaluate how accounts stack up and which one is right for you:
• The minimum deposit required
• Monthly service fees
• Overdraft fees
• Out-of-network ATM fees (Tip: Choose a bank with ATMs close to your home and places you frequently go)
• Online banking services, including a mobile app for check deposits, online bill payments, and direct deposit features
• The annual percentage yield (APY)
• Cash-back debit card services
To open a new checking, savings, or even other investment accounts, most financial institutions require at least two forms of government-issued IDs, including:
• A valid passport, driver’s license, or other government-issued photo IDs
• Social security card or individual taxpayer identification number
• Birth certificate
• Utility bill with your current address
• Student accounts may require a student ID or school acceptance letter as proof of enrollment
Make sure you meet the bank or credit union’s age and eligibility requirements. You usually need to be at least 18 years old to open a traditional checking or savings account. If you are a student or under 18, a parent may have to be involved in the process. Check the guidelines before you begin.
Fill Out the Application
Once you’ve found the right account and gathered the required documents, you are ready to fill out the application. This can be done in-person at a bank or credit union, or online from the comfort of your home.
The application form is likely to be straightforward. You’ll provide your basic personal and contact information, indicate what type of account you want, and upload or provide proof of identification. If you open an account online, this can all be done in minutes.
Recommended: How to Open a New Bank Account Online
Deposit the Minimum
After you’ve entered all your information on the new account application, the final step is to make the minimum opening deposit. If no minimum deposit is required, you can fund your new account with as little or as much money as you wish. If you do need to make a deposit, this can be done via cash or a check if applying in person. Otherwise, you can link your new account to an existing one and transfer in some funds. That’s it; you’re done! You’ll be all set with your new account.
A required minimum deposit is only one factor to consider when choosing a new checking, savings, or other type of account. And not every financial institution requires one; in some cases, you can get started with no money at all. However, besides a minimum deposit, there are other things to consider — the type of account, fees, annual percentage yields (APYs), and types of banking services offered. In the end, choose the one that provides the most functionality for your lifestyle and growth for your money.
While you’re shopping for an account, take a look at what SoFi offers. When you open our linked Checking and Savings with direct deposit, there’s no minimum deposit and no minimum monthly balance or other account fees. You’ll earn a competitive APY that outpaces the national average for checking accounts by a longshot!
Is there a minimum amount you can deposit in a bank?
Some banks and credit unions may require a minimum deposit of $25 to $100 in order to open a checking or savings account. Beyond that, there’s no minimum amount necessary to deposit per week or month, but some accounts may require a daily minimum requirement to avoid fees or closing the account.
What is the minimum requirement for a savings account?
Some basic savings accounts may require a minimum deposit between $25 to $100. They may also require you to maintain a minimum daily or monthly balance — between $300 to $500 . But some savings accounts have no minimum deposit or minimum balance requirements. It can pay to shop around.
Which banks don’t require a minimum balance?
Financial institutions that don’t require a minimum balance to start a checking account as of press time include: Capital One 360 Free Checking, Ally Interest Checking, Alliant Credit Union High-Rate Checking, and SoFi Checking and Savings.
Photo credit: iStock/pinstock
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 3.25% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 2.50% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 11/3/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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