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Many banks and credit unions require a minimum initial deposit when you open a deposit account, such as a savings, checking or certificate of deposit (CD) account. A minimum deposit is the specific amount of money needed to open an account with a financial institution.
The minimum deposit shouldn't be confused with the minimum balance requirement, which is the ongoing account balance some banks require you to maintain to enjoy certain benefits or avoid fees.
Here's what you need to know about minimum deposits, how they differ from minimum monthly deposits and how to find bank accounts that don't require minimum deposits.
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What Is a Minimum Deposit?
A minimum deposit is the amount of money you must contribute to an account to activate it. Minimum deposit amounts can vary by financial institution and account type, and many banks don't require a minimum deposit at all.
Generally, accounts that require a larger initial deposit offer more services or benefits. For example, CDs with higher minimum deposit requirements typically provide higher yields or certain perks, such as the option to boost the account's interest rate during its term.
On the other hand, many financial institutions offer low or no minimum deposit requirements to encourage more people to open an account. These accounts may feature limited services or benefits, such as a checking account that doesn't earn interest.
Many types of accounts require minimum deposits, such as:
- Savings and checking accounts: Some financial institutions require a minimum deposit to open a savings account or checking account. Opening deposits for savings and checking accounts typically range from $25 to $100, according to the Consumer Financial Protection Bureau (CFPB).
- CDs: Most CDs require a minimum deposit of $500 to $2,500 or more to open an account, but some don't require any minimum payment. CDs typically offer higher yields than traditional savings accounts, but you could face early withdrawal penalties if you withdraw funds before the CD's term expires.
- High-yield savings accounts (HYSAs): High-yield savings accounts can potentially earn yields up to 10 times higher than a regular savings account. Most of the best HYSAs don't require a minimum balance to earn the advertised yield, but some financial institutions want an initial deposit up to $1,000 to receive the specified rate.
- Money market accounts (MMAs): MMAs are a type of savings account that usually provides higher interest rates than traditional savings accounts and may come with check-writing abilities. While many banks and credit unions do not require minimum deposits, others may ask for higher initial funds of around $100 to receive the advertised rate. Additionally, MMAs often maintain higher minimum balance requirements, typically around $2,500.
Minimum Monthly Deposit vs. Minimum Opening Deposit
We've discussed what a minimum deposit is, but when you open an account, you may come across another term: minimum monthly deposit. It's important to understand the difference between these two terms.
- Minimum deposit: As mentioned, a minimum deposit is the initial amount you must add into your new account to open it. This is a one-time deposit and the amount you must deposit depends on your bank and account type and could range from $25 to $2,500 or more.
- Minimum monthly deposit: The minimum monthly deposit, or minimum balance, is the amount you keep in your account to take advantage of specific benefits or avoid fees. Unlike the minimum deposit, the minimum balance is an ongoing threshold your account must maintain to earn specific benefits.
Before opening a new account, understand its terms and conditions, including the minimum initial deposit and the minimum balance requirements. That way, you'll know what to expect and how much to keep in your account. Generally, you can find this information on a bank's website or by contacting a representative over the phone, via email or in person at a branch office.
How to Find Bank Accounts With No Minimum Deposit
Of course, you shouldn't pay a minimum deposit if you don't have to. You can likely find an account that perfectly meets your needs without having to come up with an initial deposit or maintain a minimum balance. Here's how to find banking options without minimum deposit requirements:
- Research a bank's website. Most banks break down their account requirements, including minimum deposits, on their websites. You may find this information listed under the account details, frequently asked questions or terms and conditions.
- Speak with a bank representative. Consult with a bank representative via phone, email or in person at a physical branch location to get specific details about an account, such as their requirements and fees.
- Conduct an internet search. A quick search on the internet will likely turn up many options for no-fee bank accounts. Additionally, many websites compare the best accounts by account type and list key details such as account requirements and fees. For example, Experian compares the best high-yield savings accounts by detailing their annual percentage yields (APYs), monthly fees and the minimum deposits needed to earn the advertised APY.
Frequently Asked Questions
Many savings accounts, but not all, require a minimum initial deposit to activate. Of those accounts that require a deposit, the minimum amount generally ranges from $25 to $100.
Expect to make a minimum deposit between $500 and $2,500 to open a CD, although some CDs don't impose a minimum deposit requirement. Generally, CDs with higher minimum deposits offer higher APYs. Some CDs with higher minimum deposits also provide extra perks. For example, step-up or bump-up CDs may allow you to modify the interest rate before the CD's maturity date.
Like savings accounts, the average minimum deposit to open an account typically falls between $25 and $100, but many financial institutions don't require any deposit. Before opening an account, look on the bank's website or speak with a representative about minimum deposit and minimum balance requirements so you know what to expect.
The Bottom Line
In most cases, meeting minimum deposit requirements shouldn't be an issue, especially if you plan to save money. These minimums are generally manageable and act as a starting point to open your account. If you're opening an account with higher minimum initial deposits, such as some CD accounts, you may need to save until you have enough funds to open the account. Consider establishing a sinking fund to help you reach your goal.
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