How to Open a Bank Account and What You Need

How to Open a Bank Account and What You Need

To open an account, you must select a bank and give that bank the required documentation, such as identification and proof of address. Usually, in order to be eligible, you must be 18 years old. The account may also require funding or a minimum balance to avoid fees.

Major Takeaways

  • A government-issued ID, your ID number, and your physical and mailing addresses are required to open an account.
  • Read the disclosures before choosing an account to find out about any account fees or minimum balance requirements.
  • What bank or account you use is up to you, based on the features you desire, whether they be high interest rates, low minimum balance requirements, no ATM fees, or something else.

What is Required to Open a Bank Account?

You must provide the bank or credit union with documentation when you open a new bank account so they can confirm your identity.

Have the following things prepared:

  • A document of identification issued by the government, such as a passport, driver’s license, or military identification.
  • Your unique identifier.
  • Authentication of your mailing and physical addresses.
  • A down payment (if necessary).

You might be permitted to use another form of ID if you lack a government-issued one. Find out what additional forms of identification your bank will accept by asking.

Your identification number could be your Social Security number, the number on your alien identification card, your ITIN (individual tax payer identification number), or another government-issued ID number, depending on the circumstances. Most likely, your Social Security number serves as your identification number if you are a citizen of the United States.

Regardless of whether you open an account in person or online, you will need to provide this information in some way.

Select a bank or credit union

Choose the best bank or credit union for your needs once you have all of your paperwork in order. Whether you’re shopping for an online checking account, a high-yield savings account, or something else, if you know what kind of account you want, you can find the best deals.

Financial institutions fall into one of three basic categories:

Banks, including community banks and large banks: These may be well-known names in your neighborhood or across the country. The majority of the essential services you require, such as checking and savings accounts, debit and credit cards, mortgages, personal loans, and more, ought to be available from them.

Credit unions: A credit union is a member-owned financial institution that offers a number of the same services and goods as banks do. Due to the fact that these institutions are not necessarily looking to maximize profits, joining one of them will frequently result in competitive rates. The fee schedules should be carefully reviewed because that isn’t always the case.

Online banks and credit unions: These businesses are entirely run online. You will manage the majority of service requests on your own, and there is no branch to visit (or pay for). A web-based bank can assist you in lowering your fees and obtaining higher interest rates on savings accounts if you have access to and are comfortable using a computer or mobile device-and performing basic banking transactions.

Having accounts with various banks may be a good idea. To keep your fees low and maintain the ability to visit an in-person bank if necessary, you might decide to open both an online and a brick-and-mortar bank account.

Deciding on an account

If you’re unsure of the type of account you want, think about your needs.

Checking accounts: These are typically used for receiving direct deposits and making payments.

Savings accounts: These accounts let you save money while earning interest on the funds that aren’t being used right away.

While still allowing you to access your money, money market accounts can occasionally pay slightly higher interest rates than savings accounts. With these accounts, you might also have the ability to debit and write checks.

Certificates of deposit (CDs): These investments can earn significantly more than savings accounts, but they entail locking up your money for a set amount of time.
A bank may provide numerous products, each with a unique name and level of service, under one of the aforementioned categories. These accounts may have various minimum balance requirements, charges, or interest rates.

Picking an option with a mix of features and costs that suit your needs and budget is a good general rule of thumb. For instance, if you believe you won’t keep much money in the account, you might want to open a bank account with a low initial deposit, low or no minimum balance requirements, and no fee requirements to avoid being forced to pay arbitrary fees.

In general, you should only bank at institutions that offer FDIC insurance (or NCUSIF protection if you use a credit union) to protect your funds.

Your financial background

To open a bank account, you don’t need to have perfect credit, but the bank may consider it when deciding whether to accept or reject your application. Your bank or credit union may use ChexSystems, a specialized consumer reporting agency that monitors checking and savings accounts, to assess the risk that a potential client might represent to the business where they are applying for an account. The credit reporting bureaus’ banking counterpart is called ChexSystems.

Although you don’t necessarily need good credit to open a bank account, you may want to review your credit report and obtain a copy of your ChexSystems report if you’re having trouble doing so.

Account Opening

After choosing a bank and an account type, you’ll need to give the bank your information and sign some paperwork.

You must consent to follow a set of rules and take ownership of your accounts’ activities. Before opening a bank account, be sure to read the disclosures. You should pay close attention to any fees and confirm how frequently you can make deposits and withdrawals.

A person over the age of 18 must open the account on your behalf if you are under the age of 18. You might still be able to use an online banking account and a debit card, and you can eventually open an account on your own.

(If necessary) Print, sign, and mail

Prior to the account being opened, you might need to print, sign, and mail a document to the bank if you’re opening a bank account online. To make the banking relationship legally binding, some banks use electronic disclosure and consent—everything can be done online.

Others still need a signed contract in order to open an account. Your account is inactive up until the bank receives the required paperwork.

Fill Up Your Account

You frequently need to make an initial deposit when opening a checking or savings account. You can do this after the account has been opened, but occasionally it is necessary as part of the account opening process. Your account can be funded in a number of ways:

  • Cash deposited should be available for use within one business day.
  • Deposit a check or money order: Since it’s a new account, it might take longer for the funds to become available after you make the deposit.
  • Set up direct deposit with your employer so that, if available, your income will be transferred to your new account instead of being physically deposited into your account.
  • You can make your initial deposit by electronically transferring funds from another bank account.

Get the Account Using

A brand-new bank account in your name should already exist if all the steps were followed. A few minutes to a few days should pass before it is ready for use. A debit card or ATM card for checking and savings accounts should arrive in the mail soon.

You might also be able to order or receive a checkbook. To get the most out of your account, you might be able to enroll in features that will aid in money management, such as:
You can pay your bills online and in an electronic format.
Checks can be remotely deposited using your bank’s mobile app, saving you the trouble of going to a branch or filling out deposit slips.
To receive text or email alerts when your account balance is about to expire or when significant withdrawals are made, sign up for these services.

FAQs, or Frequently Asked Questions

How can I open a bank account?

You must present identification when opening a new bank account so the bank can confirm your identity. Bring a form of government-issued identification, such as a passport, driver’s license, or military identification. Ask your bank what other forms of identification it will accept if you don’t have a government-issued ID. Your identification number, which could be your Social Security number, an alien identification number, or another ID number issued by the government, must be provided. Last but not least, you’ll require evidence of both your physical and mailing addresses, along with any necessary initial deposits.

To open a bank account, how much money is required?

The minimum opening account balance varies depending on the bank. An initial deposit of between $25 and $100 is typically required by banks. However, you can also find a few banks that will let you open an account with no deposit. Make sure to enquire at the bank about the minimum balance required to avoid fees as well as the amount of money you must deposit to open an account. Make sure the FDIC insures any bank where you deposit money.

How much time does it take to open a bank account?

Opening a new bank account only takes a few minutes to complete. Typically, it takes 15 minutes or less to apply online; however, it might take longer in person. Moreover, it might take a few days for the bank to examine your data and grant you access to your account so that you can start making payments.

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