Opening a bank account can seem intimidating given the myriad of options out there. Fortunately, most banks and credit unions follow a simple process similar to the one outlined below. To Open a bank account is just a matter of choosing a bank, providing certain details, and financing your account. Once you are done with the paperwork, you can start using your account and save time and money.
Choose a bank or credit union
You may already know where you want to bank, even if you don’t know how to open an account there. If not, compare prices. Start by finding the one that best suits your immediate needs (a checking account or a savings account, for example). When comparing institutions, consider account usage restrictions and fees that may affect your savings.
There are three basic categories of financial institutions:
- Banks, including community banks and large banks – These may be well-known brands in your local community (or across the country). They offer most of the basic services you need. Local and regional banks tend to have friendlier fee structures, but fees at large banks may not apply.
- Credit Unions – A credit union is a customer-owned financial institution, it provides many of the same services and products that banks provide. If you join one of these non-profit institutions, you will often enjoy competitive rates because they are not necessarily trying to maximize profits. But that’s not always the case, so check the rate schedules carefully.
- Online Banks and Credit Unions – These institutions operate completely online. There is no branch to visit (or pay for) and you will handle most service requests yourself. If you’re comfortable with your computer or mobile device and doing basic banking, an online bank can help you lower your fees, get higher interest rates on savings accounts, and even get a free checking account.
Visit the bank branch or website
The easiest way of opening an account is to visit the institution’s website. Search for the bank online or visit the website listed in the bank’s marketing materials (be careful when typing in the web address – there may be imposter sites with similar names).
The advantage of opening accounts online is that you can do it anytime and from anywhere. But if you’re only comfortable opening accounts in person, stop by the branch during business hours. Before leaving home, have the following items ready:
- Your government-issued ID for Example a driver’s license, passport, or military ID.
- Your social security number
- Your physical and postal address
- An initial deposit (if required)
Choose the product you want
Once you establish yourself at the bank where you want to open an account, you will generally have a variety of account types and services to choose from, including:
- Checking accounts: use them to make payments and receive direct deposits.
- Savings accounts – These accounts allow earning interest.
- Money Market Accounts – These products sometimes earn slightly more interest than savings accounts.
- Certificates of Deposit (CDs) – These products can earn you much more than savings accounts, but they require you to lock your funds for a specified period.
- Loans: You can get one of several types of loans (for cars, homes, personal loans, for example).
Within one of the above categories, a bank can offer several products, each with a different name and level of service. Premium accounts that come with more features have correspondingly higher fees (such as monthly service fees, ATM fees, and overdraft fees) and higher thresholds to avoid the service fee.
Choose the option that has a combination of features and rates to suit your needs and budget. For example, if you are keeping a low account balance, you may want to open a bank account with low or no fees.
When viewing products from an online bank, you may need to break down the product that is right for you. For example, you may need to click “Open an Account” and then click “Checking Account” and examine the free checking account options. If you open your accounts in person, talk to a banker to find the best account for your needs. Of course, you’ll only want to open a bank account where your money is protected by FDIC insurance.
Provide your information
When opening a new bank account, you will need to provide confidential information to the bank. To protect themselves and comply with regulations like the Patriot Act, banks cannot open an account without verifying your identity.
You’ll need to provide simple details like your name, date of birth, and mailing address, as well as identification numbers (in the United States, this will most likely be your Social Security Number). You will also be required to present valid government identification (such as a driver’s license or passport).
If you are opening a bank account online, type this information in a text box. Be prepared to give your identification to the banker, who will likely photocopy it, if you set up your accounts personly.
Your financial history
Many banks check your credit to see if you have had trouble paying loans in the past. These credit checks are usually “soft” pulls that don’t hurt your credit, but it’s best to ask if you’re concerned. You don’t necessarily need good credit to get a bank account, but having bad credit can sometimes lead to rejections.
Consent to Terms
You will have to agree to abide by certain rules and accept responsibility for certain activities on your accounts. When you open a bank account, you establish a relationship based on one important issue: your money. Therefore, you have to know what you are getting into. If you open bank accounts online, you will complete this step by clicking the “I agree” button (or similar) and moving to the next step.
If you are under 18, you will need someone over 18 to open the account with you. You may still be able to use an online banking and debit card, and you can eventually get your own account. But banks need at least one adult on an account to get started.
If you are opening a joint account of any kind, you will need the personal information of all the account holders and the signature of each of them. It is better to gather everyone in one place to complete the application.
Although disclosures have improved over time, there are many important details buried in the fine print when opening a bank account. In particular, you will want to know about the fees applicable to your account and when your funds will be available for withdrawal.
In addition to banking agreements, federal law dictates your rights and responsibilities as an account holder. For example, if someone fraudulently withdraws money from your account, you may be protected against loss. However, you may need to report the recall quickly for complete protection.
Print, sign, and mail (if necessary)
If you are opening a bank account online, you may need to print, sign, and send a document to the bank before opening the account. Some banks use electronic disclosure and consent to make the banking relationship legally binding; you can do everything online. Others still require a signed document to open an account. Until the documents are received, your account is not active.
Fund your account
If you are opening a checking or savings account, you will often need to make an initial deposit into the account. Sometimes this is necessary as part of the opening process, and other times, it can be done after the account is up and running. There are several ways to fund your account:
- Cash Deposit: Must be available to spend with your debit card the next day.
- Deposit a check or money order – Funds must be available within a few business days after making the deposit.
- Set up direct deposit with your employer – Instead of receiving a paycheck, your earnings will be sent directly to your new account.
- Transfer funds electronically – Transfer money from an external bank account to make your initial deposit.
Start using the account
If you followed all the steps, you should have a new bank account in your name. It should be ready to use in a few minutes to a few days. Keep an eye out for a debit card or ATM card in the mail for checking and savings accounts. You can also get a checkbook to write checks. To get the most out of your account, sign up for account features (usually free) to help you manage your money:
- Online Bill Pay – This feature allows paying bills electronically.
- Remote check deposit: Your bank’s mobile app can allow you to deposit checks remotely so you don’t have to make trips to a branch or fill out deposit slips.
- Alerts: Sign up for email or text message alerts to know when your account balance is running low (or when large withdrawals occur).