How to open a bank account
Opening a bank account is as easy as filling out an application, providing your identification and putting some money into the account. You just need to choose a bank and open the right type of account for your needs.
What you need to open a bank account
When you open a bank account, the bank will ask you to fill out an application. Whether you are applying for an account online or in-person, you’ll need to have:
- Identification: The bank will want to verify that you are who you say you are before it opens an account for you. Expect to provide a government-issued photo ID, such as a driver’s license or a passport.
- Social Security number: If you don’t have a Social Security number, you can ask the Internal Revenue Service to provide you with a taxpayer identification number, or TIN.
- Deposit money: How much money you will need to open the account depends on the bank and the type of account you’re opening. But you’ll generally need to make an initial deposit.
Choose a bank
One of the first decisions to make is whether you want to go with a bank or a credit union. At first glance, the two institutions seem pretty much alike. But there’s a big difference in how they are run.
Banks are privately owned, for-profit businesses, whereas credit unions are not-for-profit institutions owned by their members, called shareholders. Credit unions have criteria for membership that is often tied to where members work or affiliation with certain organizations. Banks tend to charge higher fees and pay less interest than credit unions because they are in the business of making money.
Another key consideration in choosing a bank is whether you want branch banking, online banking or a combination of the two. To help decide, ask institutions about their fees. Are there monthly account fees? How much are overdraft penalties? What’s the charge for using another bank’s ATM? Ask to see the fee schedule for a complete list of charges.
Finally, make sure that whatever bank or credit union you choose is insured by the Federal Deposit Insurance Corp. or the National Credit Union Share Insurance Fund operated by the National Credit Union Administration. These agencies insure up to $250,000 per depositor.
Select the bank account you want
The next part of opening a bank account is deciding which type of account to open. For daily transactions, you’ll want a checking account. Checking accounts usually don’t earn interest — although some do — and are designed for routine tasks like paying bills and depositing paychecks. Most checking accounts come with a debit card, which is used to make purchases or to withdraw money from an ATM.
If you need a safe place to stash money for emergencies and long-term goals, open a savings account. Savings accounts are interest-bearing, so it pays to shop for a savings account with a high yield. It’s best to have both a checking and savings account.
Visit a bank website or branch
Once you’ve done your homework and chosen a bank, you can open your account by going inside a nearby branch during business hours or visiting the bank’s website. Have your ID, personal information and opening deposit money at hand.
If you choose to open an account at an online-only bank, it’s best to do it during hours when bank customer service representatives are available, in case you run into a problem or have a question. You may have to mail the bank a money order, cashier’s check or make an electronic transfer if an opening deposit is required.
Minors under age 18 generally cannot open a bank account without an adult. In the case of joint accounts, the personal information, identification and signatures of all account holders will be required.
Having a bank account makes life easier. Everyday transactions are simpler and less expensive than buying money orders or using other means to access cash.
Most banks and credit unions explain on their websites how to open an account and what information is needed. Requirements for opening a bank account are usually easy to meet. And using a bank account to deposit money, save money and make payments is safer than dealing with cash.
Featured image by Boston Globe of Getty Images.