It is a given that many of us would like to learn more on how we can better our financial decisions and further increase our earnings or at least know how to handle our finances in an efficient and effective manner. Opening a bank account is a great way to jump start your financial goals and aspirations.
Generally speaking, most banks and credit unions follow a similar process like the one we listed below. The only thing left for you to do is to provide certain personal information and fund your account.
Here is a Step by Step Guide on How To Open A Bank Account. We have researched and compiled some information on how to open a bank account to help ours readers be more prepared when they are ready to apply for a bank account. Some of the tips gathered may be a benefit to you and are great to know if you are seriously considering banking.
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Type of Account
First off, find out if you want to open a checking account or a savings account. To sum it up, a checking account is a transactional account while a savings account is an interest-bearing account.
Depending on if you are interested in keep your funds all in one to be used for payments and transfers or if you want to keep the funds on deposit in order to earn interest, then you will have to take into consideration of the type of account you are trying to open.
Some other things to consider when opening a bank account is if you are opening an account with a cosigner and whether you are opening an account at a bank or credit union. Many accounts have special qualifications or requirements to open an account, so make sure you contact your financial institution to find out if what they have to offer is what you are looking for in a bank.
Choose a Bank or Credit Union
The first step in opening a bank account is choosing the right bank or credit union for you. Each financial institution will have certain offers and promotions that specialize in a certain type of account such as money market, savings, or checking accounts.
The best way to start looking for an establishment is to find the one that provides the best rates on the account that meets your immediate needs. For example, if you’re looking to save money, find the bank or credit union that provides the best rates on savings accounts. Another thing to keep in mind is when you compare institutions, be mindful of any fees that may come with them.
Three Basic Types of Banks
Once you decide what type of account you want to open, it’s now a matter of where you want to open it at. Here are the three financial institutions you have to choose from:
- Traditional banks (community and big): These are the established and well known brands of banks in your community, and they offer most, if not all, of the basic services you’re looking for. Local and regional banks tend to have a more friendly fee structure, but bigger banks can allow for fees to be waived.
- Credit Unions: A credit union is a customer-owned financial institution that provides many of the same services and products that banks provide. These establishments tend to have competitive rates because they aren’t trying to maximize profits.
- Online banks and credit unions: There are some banks out there that operate entirely online. Because there is no physical location, you will have to handle most service requests by yourself. If you’re comfortable using your mobile device or computer for everything, by all means, go for this type of establishment, but if you prefer the person-to-person interaction then check elsewhere. A perk of using an online bank or credit union is there higher interest rates on savings and free checking account services.
What You Need
There are some certain personal credentials you would need to bring into the bank with you if you are interested in opening a bank account.
You typically need to be 18 years old or older, although some exceptions may apply such as if you have a cosigner or opt for student checking, and you would need to bring in a form of identification, proof of residence, and an opening deposit.
- Identification: Opening a bank account requires two forms of ID. Usually a Social Security card and a driver’s license is sufficient but a state ID, passport, or birth certificate will work as well. A Social Security card is required for credit checking reasons.
- Social Security Number: In addition to the Social Security card you should bring with you, having your SSN memorized will make the whole sign up process even easier.
- Proof of Residence: You may present a utility bill with your name and address. As long as it is a bill or lease to prove that you are currently residing at that address.
- Opening Deposit: Opening deposits often range from $25 to $100 based on the type of account you are trying to open.
Once you have the required documents, you can begin the application process.
The Application Process
The bank opening process is fast and easy and it usually takes less than half an hour to complete. Once you submit the application, the bank will run a credit check that will review your banking history to determine the approval of the account.
Once approved, you will be required to sign a few documents and may begin making your deposits into the account. Most banks will give you a type of “care package” which will include all of their information and manuals and it will most likely include temporary checks until you are able to order the permanent ones.
A direct deposit form, a electronic payment transfer from the account of the payer to the recipient, may be included to be given to your employer if you plan to set one up. It is normal to have your ATM or debit card mailed to you a few days after you have successfully opened the account.
Online Account Opening
If you plan to open an account online, there are a variety of options for you to choose from as most national banks can be opened electronically. There are also many other online banks that do not have a physical location.
You typically just need to fill out the online form and submit along with your info and eSignature. You will be asked to verify your email address and phone number for security measures. You have a few options to fund your new account.
The easiest way may be to send money to the account through an ACH transfer, which requires a routing number and account number from an external bank linked with the new account. Sending checks in the mail is another option, but will require some time for the funds to be successfully transferred. But once your debit card arrives, you can can deposit cash into an ATM.
Why Should You Open a Bank Account?
Although opening a bank account is not mandatory, there are a few reasons why you should opt for opening one for the sake of managing your finances. For whatever reason that makes you hesitate in opening an account, there are a few benefits a bank account has to offer in order to better your experience.
Convenience: Let’s face it. You wont have the same type of convenience in traditional money handling over banking. Having all of your finances kept is one that only you have access to is both effortless and secure. It is a given that most of us has had to make large payments at one point or another. Imagine not having an account while making those payments. Not only is it a pain, but it is also time-consuming. Banks offer many bill-pay options or automatic payments they may make your life easier.
Security: Since your money is in one place at the financial institution, you can be rest assured that all of your finances are safe and secure in one place. Also, carrying cash raises the risk of it being lost or stolen. And in the event that something does happen to your bank, they are federally insured by the Federal Deposit Insurance Corporation (FDIC) and will insure up to $250,000 of your deposits. What if your debit/credit card is lost or stolen? You can easily cancel those cards by contacting your financial institution. Just let them know about the situation and they will handle the rest for you.
Saving: The ultimate goal of banking is making the best out of your money saving habits. Not having a bank account may consume more money than you think, especially if you rely on cash-check services or money orders. You are susceptible to using not-banking resources and many of them requires a small fee to process. Banks have many products and services that will aid you in your financial goals as well as offering many loan options at reasonable rates. You are able to fully manage and access your account finances 24/7 with your banking resources.
If you are interested and would like to find out how to open a bank account at certain banks, check out our reviews below:
- What Do You Need to Open a Chase Bank Account?
- How Do I Open a Huntington Bank Account?
- How Do I Open a TD Bank Account?
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Bottom Line
Opening a bank account comes down to what you really need from a financial institution. The actual bank opening process is simpler and easier than you think, so make sure to find the one that best fits your needs.
Hope our step by step guide & tips will be useful and help you have a better understanding on how to open a bank account. If you are looking for tips on taking control of your newly opened account, here are some Best Ways to Manage Your Checking Account!
Or if you’re interested in all of the ways to save those few dollars on bank fees, check out our tips on avoiding Bank Overdraft Protection & Fees. There are many great banks out there, so find the one the best suits you! Be sure to check out our expansive list of the Best Bank Bonuses to find out about any bank promotions near you!
I’ve been wanting to open a bank account, but I barely know its process. Interestingly, checking account is a transactional account whilst savings account on the other hand is an interest-bearing account. I should probably start looking for a bank that can help me with my finances.