It’s hard to live in the modern world without a bank account.
Everything from investment brokerage accounts to digital wallets to real estate investments require ways to store and send money electronically. Good luck retiring without any of those tools.
Which means if you don’t yet have a bank account, it’s high time to open one. Read on to learn how.
How to Open a Bank Account
It’s easier than ever to open a bank account in just a few minutes. Most of the time, you can do so from the comfort of your couch — without visiting a bank branch. Follow these simple steps to open your account with minimal fuss.
1. Choose a Bank
First, you need to decide where you actually want to open an account. Keep the following in mind as you choose the right bank for your needs.
Types of Banks
Your first thought might be to open an account with a big bank that has lots of physical branches, such as Wells Fargo or Bank of America. Big banks offer some perks, such as vast ATM networks, partnerships with investment banks, and partnerships with international banks. If you like the idea of in-person banking, consider a traditional bank.
If you like the traditional banking experience but don’t want to feel like just another number, explore local banks and credit unions. While they don’t have the same reach, these types of financial institutions may offer lower fees or interest rates on loans. If visiting branches in person is important to you, you can still do that — and you might get more personalized service at a smaller institution.
If you’d just as soon do all your banking from your living room, explore online banks. These relative newcomers have grown up considerably over the last decade. They typically offer more free banking services, lower interest rates on loans, and higher interest rates on savings accounts. They also offer free or low-cost ATM access through partnerships with huge ATM networks or reimbursements for ATM withdrawal fees outside their networks.
What to Look for in a Bank
You’re ready to decide what type of bank you want.
Start by deciding whether you really need access to nearby in-person bank branches. Then look at each bank’s ATM network or ATM fee reimbursement policy. Make sure you can conveniently pull cash from nearby ATMs with no fees.
If you travel to another country frequently, look for a bank that offers free ATM withdrawals in that country. Some banks do this through local partner banks or simply by offering a certain number of international ATM fee reimbursements each year.
Next, check out the bank’s online banking portal. You want to see how user-friendly it is and what banking tasks it allows you to do. For example, does it allow automated recurring transfers from your checking account to your savings account? Can you link accounts at other financial institutions?
Read some online reviews of each bank you consider to get a sense for how banking experts rate them. Be sure to check out our lists of the best free checking accounts and the best high-yield savings accounts.
Finally, don’t forget about FDIC insurance. All reputable U.S. banks are insured by the Federal Deposit Insurance Corporation (FDIC), but you should still double-check that your preferred institution is among them.
2. Choose a Bank Account Type
Everyone should have at least one checking account and at least one savings account. But that doesn’t mean you need to open both accounts at the same bank.
Some people like the convenience of having both accounts accessible in their online banking portal, of course. Others prefer to keep their savings accounts a little less accessible and visible. This reduces the temptation to raid savings for nonemergency expenses.
Checking Account or Savings Account?
You need a checking account for your day-to-day operating expenses and monthly cash flow. Money comes in every time you get a paycheck and goes out every time you pay a bill.
In most cases, you don’t earn interest on your checking account balance. That’s one of the reasons you shouldn’t keep a large balance in your checking account. Your savings belongs elsewhere so that it’s protected from impulsive spending and can earn you a return.
You need a savings account to set aside your emergency fund and goal-specific funds, such as a down payment for a house. Don’t touch your savings for any reason other than its intended purpose.
What to Look For When Comparing Accounts
I recommend only considering checking accounts with no monthly fee. The best checking accounts either have free overdraft protection or low overdraft fees.
Beware that many banks advertise “free checking” with an asterisk beside it. The fine print reveals that you have to maintain a minimum balance to avoid a monthly maintenance fee. Unless that minimum balance is so low that you’ll never run afoul of it, opt for truly free checking with no strings attached.
For savings accounts, the yield is the most important feature. You’ll see this advertised as APY, or annual percentage yield. This is the percentage of your balance that the bank pays you in interest each year.
3. Review What You’ll Need to Apply
The federal government heavily regulates banks. Banks must follow complex “Know Your Customer” laws to prevent money laundering and other misbehavior.
To open a bank account, you’ll need to provide proof of your identity, including at least one government-issued photo ID. Banks also ask for your date of birth, Social Security number, and proof of your address. That proof of address could include a utility bill in your name, the deed to your home, a property insurance policy, or other proof from a list they’ll provide you.
Note that if you want to open a joint account or an account for a minor, you’ll need to provide the other account holder’s identifying information in addition to your own.
And, of course, you need an opening deposit. That could be almost nothing, such as $1. Or it could be more significant, from $500 to $2,500 or more.
4. Visit a Branch or Apply Online
Most banks let you create new accounts online nowadays, even traditional brick-and-mortar banks. Often, the process takes just a few minutes. The website leads you through a series of steps, asking you to fill out information like your name, date of birth, and address, and upload needed documents.
If you’re opening an account with a traditional bank and prefer dealing face-to-face in a branch, you can do that too. Either way, have your photo ID, proof of address, and other necessary documents ready.
5. Fund Your Account
If you open an account in person, you can just hand over the opening deposit with cash, a money order, a check, or some other form of payment.
If you open an account online, it’s not as easy as passing an envelope full of cash or writing a personal check. You can fund the opening deposit by linking to another bank account of yours and transferring the money electronically. Brokerage accounts also work for this, or if you have a rechargeable debit card, you may be able to link the accounts to transfer money via ACH.
You can also set up direct deposit with your employer and use your next paycheck as your opening deposit.
If you don’t have any other accounts that let you transfer funds electronically, you’ll need to fund your opening deposit by mailing in a money order or check. Your new bank will provide instructions if you opt for this over an electronic funds transfer.
6. Sign Up for Account Features
Once you’ve created your new bank account, you can start setting up the features that you want to use.
For example, you might set up automated recurring transfers from your checking account to your savings account, scheduled for every payday. Or you might set up notification alerts to notify you if your balance drops below a certain amount.
Most banks today offer a bill pay service, allowing you to set up recurring automatic payments for your monthly bills. At the very least, you should be able to execute one-click manual payments for saved payees.
You can also turn off paper statements in most cases. This cuts down on your paper clutter and reduces waste and fuel usage from shipping.
Frequently Asked Questions (FAQs)
If you’re new to the world of banking, it can feel intimidating and overwhelming. You certainly aren’t alone if you still have questions.
How Much Money Do You Need to Open a Bank Account?
It varies by bank and the specific account. Some don’t require any minimum opening deposit. If they do, it’s a token amount, like $1. Others require a hefty opening deposit — hundreds or even thousands of dollars.
In still other cases, the bank doesn’t require an opening deposit but does charge a monthly maintenance fee if your account balance is below a certain amount. That adds to the total cost of your banking activities, so steer clear of these accounts if you’re not sure you can meet the minimum.
Can I Open a Bank Account With No Money?
Yes — at least with certain banks and certain accounts. Look for bank accounts that don’t require a minimum balance and don’t charge a monthly maintenance fee if your balance falls below a certain level.
What Do I Need to Open a Bank Account?
Plan on providing the following information to the bank:
- Full contact information, including your name, address, phone number, and email address
- Proof of address, such as a utility bill or insurance statement
- Your Social Security number
- At least one form of government-issued photo ID, such as a driver’s license or passport
- An opening deposit (if required)
How Long Does It Take to Open a Bank Account?
You can open an account in as little as a few minutes, assuming you have all the required information and documentation handy.
If you can link another account to transfer the opening deposit, that speeds up the process compared to mailing in a money order or paper check. Not all accounts require an opening deposit, but you can’t do much with your new bank account without any money in it.
As you explore bank options, you may prefer banks that offer other attractive account types. That could include high-yield certificate of deposit (CD) accounts, or money market accounts, or small business checking accounts. Or it could mean optimal travel rewards credit cards, low-APR credit cards, or cash-back credit cards.
Alternatively, you might want specific technical features in a mobile banking app, such as mobile deposit for checks.
Decide what features matter most to you, then start looking for accounts that fit the bill. In today’s market, you should have no trouble finding plenty of worthy options.