So you are looking to open a bank account. That is great! You are probably wondering how you can open one. Below is a run down of how you can open a bank account that will best suit your needs.
1. Bank or Credit Union?
- Determine if a bank or credit union would be the best option for you and your unique situation.
- Bank: This can be either a brick and mortar bank or strictly online financial institution that provides financial services and products.
- Credit union: This is a customer owned financial institution. It provides many of the same services as a bank does but may be more limited. May have more competitive rates. There are credit unions that are restricted based on occupation such as teachers credit unions or military credit unions.
- When researching, determine what the bank usage fees are and if there are any restrictions for your account(s). Depending on the bank, they may have certain requirements that you would need to meet so that you don't have to pay the bank fees. You should be able to find this information either online or you can ask when you go into the back to start the application process.
- Banks update their fees yearly as well as their requirements.
2. Start the application process.
- Either visit your closest bank that you have decided to use or go onto their website.
- You will be able to open an account either way. You will need to provide sensitive information. Make sure to bring a government issued identification, your social security number, and evidence of your physical mailing address. You will be required to provide an initial deposit as well depending on the institution that you choose to apply to.
- You will need to provide information that can verify your identity. Make sure that your government issued identification, social security card and mailing address correlate and are easy for the financial institution to trace. If you do not have one of these identifications, ask the institution if there are other ways of verifying your identity.
3. Pick your products.
- Depending on the financial institution will determine what products and services they offer. Most institutions will provide access to a checking account, savings account, money market accounts, certificates of deposit and loans.
- Checking account: the account that allows for checks to be drawn from it and allows for a debit card to be used.
- Savings account: account that earns interest. The average interest rate as of November 2021 is 0.06 percent.
- Money Market Accounts: similar to a savings account but usually has a higher interest rate and some allow you to use a debit card and limited checkwriting. Some institutions will offer higher interest rates the more you put in it.
- Certificates of Deposit: is an account that earns interest on a lump sum deposit that can not be withdrawn from for a predetermined set period of time.
- Loans: borrowed money that is expected to be paid back over a period of time with interest.
- Some institutions will provide other products and services such as credit cards, insurance, foreign currency exchange, consultancy, cashiers checks, money orders, wire transfers, safe deposit boxes, retirement planning, wealth management, portfolio management, business banking as well as other products and services.
4. Your financial history will be reviewed.
- The bank will check your financial history. Even though it does not need to be perfect, it will be a part of the deciding factors on whether or not you will be approved or denied. Banks will usually use ChexSystems to see what the applicant's potential risk factor is to the institution. With this system, they will be able to see if you have any bad debts with any other financial institutions. If they find anything questionable on the ChexSystem report, you can ask for a copy. Once you fix those issues, you can proceed with the application process.
- If you are applying for a loan, they will have to run your credit. These are usually soft checks so they should not negatively affect your credit score, but make sure to confirm this before they pull your credit.
5. Provide consent to terms.
- You will need to review and agree to the terms of consent for the institution. By agreeing you will have to abide by the institution's rules and will be held responsible for certain bank account actions.
- If you are under the age of 18, you will not be able to provide consent. You will need someone over the age of 18 to open the account for you.
- If you have a joint account, you and the other individual or other individuals that will be a joint account holder will need to both provide consent and agree to the terms.
Benefits of a Bank Account
- A bank account is safer than if you leave your money in your drawer or in your mattress. The standard amount that each depositor is insured up to $250,000 for each account ownership. That means that you are protected from bank failure or theft of up to $250,000.
- Banks offer cheaper services to their depositors. You can deposit a check for free. You can wire money for usually a flat fee as well as other services that banks offer for free or at a lower price.
- Bank accounts offer you access to credit such as getting a loan for a car, home or business loans.
- It provides you the opportunity to earn interest on your money. Even though it may be a small percentage, you are earning more on your money than if you just had cash stashed away somewhere.
- You can use your bank account to set up automated payments.
- Depending on what bank you have, you have accessibility to your cash from pretty much anywhere.