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Banking 101: What Do You Need to Open a Bank Account?

Written by Dawn Papandrea | Published on 3/29/2019

Note: This article is part of our Basic Banking series, designed to provide new savers with the key skills to save smarter.

Your financial situation is constantly changing (and storing cash under your mattress isn’t the best idea), so there’s a good chance you’ll need to open a new bank account at various times in your life. If it’s been a while since you’ve done it, or if you’re a first-timer, there are a few things you should know, beginning with the requirements to open an account.

Here’s a breakdown on how to open a bank account.

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What do you need to open a bank account?

The requirements to open a bank account may vary by banking institution, but generally speaking, it’s usually fairly simple. You’ll need a few main items:

  • First, you’ll need two (or more) forms of identification. The first form of ID will almost always be a U.S. or state government-issued photo identification, such as your driver’s license, U.S. passport or military identification. If you don’t have that, some banks may allow foreign passports and consular IDs. Your second form of ID can typically be something like your birth certificate or your Social Security card.
  • Next, you may need to provide proof of address, such as a utility bill in your name or a mortgage or lease statement.
  • Finally, you will have to make an initial deposit to open the account. Some accounts will have a minimum amount, typically $25 and up. Interest-bearing accounts will usually require a higher deposit.

Along with those documents and your deposit, the next step is to fill out the bank’s application, and some banks may run a special bank history check on you to verify your identity and check your history of bank account management.

Finally, you’ll have to sign your signature form (for online accounts, you may be sent physical documents in the mail to sign and send back).

What type of bank account should you open?

There are different types of bank accounts, but the two that people use most often are checking and savings accounts.

  • Checking account – This account is used to conduct transactions, such as paying bills. You will get a traditional paper checkbook and the option to pay bills online.
  • Savings account – If you need a secure way of socking away some cash, savings accounts are usually a safe bet. While they don’t earn all that much in interest these days, they are ideal for setting up an emergency fund or working toward a small savings goal. It is also easy to withdraw funds so that you have full access to your cash.

In addition to checking and savings, you might consider opening up one of the other types of banking accounts: money markets and CDs (certificate of deposit).

  • Money market – These accounts work like a savings account, but they have a higher interest rate. The downside is they usually require you to maintain a higher minimum balance.
  • CD – This account locks up a set amount of savings for a specific amount of time. The benefit is that you’ll earn a fixed amount of interest for that term that’s usually a bit higher than a traditional savings account. However, if you need to withdraw the money early, you will likely have to pay penalties.

Where to apply for a bank account

You’re probably used to seeing a bank on every street corner, but in addition, you can open a bank account online or with a credit union.

  • Bank – Some people choose a small community bank for the convenience and community feel, or you might opt for a big-name banking institution, which will have branches all over the country.
  • Online – Traditional banks sometimes offer online accounts, and there are also some online-only banking institutions. An online bank account sometimes has the benefit of higher interest rates since there is not as much overhead.
  • Credit union – These institutions are member-owned, cooperative institutions, and they are not-for-profit. Typically, you might find better terms and rates, but you sometimes need some sort of affiliation to join (such as through your employer, local organization or church).

What to look out for when opening a bank account

Like any other financial decision, you want to make sure you’re getting the best value from your banking accounts.

  • Fees – “There’s no question, fees can eat you alive,” said Steve Azoury, owner of Azoury Financial in Troy, Mich. He said to pay attention to charges for going below a minimum balance, monthly service charges and fees for ATM transactions.
  • Interest rates – Rates are generally on the very low side these days, so any slight differences between banks might be negligible. You might shop around more if you’re looking into a CD or money market account, however, since those accounts are intended to help you earn a bit more.
  • Security features and fraud alerts – Bigger banks are putting more and more security measures in place to protect your account, said Azoury. So if you’re considering a smaller bank, and that’s a big concern for you, ask for details.
  • FDIC – The Federal Deposit Insurance Corporation is an independent government agency that insures bank accounts up to $250,000 in the event that the bank fails. In short, you want to make sure you choose an FDIC-insured bank.
  • Online banking, apps and bill pay options – If you’re someone who wants to make check deposits by snapping a photo with your smartphone or automate all of your bills, you’ll want to find out about the bank’s app and digital services.

What to do after your bank account is open

Keep tabs on your account. Get in the habit of checking your account online or by phone. You can also set up alerts and notifications to keep you informed when transactions are made. And be sure to carefully inspect your monthly statements to make sure everything is correct.

Understand the bank’s policies. Each bank is slightly different when it comes to things like overdrawn accounts or when deposits clear, so be aware of your bank’s specific policies.

Opening a bank account is a simple process once you decide the type of account you need and which bank you want to do business with. Once you’re ready, gather your paperwork, get that cash out of your mattress and enjoy your new account.


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