One of the signs of managing money as an adult is opening your first bank account. People open their checking or savings accounts at other ages, although it seems that most people open their first bank account at the age of 16 or 18.
Nearly 95% of U.S. households have a bank or credit union account, according to the 2019 FDIC Bank Survey.
However, no matter what age you plan to open your first bank account, opening a bank account can be a bit intimidating as it requires many different bank accounts and documents.
But don’t worry. It’s simpler than you think.
Below you will find a simple step-by-step guide on how to open your first bank account. We’ll explain what it takes to open a bank account and how to choose the one that best suits your financial needs.
(Oh, and did you know that many banks actually pay bonuses when you open a new checking or savings account? Check out our list of bank account signup bonuses for a list of the best account opening promotions some banks offer. Bank.
Why you need a bank account
In the old days, cash was king, but these days nobody wants to carry wads of cash in their pockets. Having a bank account that offers checks and debit/credit cards makes things a lot easier, faster and safer.
You can also send or send money abroad from within your home country with just a few clicks. Of course, there are ways to send money without a bank account, but banks make things a lot easier.
And along with many competitors, banks need to lower their fees and reduce restrictions. So overall, having a bank account is convenient and safe.
How to open a bank account step by step
Here is all the information you need to successfully create your first account.
Step 1: Find a Financial Institution That Fits Your Needs
It could be:
- Bank: You can go to a traditional bank. This can include community banks and large banks.
- Credit Union: Credit unions are customer-owned financial institutions. It offers many of the same services and products you would find in a regular bank.
- Online bank or credit union: Online banks and credit unions do not have branches you can visit. Instead, it only works online. If you only care about online banking, signing up for online banking or a credit union can save you fees, and in some cases you can get higher interest rates on your savings account.
Step 2: Choose the best account for you
Banks usually offer several account types. This may vary depending on the financial institution you choose.
In general, the following account types and services are offered:
- Savings account: This is your usual old bank account where you can pay and receive direct deposits.
- Savings account: If you want to earn interest on your money, you may be interested in a savings account. You can earn interest through a savings account.
- Money Market Accounts: This is a savings account that pays interest according to the current interest rate in the money market. Money market accounts usually pay higher interest rates, but have limitations that can make them less flexible than regular checking accounts.
- Deposit Certificate: A Certificate of Deposit (CD) allows you to deposit money for a specific period of time that cannot be withdrawn. However, a proof of deposit can earn you much more than a savings account. With CDs, you usually get a fixed/predetermined interest rate.
- loan : Most banks offer loans such as auto, personal, home and business loans.
Also, the bank offers several different types for each of the above account types. For example, most banks offer basic checking accounts and premium accounts. You usually pay higher fees like ATM fees, overdraft fees, and service fees with a premium checking account, but you get access to more features. Each product offered is given a different name and service level. So compare accounts to find the one that suits you best.
Step 3: Gather the information you need to open a bank account
A lot of people want to know. What do I need to open a bank account?
This is an important question because once you have chosen a financial institution and the right account for you, you need to gather all the necessary documents.
To open a bank account, you will need:
– A valid photo ID issued by the government as follows:
- driver’s license
- Or, if you are not driving, your state ID card, which you can get at the DMV office.
– Basic information such as:
- date of birth
- mailing address
- social security number
- Taxpayer Identification Number
- Phone number
– Deposit (if required when opening an account): Some banks require an initial deposit. Not all of them are. So it depends on the account you choose. Step 6 below discusses how to fund your account.
– Identification information of other applicants when opening a subscription accountA: If you open this account to someone else, the bank will need the ID and personal information of all account holders.
– Co-owner to open account if under 18A: The bank does not allow minors under the age of 18 to open accounts on their own. So, if you are younger than that, we need a parent or legal guardian to open an account with you.
Step 4: Ask About Credit Checks
Most banks check your credit to see if there have been problems in the past, for example, problems with repaying a loan.
In most cases, these tests are “soft scans”. This means it will not affect your credit rating. However, if you are concerned, it is best to ask what type of credit check your bank plans to do.
Otherwise, skip this step!
You don’t necessarily need good credit to open an account, but having bad credit can result in rejection by certain financial institutions.
Step 5: Agree and sign the terms and conditions
Ok, now that you have provided all the information to the bank, it is time to accept and sign the terms and conditions.
The bank has terms and conditions that come with the account. Please read this correctly before signing. If everything looks on the board, you need to agree to the terms and conditions.
If you open a bank account online, you may need to print, sign, and mail the documents to your bank before opening an account. Some banks use electronic disclosure and consent to legally bind contracts. So you can do everything online. Others need a signed document to open an account. Your account will not be activated until you receive the document.
It depends on the bank you choose. Each has its own signature requirements.
Step 6: Account Funding
Ok, I’ve included this step as step 6, but sometimes it can come before the previous step.
Some banks require an initial deposit into a checking or savings account. This may be necessary as part of the account opening process or once the account is up and running.
So, although we have listed how to deposit funds into your account in 6 steps, you may need to do this before actually opening an account.
It really depends on the bank.
There are several ways you can deposit funds into your account.
- Cash Deposit: You can deposit money into your account in cash. This amount can be used on your debit card within a day or so.
- Deposit check: The amount will be available within a few business days after deposit.
- Money Order Deposit: Once deposited, your money will be available within a few business days.
- Set up direct deposit to your employer. Instead of getting paid, you can send your earnings directly to your new account.
- Electronic remittance: You can transfer money from an external bank account for an initial deposit.
Of course, the amount of time it takes for money to appear in your account depends on your new bank’s processing time and the payment method you use to deposit.
Step 7: Start Using Your New Account
Now that everything is set up, you can start using your new bank account. Setting up a bank account doesn’t take long. Especially after you have chosen your bank, account and have all the necessary documents ready.
Once you have signed everything and made the necessary deposits, your bank account will be ready for use within minutes to days.
If it’s a savings or checking account you opened, look for a debit or ATM card in the mail.
You can also take a check.
Some banks even offer useful apps for depositing and cashing checks, online banking, and more. So, make sure your bank or credit union has an app for their customers.
You can also set up bulk withdrawals or email notifications to notify you when your balance is low.
Check out the features your bank has to offer.
Bonus Tip: Don’t forget to close your old account if necessary!
Above we have provided a simple step-by-step guide to opening a bank account. As it may not apply to everyone, here are some things I would like to mention as a bonus tip.
If you switch banks and you don’t need the old account, you should close the bank.
If this applies to you, read on.
Switching banks properly can help you avoid late fees and other issues.
Here are some tips for seamlessly transitioning your bank account.
- Make sure you have the new account information so your employer can make direct deposits.
- Automatic Invoice Payment Confirmation: You will need to cancel all payments made on your previous account, whether it be utility bills or Netflix subscriptions. This may need to be done on the service provider’s website or on the bank’s own bill payment platform. Set up a new payment with your new account information.
- Cancel all recurring transfers and linked accounts: Make sure your information from payment and money transfer apps like PayPal or Venmo is up to date with your new bank account. Remove the details of the old account. And if you have ever transferred money from your old checking account to your old checking account, be sure to cancel it. For example, you can set up a transfer between a new checking account and an existing savings account.
- Delete App and Cancel Notifications: If you have an old banking app, delete it as you no longer need it. You should also cancel or turn off text or email notifications you received from your previous bank.
- Destroy all remaining blank checks from your old account.
- If you have a safety deposit box and want to close it too. Then check your rental agreement for details on how to collect the stuff yourself and close the box.
- You will receive confirmation from your existing bank that your account has been closed.. Also, ask about the bank’s reopening policy. For example, some financial institutions reactivate closed accounts in order to receive deposits or receive automatic payments. This can result in unwanted fees. So make sure your account is not terminated and reactivated. You may receive a written statement from your previous bank that your account was closed.
Honestly starting a new bank account doesn’t take as long as you think. Especially in online banking! Whether you choose a bank account at a national bank that has branches you can visit in person, a local credit union, or an online bank, it is important to be prepared.
Do your research on different accounts, compare products offered by different financial institutions, and make sure you have everything like an ID ready to use when opening a new account.
If you want to know how to open a bank account, just follow the steps above and don’t forget to contact your bank for details about opening an account as well. Each bank has its own rules, regulations and conditions for new account holders. So it’s important to ask for details about what you need.
Banks are always looking for new customers, so they will be happy to help you set up your new account.
Any advice on opening a new bank account? If so, please share with us in the comments section below.