Here’s What You Need to Open a Bank Account
These days, the process for opening a new bank account is fairly simple and straightforward. That’s true whether you already have a few accounts to your name or you’re opening your very first one. Plus, it can usually be done online if you’d rather skip a trip to a branch.
However, you will need to be prepared with a few items to get your checking account or savings account up and running. Below are a few tips you should know about how to open a bank account.
What Do You Need to Open a Bank Account?
“Typically, you can open an account in person or online by showing the appropriate proof of identification and filling out an application with your information,” says Kendall Meade, a certified financial planner with SoFi. When you’re ready to apply for an account, you’ll need to have a few details and pieces of documentation handy:
- identification, You’ll typically need one or two forms of valid, government-issued identification, such as a driver’s license, passport or Social Security card.
- Personal information, This typically includes your full name, date of birth and contact information such as your address, email address and phone number.
- Proof of address, Some banks may require a proof of address. If so, you can usually use a utility bill, rental agreement or a similar document with your current address on it.
- Social Security Number (or Individual Taxpayer Identification Number), This is needed for tax purposes, as the bank will report the interest you earn to the IRS.
- Initial deposit, Some banks also have minimum opening deposit requirements, which can range from $1 to $1,000 or more, especially if the account offers high interest rates. However, most deposit requirements are fairly small – around $25 to $100. That means you should be prepared with the cash on hand when opening your account.
- Miscellaneous information. Some banks will also ask you basic questions about your employment or sources of income. And if you’re opening a student account, you might need to provide student identification or a college acceptance letter.
Meade adds that once your application has been submitted, all you have to do is wait and find out if it was approved. In most cases, that should happen quickly, unless there were errors in your application or you have been reported to ChexSystems.
What Else You Must Do When You Open a Bank Account?
Having the right documentation isn’t all you’ll need to open a bank account. Here are a few more important steps.
Determine the Right Type of Account for You
When opening a bank account, it’s important to choose one that meets your financial needs. That might be a checking account for managing daily spending, or a savings account for your emergency fund. When comparing accounts, Meade says it’s important to choose one that allows you to earn as much interest on your money as possible so that it can continue to grow — while making sure your funds are accessible.
“Look for an account that offers a high APY,” he says, “but watch out for minimum account values and restrictions on access to your money.”
Learn How To Avoid Fees
There are many types of fees that a bank may charge, which can add up. These include overdraft fees, account minimum fees, monthly fees, ATM fees and more. According to Meade, “It’s important to take all of these fees into account, because even if you are getting a higher APY, these fees may end up costing you more than the interest you earn.”
The good news is that many banks have simple requirements to get fees waived, such as signing up for e-statements, maintaining a minimum balance or connecting a checking or savings account. Be sure you are aware of your bank’s particular requirements so you don’t incur any unnecessary fees.
Sign up for Online Banking
Once you have your new account, it’s a good idea to sign up for the bank’s online banking platform and download the mobile app. This will allow you to easily manage your account from just about anywhere and perform basic tasks like checking your account balance, depositing checks and setting up account alerts.
Reroute Deposits and Transfers
If you’re switching banks, you’ll want to make sure you notify your employer and migrate over your direct deposit to the new account. Also, update any auto-pay settings for bills; Don’t forget about the ones that come in quarterly or semiannually, such as insurance premiums. Failing to do so means you could accidentally miss a payment or overdraft your old account.
Make Sure Your Old Account Is Closed Out
You can choose to keep your old account open, as there aren’t any restrictions on having bank accounts with several financial institutions. “In fact, it can be smart to keep relationships open with multiple banks, so that you can shop for the best rates on deposits, mortgages and other loans,” says Gary Zimmerman, founder and CEO of MaxMyInterest, an automated cash management platform.
On the other hand, if you’re leaving your old bank completely behind, wait until pending transactions and outstanding checks have cleared before closing the account. “Some financial institutions may allow you to close your account online, but others may require a phone call to customer service or a visit to a local bank branch,” Meade says. “Some may even require you to fill out an account closure request form or submit a written request.”
Also, be sure to destroy any debit cards or unused cheques.
How Should You Pick a Bank?
Choosing the right bank comes down to whether it offers the products you’re looking for, with competitive rates and good customer service, according to Zimmerman. “It’s often smart to have a relationship with a brick-and-mortar bank, so you can withdraw and deposit cash, get a cashier’s check, or apply for a loan to buy a house or for your business,” he says. “But many of these functions are available online as well, so it pays to shop around.”