Opening a checking account is a rite of passage that often marks the beginning of a person’s financial life. If you’ve never applied for a checking account, you might not know what to expect. To help you out, here’s everything you need to know about how to start a checking account.
What Do You Need To Open a Checking Account?
Identification: The bank you choose will usually collect details from you to verify your identity and confirm your eligibility to open the account. You generally must supply your:
- Contact information (name, address, phone number, etc.)
- Date of birth
- Government-issued photo ID such as a driver’s license or passport
- Social Security number or Individual Taxpayer Identification Number (ITIN)
- Proof of address (mortgage statement, rental agreement or utility bill)
Opening deposit: Most banks require an initial deposit to open a checking account—usually $25. Initial deposit requirements can be as low as $5 and typically don’t exceed $100. Some banks don’t require any deposit to open a checking account.
Which Type of Checking Account Do You Want To Open?
There are several types of checking accounts to choose from. Here are the most popular types:
- Basic checking account
- Premium checking account
- Joint checking account
- Rewards checking account
- Interest-bearing checking account
- Student checking account
- Military checking account
- Senior checking account
- Business checking account
Different financial institutions have different options when it comes to checking accounts. While most types of checking accounts are available from both online and conventional brick-and-mortar banks, the accounts themselves can vary between the two major categories of institutions.
Online Vs. Traditional Checking Account
Online checking accounts typically have lower fees than checking accounts offered by traditional banks because online banks have lower overhead costs.
Pros of Online Checking
- Lower fees
- Higher annual percentage yields (APYs)
- An easy account-opening process
Cons of Online Checking
- No in-person customer service
- Difficult to make cash deposits
- May have limited access to fee-free ATMs
Meanwhile, brick-and-mortar banks typically offer their checking customers personalized, face-to-face service at branch locations and larger ATM networks.
Pros of Traditional Checking
- In-person banking services
- Easier to deposit cash
- Greater access to fee-free ATMs
Cons of Traditional Checking
- Lower APYs
- May have higher fees than online banks
- Some services may require you to visit a branch
How To Choose a Checking Account
You have several factors to consider as you compare checking accounts.
Fees can vary significantly depending on the financial institution and account type. For example, fees associated with a student checking account are usually lower than fees for a traditional or business checking account. That’s why it’s important to review a bank’s schedule of fees prior to applying for your account.
Fees you might encounter with a checking account include:
- Monthly maintenance fees
- Overdraft fees
- Paper statement fees
- Foreign transaction fees
- ATM fees
- Fees for additional checks
Most banks offer ways to avoid monthly maintenance fees, such as enrolling in direct deposit or maintaining a minimum balance. Because fees vary widely from one bank to the next, shopping around for the best rates is crucial.
Minimum Balance Requirements
Some banks require you to maintain a certain amount of money in your checking account—a minimum daily balance—to avoid monthly fees. If your balance dips below the threshold at the end of any given day, you may be charged a fee.
If you open an account with a minimum daily balance requirement, keep a close eye on your account to ensure you don’t accidentally fall under the limit.
The Federal Deposit Insurance Corporation (FDIC) was established in 1933 to rebuild the nation’s trust in the financial system after the Great Depression. FDIC insurance protects the money consumers hold in their bank accounts in case the bank fails.
Only deposit accounts—including checking, savings and certificate of deposit (CD) accounts—are eligible for FDIC insurance. The agency does not insure investments in stocks, bonds or other securities.
The FDIC insures up to $250,000 per depositor, per bank and per account category. FDIC coverage does not guarantee money held at credit unions, which are insured by the National Credit Union Administration (NCUA).
How To Open a Checking Account
Although the specific process varies by bank, opening a checking account generally involves these steps:
- Decide whether you want to open a traditional or online checking account.
- Gather your important information (ID, proof of address etc.).
- Fill out an application online or in person.
- Pay your opening deposit (if required).
- Start using your checking account.
How Many Checking Accounts Can You Have?
There’s no limit to the number of checking accounts you can have—you may open as many as you wish. One checking account is enough for some people, while others may want multiple accounts to separate specific financial transactions or stay under the FDIC coverage limits.
Opening multiple checking accounts allows you to have individual and joint accounts. Many couples prefer having a few accounts: individual checking accounts for personal expenses and a joint checking account for shared expenses.
How To Open a Checking Account for a Minor
A checking account can help your child develop money management skills at an early age. Minors are not allowed to open a checking account on their own, but they can open one with an adult. Kids can use checking accounts to deposit money, make purchases and save for specific goals.
One of the best ways to open a checking account for your child is to apply for a joint account:
- Choose an online or traditional checking account that supports joint ownership.
- Gather the usual important information for yourself and your child.
- Fill out a joint checking account application.
- Fund the account with an initial deposit.
With many joint checking accounts, the child has full access to the account and can make withdrawals and purchases. If you’re concerned about your kid overusing the account, choose a bank that allows you to track your child’s spending and set parental controls.
Opening a checking account is relatively straightforward but requires due diligence to uncover the best option. Compare the best checking accounts based on their fees and balance requirements to find an account that suits your needs and wallet.
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