What do you need to open a bank account?
Learn how to open a checking or savings account
While more people have bank accounts than in the past, there are still an astounding 5.9 million American households that are “unbanked.”
Lisa Frison, head of financial inclusion and racial equity, U.S. personal banking at Citi, said there are many factors behind this, “from a lack of familiarity with financial products, to concerns about costs and fees, to systemic societal challenges that have, historically, diminished the trust between people and their banks, and more.”
Opening a bank account is an important step in taking control of your finances. Whether you're a first-time account holder or switching to a new bank, the process of opening a bank account doesn’t have to be overwhelming. With so many options for banks and credit unions, it is easy to find one that makes online banking and managing your money a streamlined process.
“Having a bank account means having the backing of a strong financial institution,” said Frison. “Without a bank account, they may be putting their hard-earned cash and savings at risk and, in some cases, paying higher costs.”
- Some, but not all, banks and credit unions require a minimum balance for your account to avoid fees.
- Look for accounts with overdraft protection to avoid unnecessary fees when your account dips below zero.
- If you can’t get a bank account, banking alternatives like prepaid cards and payment apps can help you with online purchases and bills.
Requirements for opening a bank account
It does not take long to open a bank account, but there are certain requirements you'll need to meet. For starters, most banks and credit unions require you to be at least 18 years old to open an account. Minors can open a joint account with an adult companion, but there are additional considerations to keep in mind, such as different fees or account minimums. Bank accounts for minors can also be limited in functions, such as access to a debit card.
While banks don’t check your credit score, they might first screen your financial history for excessive overdraft fees or financial crimes. Here are a few other requirements needed to open a bank account:
- U.S. physical address (no P.O. Box addresses)
- Government-issued ID such as driver’s license or passport
- Social Security number
- Minimum deposit (varies by financial institution)
If you are not a U.S. citizen, the financial institution might still consider your application but will likely require additional documentation before approval.
Bank account application process
The application process for a bank account may vary slightly between different financial institutions, but generally, the process involves the following steps:
- Choose the type of account. Do you want a savings, checking or joint account? Think about your money needs, and choose an account that will help you manage your finances best.
- Visit a branch or apply online with the required documents. Be sure to have your identification and proof of address handy. A driver's license or passport will work for identification, and a utility bill or lease agreement will confirm your address. If you are applying online, you will need to fill out an application and upload the necessary documents.
- Deposit initial funds. You will need to deposit funds to activate your account; some accounts might come with a minimum opening deposit.
- Wait for approval. Once you have completed the application process, the bank will review your application and documents. If everything is in order, your account will be approved — in some cases instantly or on the same day. You will then receive your account number and routing number. For many accounts, you’ll also be able to set up an online account and connect it to the bank or credit union’s mobile app.
- Start using your account. As soon as your account is open, you can start using it to deposit and withdraw funds, pay bills and make purchases.
» MORE: How to save money for a house
How to choose a bank account
Not all financial institutions will be the best fit for you and your financial needs. Consider the following before choosing:
- Traditional vs. online vs. credit union
- Traditional banks: These banks offer the convenience of brick-and-mortar branches and ATMs for in-person banking. Many also offer online banking technology. Traditional banks often have a wider range of account options and services, but may also have higher fees and more stringent requirements.
- Online banks: Online-only banks are increasing in popularity and often offer the latest banking tech along with lower fees and higher interest rates on savings accounts. They may have limited or no physical locations, which can be a drawback for those who prefer in-person banking.
- Credit unions: Credit unions are not-for-profit organizations that are owned by members. They typically offer lower fees, better interest rates and a more community-focused approach to banking.
- Savings vs. checking vs. other accounts
- Savings: Savings accounts are ideal for storing funds for future goals, emergencies or other long-term needs. Check what the annual percentage yield (APY) is and if there is a minimum balance requirement. It is a good idea to also check for any maintenance fees that can eat away at your savings.
- Checking: These accounts are designed for daily transactions such as paying bills, making purchases and withdrawing cash. Before choosing, check for fees and account requirements, and look for helpful features such as mobile check depositing.
- Other account types: There are many other savings and investment vehicles that financial institutions offer, such as money market accounts (MMAs), certificates of deposit (CDs) and individual retirement accounts (IRAs). Each product comes with its own perks and drawbacks, but it is a good idea to check these out briefly before settling on a financial institution.
- Security and insurance
- Insured: Most traditional and online bank accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, while credit unions are typically insured for the same amount by the National Credit Union Administration (NCUA). Confirm that the bank or credit union you choose is FDIC- or NCUA-insured.
- Security measures: The bank's website and mobile app should use encryption to protect the data that's transmitted over the internet. It should also offer two-factor authentication for extra protection.
- Fraud monitoring and protection: Banks should have systems in place to detect and prevent fraudulent transactions, such as monitoring for suspicious account activity and blocking transactions that seem out of the ordinary. It should also offer identity theft protection services, such as credit monitoring, identity theft insurance and fraud resolution assistance.
How to change your bank account
If your current bank account is no longer meeting your needs, you can change banks easily:
- Once you've chosen a new bank, open a new account with it either online or in person.
- Next, transfer your funds from your old account to your new one — your new bank should be able to help you do this seamlessly.
- Then, update your automatic payment and direct deposit information by notifying your employer and any company that automatically withdraws your funds for bills.
- Once everything is successfully transferred, you can close your old account if you choose.
If you simply want to add a new account to the bank you already love, you should be able to do so in person at your local branch or through the bank’s website. As long as you meet the account’s requirements, opening a new account or different account should be quick if you are already an existing customer or member.
Bank account alternatives
When you’re applying for a bank account, one of the most important factors that banks consider is your banking history. That means if you have a history of unpaid fees, overdrafting, or fraudulent or suspicious activity, the bank may reject your application. Additionally, banks require certain forms of identification and a valid mailing address. If you cannot provide either one, your application will be denied.
If you do not qualify for a bank account, consider one of these banking alternatives instead:
Prepaid debit cards
Prepaid debit cards are reloadable and can be used like traditional debit cards to make purchases and withdraw cash from ATMs. They are a good option for those who want to avoid overdraft fees and don't want to maintain a minimum balance.
Mobile payment apps, such as Venmo and PayPal, don’t require a bank account, though it is recommended. These apps allow users to transfer money to friends and family, pay bills and make purchases online. Some apps also offer debit cards that can be used like traditional debit cards.
Can I open a bank account online?
Most banks will allow you to get a bank account online. The requirements are similar to those required for in-person opening. You must meet eligibility requirements, provide proper identification, submit a minimum deposit and provide your date of birth, mailing address, phone number and email address. You can enter these pieces of information into the bank’s online form and send your minimum deposit via electronic transfer or by mailing a check. Some banks allow e-signatures for the opening agreement, while others only accept actual signatures.
How much does it cost to open a bank account?
Banks won’t usually charge a fee to open a bank account other than the minimum deposit, but they do charge penalty fees on accounts that fall below the minimum balance and on overdrawn transactions against a checking account. Withdrawals from your account made at other banks’ ATMs are also subject to fees.
Can I open a bank account with bad credit?
Some banks may deny your bank account application for bad credit, but others offer “second-chance” accounts without another credit check. They might require more strict compliance with maintaining the minimum balance requirement or a certain number of direct deposits each month.
- Article sources
- ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Federal Deposit Insurance Corporation, "2021 FDIC National Survey of Unbanked and Underbanked Households." Accessed Feb. 16, 2023.
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