Before even starting discussing what do you need to open a bank account, you need to select the right bank for you. In order to choose the right bank you need to define your preferences and needs. This is in a sense that you need to know what you are looking for from your bank and what do you expect from your bank account. Be aware that different banks have different advantages suitable for different preferences and needs. The best thing would be to make a comparison table for the banks in your area (make sure to include online banks in the table). This comparison table should be consisted of the things you would expect from your bank and the aspects you would dislike about a bank. Some basic features that should be listed when making the comparison table are shown below.
Bank features comparison table
|Features (preferences, needs)||Bank A||Bank B||Bank C|
|Minim balance fees|
|Monthly maintenance fee|
|Interest rates on loans|
|Interest rates on savings account and saving instruments|
|Time period you will be with your bank|
|New account promotions|
|Switching banks offers|
|Personal aspects (preferences)|
|Types of loans available|
|Loan application process|
While the first part of the table should list the general aspect associated with your new bank and bank account, the second part is also important because it is considering your personal preferences. Start by listing the features in two categories, a general category and personal preference category. The general category should be consisted of all common features each and every one of us would be faced with. The personal aspects category should be consisted of features specific to your needs and preferences. When it comes to some products, such as loans, make a separate row for each loan (revolving loan i.e. credit card, personal loan, car loan, mortgage, and so on).
Make sure that you include any bank promotions available. These promotion could give you value in the short run or the long run, depending on your needs. For more information about the short-term and long-term value of new account bonuses you can read the post about the bank switching offers attractiveness.
So, what do you need to open a bank account?
What do you need to open a bank account is to decide about the type of account you are planning to use. Meaning that, after selecting the bank, you should decide on the type of account you will open. There are a couple of basic account types, these are:
- Checking account – is what you need for a day-to-day activities. This account represents the most liquid type of account. Thus, you can make frequent deposits and withdrawals of money from this type of account. You could be using this account through a debit card, checks or ATM. You should be aware that money in checking account will not be earning high interest (or maybe not earn any interest at all). Get familiar with the bank’s fee for products such as overdraft, and understand how you could decrease or avoid paying these fees. Other things that could be associated with your checking account, which you should know before hand, are: maintenance fees, minimum balance fees, and minimum balance. Make sure that you are familiar with the available possibilities to avoid paying fees.
- Savings account – is less liquid form of account compared to the checking account. But due to some federal regulations, more precisely Regulation D, you are limited to six transactions per month. The savings account usually serves the purpose to put aside an emergency fund, or any other short-term savings you might have. Unlike the checking account that offers low interest or no interest at all, savings account can earn you some interest income on your money. Most often, fees associated with savings account are lower than fees associated with your checking account. But, as it was the case with checking account, you should also get familiar with fees related to the savings account.
- Certificate of deposits – this form of account has the lowest liquidity in comparison to the checking and savings account. When opening a CD you agree that you will not be using your money for certain period of time. Namely, you can open a CD for a specific term, for instance, couple of months, a year, or more. Until the expiration of the CD term, you cannot use your funds. In case you want to withdraw money prior to the maturity date of the CD, then you would have to pay an early withdrawal penalty (fee). Because of this form of agreement, the CD is bearing higher interest rate than you would normally get with a savings account.
You should know that some banks have an accounts that have combined features from these accounts. For instance, you could open a checking account that earns interest, but you are obliged by the bank to maintain a higher balance. Before deciding on the account type, you should be aware about all offers from your bank in relation to the accounts. This way, you will ensure that you have an account with the most adequate features in accordance to your needs.
After selecting your bank and account type, what do you need to open a bank account is the documentation required by the bank. Thus the next steps, entails that you should prepare the needed documents required by the bank to open new account. Keep in mind that these are more or less the general requirements for opening a new account, but you should always ask the bank, because there might be some additional requirements, or differences from one bank to another. Get acquainted with account application process of your new bank, should you apply in person or you can do it online. The basic list of requirements for opening a new bank account are:
- Identification – you will need to have a valid identification document. A valid identification document is a driver’s license or passport. Or a state specific ID card.
- Personal details – these serve the purpose for verifying who you are, such as, name, date of birth, phone number, present address, social security number and an email address.
- Initial deposit – if there is a need to deposits money on your new account. Some banks may ask you to make an initial deposit, so make sure that you have money with you. You could also ask the bank prior to opening the account, so you would know whether they require an initial deposit to be made or not.
You should be aware that some banks might require a credit check. If you have a problematic credit history, do not be surprised if you are rejected. This credit check is done through a ChexSystems which is a consumer reporting agency. You can read more about ChexSystems on the following link.
In summary, what do you need to open a bank account is the following: select a bank, decide on the type of account, get familiar with the account opening process, and prepare the necessary documents. Make sure you go through these steps, so you are not faced with a redundant trips back and forth to your bank.