How to Open a Checking Account

Opening a checking account, whether a personal or business checking account, is a relatively easy process as long as you’re prepared with the right information. It becomes even easier when you know what to expect. To open a checking account, you can head over to your bank or credit union of choice. Even better, you can open an account online from the comfort of your own home. This option has become increasingly popular among financial institutions.

How to Choose a Checking Account

Before you open one, you’ll want to make sure you choose the right checking account for your financial needs. For starters, you want to be comfortable with bank you’ve chosen. Do you want a major bank with ATM and branch locations all over the country? Or would you prefer an online bank that requires all deposits and transfers to be made electronically? You may also want to consider the bank’s customer service ratings and reviews. These factors can make or break your experience with a bank.

Once you’ve decided you like a bank, you can dive into its checking account options. First off, research all the fees you might face with each account. Many big banks tend to charge a monthly maintenance fee, while online banks often offer free checking accounts. You can usually have a monthly maintenance fee waived by meeting certain requirements, like direct deposits or a minimum account balance. Some accounts require a minimum monthly balance as a standard, charging a penalty if your balance falls below the limit.

Banks also charge overdraft fees when you take more money out of your account than you actually have. Luckily, there are checking accounts with low overdraft fees or overdraft protection. Be sure to find out what the bank’s ATM fees are, as well. Some banks charge for each transaction you make at an ATM that doesn’t belong to that bank. Others provide access to a specific ATM network, like Allpoint, that has thousands of locations. Premium checking accounts may even allow you to use out-of-network ATMs and receive reimbursement for those fees from the bank.

Knowing the fees each account charges can help you choose the right one. For example, if you can’t afford a $30 monthly maintenance fee, that account will probably be more of a hassle than an asset. On the other hand, maybe you can’t afford an extra $30 monthly payment, but you can meet the requirements to waive the fee instead.

Sometimes, banks offer bonuses to new customers. This essentially means free money for opening an account. This makes it a good idea to keep an eye out for these kinds of offers when you shopping around for a bank. Don’t let these offers make your decision for you, though. You want to make sure the bank and checking account are the right choice on their own.

Where Can You Open a Checking Account

Banks are the most popular home for checking accounts. If widespread accessibility is what you’re looking for, big banks like Chase, Citi and Bank of America are probably your best bet. These banks allow you to open your checking account in person or online. To the opposite, banks like Ally and Charles Schwab have few to zero physical locations, meaning you’ll have to head to the bank’s website to apply.

Credit unions offer checking accounts, as well. Credit unions may require that you already have a savings account with them before you can open a checking account. Plus, you must qualify for membership to bank with a credit union. Credit union membership usually encompasses a certain geographic area, a specific company or an organization like a place of worship. Local credit unions based near your home tend to be a good bet. Not only can you usually qualify for membership, but you’re guaranteed a nearby location.

How to Open a Checking Account

Once you are ready to open a checking account your first step – whether online or in person – is to get your application. In person, you’ll simply need to tell a bank employee that you’d like to open an account. Online, it’s as easy as clicking an “Apply Now” or “Open an Account” button on the account’s page. The application will help the bank determine your eligibility to open an account.

During the application process, you’ll need to provide a government-issued ID, like your driver’s license or passport, and your Social Security number. You may also need to show proof of address, like a lease or a utility bill. Banks often run a credit check on you to get a better understanding of your banking history. For example, if your report shows that you’ve failed to pay maintenance fees on previous accounts, a bank may not approve you for an account.

If you are approved, you sometimes have to make an initial deposit, depending on the bank. Not all banks require a minimum deposit and the exact amount will vary from bank to bank. It’s important to know your account’s minimum before opening. That way, you can either bring the right amount of cash or be prepared to make a transfer from another account.

When you open an account in person, you’ll likely create a secure PIN and receive a temporary debit card. You should receive your permanent debit card and account paperwork in the mail within a few days after opening. If you open an account online, you’ll have to wait for your debit card to come in the mail.

How Much Does It Cost to Open a Checking Account?

Banks typically don’t charge fees to open a checking account. However if the bank requires a minimum deposit, you’ll need that money when you open. The required deposit can be at little as $25 or as high as a few hundred dollars for more premium accounts. You can find out the minimum deposit by checking the bank’s website or contacting your branch directly.

Credit unions work differently than banks, in that all account holders own shares in the union. To open an account, you have to buy a share in the credit union. While this might sound scary, the cost is usually between $5 and $25. That deposit gets to stay in your checking account, too, as long as you have the account.

While checking accounts don’t have opening charges, it could cost you to own a checking account. This comes in the form of the fees we discussed earlier. Monthly maintenance fees range from $2 to $30, depending on the account type. Another checking account cost is the potential penalty for failing to meet a minimum balance. These potential costs make it extra important to find the right account for you and stay on top of your finances.

The Bottom Line

Opening a checking account, especially for the first time, can be a financial game changer. It offers a safe place to keep your cash and an easy way to use that money virtually anywhere. Luckily, it’s easy to open a checking account both online and in person at a bank or credit union. Make sure you have the necessary information, like your driver’s license, and enough money to make your initial deposit.

Tips for Managing Your Money

Owning a checking account is a step in the right direction when it comes to managing your money. It allows you to keep better track of your spending, making for a better budgeting system than just keeping cash in a jar.
Part of your budget should include some sort of savings, especially retirement savings. It’s never too early to start saving for retirement. Plus, once you have a checking account, opening an accompanying savings account is just as easy.
If you find yourself struggling to manage your money on your own, a financial advisor can help you create a financial plan. SmartAdvisor is a financial advisor matching tool that can help pair you with an advisor in your area. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to three fiduciaries who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.