How To Open A Checking Account – Forbes Advisor

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 before, you might not know what to expect. To help you with that, here is everything you need to know about opening a checking account.

What do you need to open a checking account?

ID: The bank you choose will usually collect information from you to verify your identity and confirm your eligibility to open the account. In general, you must provide the following:

• Contact information (name, address, phone number, etc.)
• Date of birth
• Government-issued photo ID such as 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 depot: Most banks require an initial deposit to open a checking account – typically $25. The initial deposit requirement can be as low as $5 and usually does not exceed $100. Some banks do not require a deposit to open a checking account.

What 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:

Different financial institutions have different options when it comes to checking accounts. While most types of checking accounts are available from both online and brick-and-mortar banks, the accounts themselves can vary between the two main 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 overheads.

Benefits of online verification

Disadvantages of online verification

• No personal customer service
• Cash deposits difficult
• Access to toll-free ATMs may be limited

Meanwhile, brick-and-mortar banks typically offer their checking customers personalized, personal service at branches and larger ATM networks.

Advantages of the traditional exam

• Personal Banking Services
• Deposit cash easier
• Better access to toll-free ATMs

Disadvantages of traditional testing

• Lower APYs
• May have higher fees than online banks
• Some services may require you to visit a branch

How to choose a checking account

When comparing checking accounts, you need to consider several factors.

fees

Fees can vary significantly depending on the financial institution and account type. For example, the fees associated with a student checking account are typically lower than the fees for a traditional or business checking account. Because of this, it’s important to check a bank’s fee schedule before applying for your account.

Some of the fees that you may incur with a checking account include:

• Monthly Maintenance Fees
• overdraft fees
• Paper Statement Fees
• Foreign Transaction Fees
• ATM fees
• Fees for additional exams

Most banks offer ways to avoid monthly maintenance fees, such as B. registering for direct deposits or maintaining a minimum balance. Because fees vary widely from bank to bank, it’s important to look around for the best rates.

Minimum Balance Requirements

Some banks require you to have a certain amount of money in your checking account — a minimum daily balance — to avoid monthly fees. If your balance falls below the threshold at the end of a given day, you may be charged a fee.

If you open an account with a daily minimum balance requirement, keep a close eye on your account to make sure you don’t accidentally fall below the limit.

FDIC Insurance

The Federal Deposit Insurance Corporation (FDIC) was formed in 1933 to rebuild the nation’s confidence in the financial system after the Great Depression. FDIC insurance protects the money consumers keep in their bank accounts in the event the bank fails.

Only deposit accounts—including checking, savings, and certificate of deposit (CD) accounts—are eligible for FDIC coverage. 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 insured by the National Credit Union Administration (NCUA).

How to open a checking account

Although the specific process varies from bank to bank, opening a checking account generally involves the following steps:

1. Decide whether you want to open a classic or an online current account.
2. Gather your important information (ID, proof of address, etc.).
3. Complete an application online or in person.
4. Pay your opening deposit (if required).
5. Start using your checking account.

How many checking accounts can you have?

There is no limit to the number of checking accounts you can have – you can open as many as you like. A checking account is enough for some, while others want multiple accounts to separate certain financial transactions or stay under FDIC coverage limits.

By opening several checking accounts, you can have individual and joint accounts. Many couples prefer to have fewer accounts: individual checking accounts for personal expenses and a joint checking account for shared expenses.

How to open a checking account for minors

A checking account can help your child develop money management skills from an early age. Minors are not allowed to open a checking account alone, 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:

1. Choose an online or traditional checking account that supports joint ownership.
2. Gather the usual important information for you and your child.
3. Complete a joint checking account application.
4. 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 that your child is using the account excessively, choose a bank that allows you to track your child’s spending and set up parental controls.

bottom line

Opening a checking account is relatively easy, but it 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.