When you want to know how to open a bank account, you've got to ask yourself a few questions.
One being ⎯ what type of bank account should you open? The other being – should you use a bank or credit union?
There's no argument that banks and credit unions provide the safest place to store your money. Fortunately, whether you choose a bank or a credit union to store your money, the steps to open a bank account are practically the same.
There are several types of bank accounts. Knowing the difference will aid in your decision to open a bank account.
How to open a bank account
Here’s what you’ll need to open a bank account:
1. Photo Identification. Valid U.S. government (Federal or State) issued ID that includes a photo. Example: Drivers License, U.S. Passport or State ID. If you're not a U.S. citizen, you may be able to open an account with identification issued from your home country. Some banks may also require secondary identification such as a credit card.
2. Social Security number. Most banks still require your Social Security number or a Taxpayer Identification Number that you get from the Internal Revenue Service.
3. Proof of Address. Documents like a lease or utility bill with your name and current address can serve as proof of address.
4. Other personal information. This will include your date of birth, physical address, phone number, and perhaps your email address.
5. Initial deposit. You’ll only need this right away if your bank requires a minimum amount to open an account. You can usually fund your new account with a check, debit or credit card, or money order.
- If funding your new accounts by electronic transfer from another financial institution, you’ll need their routing number and your account number.
- If funding with a debit or credit card, you’ll need the card number, expiration date, and CVV code.
Types of bank accounts to consider
When you're new to banking start with a basic bank account like a checking account or savings account; or both.
- Checking accounts. The checking account is mainly for your daily financial transactions. It’s the most liquid kind of account, meaning you’ll be putting money in and taking money out fairly frequently. It will be easy to access via your debit card, ATM, or checks. Consider a free checking account to avoid monthly maintenance fees.
- Savings accounts. A savings account is for emergency funds or short-term savings goals. Make sure you find a high-yield savings account as the national average savings rate is currently pretty low at 0.06 percent. When you're ready to look at investment products like Certificate of Deposits, Mutual Funds or IRAs you can do a little research and contact your banker for options and advice.
How to choose a bank
5 Best Checking Accounts
There's really no comparison when it comes to the importance of a bank account. From the safety and convenience a bank offers you to the opportunity to build a banking relationship and take advantage of ways to grow your money, having bank account is tantamount to building and maintaining wealth.