How to open a bank account

Opening a bank account is as simple as gathering the necessary documents and information and applying online or in person. It’s also ubiquitous: More than 98% of American households have one. 

The trick, though, is to decide what type of account you want and where you want to open it. A bank account that’s convenient, charges few fees and pays decent interest can make all the difference as you build a solid financial foundation.

Everything you need to open a bank account

You can typically open a bank account at a bank branch, on the phone or with an internet connection. Whatever your preference, have the following handy: 

• Personal information, including birthdate and Social Security number.
• Contact information, such as address, phone number and email.
• A valid, government-issued photo ID.
• An opening deposit.

There may be a minimum initial deposit required to open the account, which is typically between $5 and $100, depending on the bank and the account you want. Some banks don’t have minimums, although you typically must put in some money within 90 days or the account will be closed. And, of course, you could deposit more than any required minimum. 

You can make an opening deposit in several ways. If you have another bank account, you can provide that account’s information, including the routing and account number, and fund your new account with a transfer. If you open one in person, you can usually use cash or a check.

Finally, if you’re opening a joint account, the other person will also need to provide their personal information. Anyone under the age of 18 usually needs a joint account co-owner in order to open an account, but the age limit can vary by state.

Choosing the best bank account for your financial needs

Each institution and each account have varying requirements, fees, penalties and perks. When it comes to choosing the best bank account, your personal situation and needs are the most important things to consider.

• Do you prefer to bank in person or online?
• Do you want a full range of products and services (including loans) from one bank?
• Is your goal to get top interest rates?
• Do you have any special circumstances, like having been denied a bank account in the past, that limit your options? (Second-chance banking may be a solution.)

Keep these things in mind when deciding where to bank and what type of account to open. 

Where do you want to bank?

You can open a bank account at a traditional brick-and-mortar bank, an online bank or a credit union. Here are their typical pros and cons.

What account type do you want?

Because they serve different purposes, it often makes sense to open both a checking and a savings account.

Checking accounts are best used for paying bills, writing checks, withdrawing cash and making transfers. Usually, checking accounts come with check-writing abilities and a debit card. But most checking accounts don’t pay any interest.

Savings accounts, on the other hand, are better for both short- and long-term savings goals.

They’re ideal for housing money that you want to set aside for a specific purpose, such as an emergency fund or a down payment on a house or an upcoming vacation. 

Checking account vs. savings account

Tips for Managing Your New Bank Account

When opening a bank account for the first time, you might be unsure how to manage it. The following tips can help:

• Check your accounts regularly. Keeping track of your balances helps you track your spending, check on savings progress and catch any unfamiliar charges. 
• Set up automatic transfers. If you have savings goals, you can set up automatic, recurring transfers from checking to savings. This will ensure you’re always saving without even having to think about it.
• Set up automatic payments and direct deposit. Paying bills is a lot easier when you don’t have to remember to do it. Just make sure you keep enough money in your checking account to cover your payments. Use direct deposit to get your paycheck quickly and easily.
• Use your account’s mobile app. Even if you prefer to bank in person, it’s helpful to use your bank’s app to check account balances or transfer money in a pinch.
• Know how to avoid fees. Some accounts have specific conditions to meet, like maintaining a minimum balance, in order to waive monthly fees. Make sure you meet these requirements (or simply choose bank accounts with minimal fees). 
• Track your net worth. Rick Nott, a senior wealth advisor at LourdMurray, suggests using a tool like Mint or PocketSmith to get a bird’s eye view of all your accounts and to boost your motivation to save: “Tracking your total net worth (all assets minus all debts) is the easiest way to psychologically encourage yourself to increase that number and save,” he said.

How many bank accounts should you have?

There isn’t a rule of thumb regarding the number of bank accounts you should have. It depends on your financial situation and your personal preferences. 

Most people have at least one checking account and one savings account. But many people have more, which can be helpful in a variety of circumstances. 

For example, some people open a joint checking account with a spouse after getting married and others have additional savings accounts for specific purposes, like for travel or emergencies.

You could also create a system of accounts with different ones for various purposes. Miriam Whiteley, owner of LifeCraft Financial Planning, suggests a system in which all money initially funnels into a “working account.” 

“This receives all income from paychecks and side hustles, to gifts and refunds,” she said. “This is the ‘faucet’ that directs money to other accounts for bill paying and other financial goals.” 

Whether you have a multi-account system or you prefer things streamlined, it doesn’t matter how many bank accounts you have, as long as you can keep track of your money.