5 Simple Steps to Opening a Bank Account

Under your mattress is not the best place to stash your cash. Here’s how to open a bank account.

Written by Melissa A. Watkins / January 25, 2022

Quick Bites

  • You have a lot of options as to where to open a bank account, both online and at a branch.
  • Comparing the fees associated with accounts at different banks is a good idea, as these can vary widely.
  • Just as with a credit card, you may be able to earn rewards through your bank account.
  • You can use apps to pay people directly from your bank account, keep track of your money and more.

Opening a new bank account is actually pretty easy. It’s also a smart financial step. If you choose the right account, your money will be more secure, easier to access and could even earn you a little extra cash. A bank account can also help you organize your budget and save for special purchases.

Setting up the perfect bank account for you only takes a little effort. In fact, you can do it in just five steps. 

Inside this article

  1. Do your research
  2. Gather documents
  3. Make a deposit
  4. Choose account features
  5. Check for perks

Step 1: Do your research

If you’ve never had a bank account before, or if you’re trying to open a new account, all of the options can seem a little overwhelming. Don’t worry! There are questions you can ask yourself to figure out which account is best for you. 

Ask: What Are You Going to Use the Account For? 

Are you trying to save for a special vacation? Do you want to start using contactless payments at your local Starbucks? Think carefully about what you want to do. Generally, there are two types of beginner bank accounts: 

1. Savings Account: Usually, people open savings accounts when they have a specific financial goal in mind. For example, savings accounts can be used to pay for vacations, keep an emergency fund or prepare for special expenses like a housing deposit. 

Most savings accounts only let you take money out by visiting a bank in person or by using an ATM (automated teller machine) card. If you want to put your money somewhere safe so that you can’t spend it immediately, then a savings account is for you.[1]

Savings accounts also have the added benefit of earning APYs. APY means annual percentage yield, which is the amount of money the bank pays you each year in interest. Because the money in a savings account is usually held in the bank for a long time, the bank is able to use it. They treat it like a loan and pay the customer interest. If you keep a high savings account balance, you’ll actually earn money every month.

2. Checking Account: If you have a checking account, you can choose to use a debit card or a check instead of cash when paying for something. The card purchase or check amount is deducted from the amount of money you have in the account. It’s important to budget and be sure that you are not spending more money than you have. Banks charge fees (called overdraft fees) if you overspend, and they add up very quickly![1]

Because checking accounts are designed for money to move in and out of constantly, you usually don’t earn any interest on them, and there’s usually no APY. 

Ask: What Type of Bank Do You Need?

There are lots of different types of banks. Asking yourself these questions can help you figure out which type you need.

Bank or Credit Union?

Banks are private companies. They’re focused on growth and profits, so they often have many different products, partnerships and physical branch locations. However, banks also have relatively high fees and high interest rates on loans. 

Credit unions are not-for-profit. Because of this, they often have lower interest rates on loans and higher APYs. However, they also tend to have fewer resources than corporate banks. This means fewer locations, fewer ATMs and fewer products like loans and credit cards.[2] 

Also, many credit unions have membership restrictions. They’re only open to people who are connected to certain communities, such as members of unions, workers in specific professions (for example, nurses, firefighters or teachers) or residents of particular towns or cities.

Online Bank or In-Person?

Every bank has some form of online banking. But some banks operate 100% online, with no physical branches.

Because online banks don’t maintain physical buildings, they have lower maintenance costs. That money is returned to the customer in the form of higher APYs and lower fees.

If you don’t mind only having phone and email conversations with your banker, online banking can be ideal. But in-person banks also offer comprehensive online services with the added benefit of being able to talk to a person face-to-face if you really need to.

Ask: What Fees Matter Most to Me?

While it usually doesn’t cost anything to open a bank account, there are some costs associated with having a bank account.

Account Fees: Some banks require a minimum balance to be in the account at all times. If the amount of money in that account falls below the requirement, you’ll be charged an account maintenance fee, usually on a monthly basis.

Overdraft Fees: If you spend more money than you have in your checking account, you may be charged an overdraft fee, which is usually between $20 to $50 for every attempt to overspend. Overdraft fees can add up very quickly so it’s important to always be aware of how much money you have in your account so that you don’t accidentally incur lots of expensive overdrafts. 

Other Fees: Although it’s becoming less common, you do have the option of getting paper checks if you open a checking account. You may get a few free temporary checks when you open the account, but unless you have an account that offers them for free, you may have to pay for paper checks later. 

Even if you don’t want to use paper checks and prefer to use your debit card, you may sometimes need to send an official payment using a cashier’s check, money order or wire transfer. These are all ways of sending money in an official and trackable way. All of these methods can be accessed through your bank, but you usually need to pay an extra fee for them.

Step 2: Gather your documents

Now that you’ve done your research, the next step is easy. To open a bank account, you need to prove a few pieces of important personal information. These are the questions the bank will ask, and what documents you can use to answer them. 

Who Are You? 

To open a bank account you need to prove who you are. Your bank will need at least your name and birthdate from one of the following documents:

  • Driver’s license

  • State ID

  • Passport

The key is to bring a valid, non-expired, government-issued ID with you to the bank to open your account.[1]

Banks also require your social security card in order to open an account. The only time you don’t need to do this is if you are using your U.S. passport as your ID.

Are You Banking Alone?

If you want someone else to have access to your account—whether it’s your partner, your parent or someone else—then they need to meet the same ID requirements as you do. Basically, this means they also need to have a valid, non-expired, government-issued ID and social security card.

Are You a U.S. Citizen? 

Citizens of other countries can still open a bank account in the U.S. The forms of ID required vary from bank to bank, and you’ll need to open your account in person, not online. At a minimum, you’ll need a valid ID from your own country and an ITIN (Individual Taxpayer Identification Number).[1] 

Step 3: Make a deposit

Now that you’ve decided what kind of bank you want to use and gathered all your paperwork, it’s time to go to the bank (or open your bank’s website), make your first deposit and open your account! 

This is probably the easiest part of opening a new bank account, but there are still a few things to be aware of. 

Your Starting Deposit

Some banks require a minimum deposit when you open a new account, depending on the type of account you want to open. For example, some checking accounts can be opened without a deposit, as long as you also set up direct deposit (more on that later). New savings accounts generally require a deposit.[3] 

Minimum Balances

When you’re opening your bank account, you’ll probably want to cover the minimum balance if you don’t want to pay a maintenance fee. Try to make sure your first deposit is at least the minimum balance and try to always maintain that amount of money in the account. If you can’t be sure of how much money you will consistently have, opt for an account with no minimum balance requirement.

Step 4: Take advantage of what your new bank account offers

The point of opening a bank account is to make it easier for you to manage your money. Now that you’ve made your first deposit and received your new debit or ATM card, it’s time to use the features of your new bank account to your benefit.

Set Up Direct Deposit

Direct deposit is when your employer deposits your wages directly into your bank account on payday. With direct deposit, you don’t have to deposit a physical check at your bank, and you can access your paycheck easily and immediately on payday. 

To set up direct deposit, you’ll need to fill out a form with your employer and provide either a canceled check (if you use them) or a special printout that you can ask your bank for.[2] 

Set Up Online Banking

How do you know what your direct deposit is in your account? How can you keep track of your checking account spending or your savings APY? 

The answer is online banking. Online banking allows you to check your accounts and do basic banking business 24/7 without having to go into a physical branch. 

If you’re using an online bank, or if you’re opening an account with a physical bank online, setting up your account gives you immediate access to online banking. If you open your account in person, be sure to ask to set up online banking when you’re opening your account. It’s a quick process that makes banking much easier. 

Set Up Transfer Apps

Everybody uses smartphone transfer apps like Venmo, CashApp or Zelle these days. They’re a quick way to send a tip, reimburse a friend for your half of the bar tab, or pay for something when you don’t have cash on you. These apps all connect to a bank account easily. To set them up, you’ll need to download the apps and usually use your phone number and bank info to set up a login. 

Setting up transfer apps on your phone takes a few minutes but can save you hours. Instead of having to find one of your bank’s ATMs, travel, use your card and withdraw cash, you can use an app and transfer the cash in minutes.

Set Up Bill Pay

Another way to save time is to set up bill pay through your bank’s online banking system. A bill pay program lets you automatically pay your bills each month by setting up debits to each company from your personal account.

Bill pay programs are a little different for each bank but you can ask customer service or a banker in person to guide you through setup. Online banks often have downloadable guides that will walk you through their bill pay systems. It only takes a few minutes to set up the service, and every month it saves you the time spent paying each company individually.

Set Up a Budget

We’ve talked about apps for payment, but what about keeping track of your funds? It’s important to set up a budget for your own information and peace of mind, and to avoid the overdraft fees we talked about in Step 1. 

A simple search of any app store will lead you to lots of different budgeting apps. Some of the most popular ones are Mint, You Need A Budget and Honeydue. Each one has a slightly different focus. Test a few out and see which one is right for you. 

Your bank may also have a budgeting tool through their online banking. Ask a banker to see what services they offer for budgeting. If you want to take a more low-tech approach, credit unions sometimes offer budgeting classes and in-person advice sessions for members. Ask and see what they offer—you might be surprised! 

Step 5: Check for perks

So, you’ve made a deposit, you’ve set up online banking, you’re on top of your budget and your money is managed. Now what?

You’re not done optimizing the bank account experience yet. There are a lot of programs that offer extra benefits for your bank account, and the number is always increasing. Be smart about joining these. Do your research, ask questions and never give your personal information, including your new bank account number, to a company you haven’t verified.

There are too many to list here, but here are a few types of perks you can look into for your new account. 

Reward Accounts 

A reward account is a type of account that lets the holder earn money back on online and debit card purchases. Credit card companies are known for offering reward accounts, but now some banks are offering this perk for checking accounts too. Usually, the amount you receive back is a small percentage of your purchases, between 1% and 3%. Small amounts can add up over time, and if you’re thinking of using your debit card a lot a reward account is a good choice. 

There’s one thing to watch out for: Reward accounts often have more specific requirements for minimum balances and maintenance fees than standard accounts do. Make sure you check these requirements before signing up. 

Referral Bonuses

If you love your new bank account, you’ll want to share the good news with your friends, right? Some banks pay a referral bonus if you can convince a friend to sign up for an account too. 

Referral bonuses can range from $15 to $150, depending on the bank. The person being referred usually has to keep a minimum balance in the account for a certain amount of time before you receive the bonus. 

There are also sign-on bonuses. You can earn hundreds of dollars just for opening an account. This usually has high minimum balance or opening deposit requirements, and sometimes requires you to have a long relationship with the bank already. Still, it’s worth asking if there are bonuses available if you open more than one account with your bank. 

Discount Programs

Corporate banks and some larger credit unions offer discounts if you use your debit card at selected retailers that they have relationships with. You will need to check for a list (easy to find on your bank or credit union’s website), but this is a good way to save money when you shop. 

Article Sources
  1. "Opening a Bank Account.” Consumer.gov. https://www.consumer.gov/articles/1003-opening-bank-account.
  2. “What Is a Credit Union?” MyCreditUnion.gov. https://www.mycreditunion.gov/about-credit-unions/credit-union-different-than-a-bank.
  3. “Bank Accounts and Services.” Consumer Financial Protection Bureau. https://www.consumerfinance.gov/consumer-tools/bank-accounts.

About the Author

Melissa A. Watkins

Melissa A. Watkins

Melissa Watkins is a former social and cultural studies lecturer who became a writer. Her financial experiences overseas and abroad include small business ownership, endless side hustles, and founding a networking organization for overseas business owners in South Korea.

Full bio

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