How to Open a Bank Account

You have a lot of options when opening a bank account these days. The process is pretty straightforward, but there are a few decisions you'll have to make first. Here's a brief overview of the steps you'll need to take to open a new bank account in your name, along with what items you need to open a bank account.

How to open a bank account

Here's the basic process for opening a bank account:

1. Choose your bank
2. Choose the account you want
3. Gather the relevant documentation
4. Fill out the application
5. Fund your account

We'll look at each of these steps in detail below.

1. Choose your bank

First, you need to decide what kind of financial institution you want to work with. There are three main types:

• Brick-and-mortar banks: These banks have physical branch networks and they're known for providing personalized service. But one disadvantage of brick-and-mortar banks vs. online banks is that brick-and-mortar institutions often charge more fees and pay you less interest on your savings.
• Online banks: These banks don't have any physical branches, but as a result, they're able to keep their costs down, offering higher annual percentage yields (APYs) on savings and lower fees.
• Credit unions: A credit union typically operates in a small area and many have physical branches. They also offer personalized service and can have more competitive interest rates and fees than large brick-and-mortar banks.

Ask yourself the following questions to determine which bank is the best choice for you:

• Do I want to be able to visit a local branch?
• How do I plan to deposit and withdraw funds?
• How much money do I plan to keep in the account?
• What online and mobile banking tools does the bank offer?

Use this information to guide you as you start thinking about the type of account you need as well.

2. Choose the account you want

There are several types of bank accounts to choose from, but for most people, it comes down to a decision between a checking or savings account. (Usually, the best decision is both.) We'll look at the pros and cons of each below.

Checking accounts

Checking accounts are best for money you plan to use for everyday spending. Most include a debit card and check-writing capabilities, and there are no limits on how many withdrawals you can make.

If you choose a brick-and-mortar checking account, you may run into minimum balance requirements. If you can't meet them, you could face monthly account maintenance fees. You should have some idea of how much money you'll keep in your checking account, so make sure the account you choose has a balance requirement that's equal to or lower than this.

Opening a checking account online is another option if you want to avoid a monthly fee, but then you could run into a problem depositing cash. Some online banks have deposit-taking ATMs, but if you plan to deposit cash regularly, a brick-and-mortar checking account might suit you better.

Savings accounts

Savings accounts are designed to hold money you don't plan to use in the next few years. You'll earn interest on these funds, though the rates vary significantly depending on the bank you choose. Some banks use tiered APY systems that reward you for keeping more money in the bank.

If you want to get the most out of one of these accounts, you need to know how savings accounts work. Many charge penalties if you withdraw money more than six times in a month. This used to be required by a federal law known as Regulation D, but the government lifted it at the start of the COVID-19 pandemic. Still, many banks charge customers for making too many monthly savings withdrawals. If you're worried about this, a checking account might be a better fit.

Savings accounts can also have minimum balance requirements and monthly fees, just like checking accounts do. It's crucial to choose one that either doesn't have a fee or has one you're confident you can have waived. Otherwise, you could lose money over time.

Other account types

Some other common bank account types include:

• Money market accounts
• Certificates of deposit (CDs)
• Cash management accounts

3. Gather the relevant documentation

What do you need to open a bank account? Once you've chosen the bank account you want to open, you need to gather some documentation. Most banks will ask for:

• A government-issued ID, like a driver's license or a passport
• Your Social Security number
• Your contact information (name, address, phone number, and email)
• Proof of a U.S. mailing address, such as a utility bill
• Initial deposit

If you have any questions about your bank's specific requirements, you can contact its customer service department to ask about what documentation you need.

What if I don't have a driver's license or a passport?

If you don't have a driver's license or passport and have no plans to get one, you should look into obtaining some other form of government-issued ID. If you visit your local Department of Motor Vehicles (DMV) office, you may be able to obtain an identification card you can use to open a bank account.

Some banks may also accept alternative IDs. Check with the bank to see what kinds of identification it will accept.

What if I'm not a U.S. citizen?

If you're not a U.S. citizen, you won't have a Social Security number. Fortunately, many banks accept an Individual Taxpayer Identification Number (ITIN) instead. You can obtain an ITIN by filling out Form W-7 and submitting it to the IRS with a copy of your completed tax return.

What if I don't have a permanent address?

Opening a bank account without a U.S. address is difficult due to banking regulations. A P.O. Box is not considered a valid address for opening a bank account. However, you can request that any correspondence from the bank be sent to the P.O. Box.

4. Fill out the application

With your documentation in hand, you are ready to complete the bank account application. Many banks enable you to apply online these days, but if you choose a traditional bank with brick-and-mortar locations, you can also schedule an appointment with a banker and complete the application in person. Some brick-and-mortar institutions may require this.

You'll have to provide your personal information and the documentation discussed above. If you're applying online, you may need to submit scans of this documentation to the bank so it can verify your identity.

If you have any questions throughout the application process, reach out to the bank.

5. Fund the account

Most banks require some sort of initial deposit when you open the account. Often this is $100 or less, but it depends on the account. There are several ways you can fund your account, including:

• Electronic transfer
• Wire transfer
• Direct deposit
• Check deposit
• Cash deposit

It may take a few days for these funds to process and show up in your account, but once they do, you're free to begin using your new account.

More information on opening a bank account:

• How to Open a Bank Account for a Minor
• How to Open a Bank Account for a Business
• How to Open a Bank Account for Students