How to Open a Bank Account
Quality Verified
Updated: September 15, 2023
Quality Verified
Updated: September 15, 2023
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Having a bank account is both a convenience and a necessity these days. Yet according to a 2021 Federal Reserve report, 6% of adults in the United States do not have a bank account. Even more are “underbanked,” meaning they have a bank account but often rely on alternative financial sources (like pawn shop loans, payday loans, auto title loans, money orders, check cashing services and tax refund advances). The percentage of unbanked and underbanked people is also higher among Black and Hispanic adults, as well as those with lower income and less education.
Our guide breaks down the process of opening a bank account to help you gain knowledge and confidence while navigating your banking journey. It also addresses common banking challenges faced by those who are minors, non-U.S. citizens or are unhoused.
Understanding the Basics of Bank Accounts
A bank account is a financial arrangement with a bank that allows you to deposit, store and withdraw money. Its primary purpose is to keep your funds safe and accessible, as well as to earn potential interest.
There are several types of bank accounts tailored to different needs:
What Do You Need to Open a Bank Account?
Choosing the right bank is all about partnering with an institution that can offer security, tools and resources to help you make informed financial decisions. Factors to consider include:
- Fees and Charges: Ensure the bank's fee structure is transparent and aligns with how you plan to use the account.
- Accessibility: Consider branch locations, ATM availability and online banking features.
- Customer Service: A bank with prompt and helpful service can make all the difference.
- Products and Services: Look for a bank that offers a range of products — from savings accounts to loans — tailored to your needs.
How to Open a Bank Account in Person
Opening a bank account in person might seem traditional, but it offers the advantage of personalized service and immediate assistance. If you appreciate face-to-face interactions and hands-on guidance, here's a step-by-step guide to opening a bank account at a physical branch.
Research and Choose a Bank
Consider factors like location, banking products and customer reviews to find a bank that aligns with your needs.
Gather Necessary Documentation
Ensure you have all required documents, typically a government-issued ID, proof of address and your SSN or ITIN.
Visit the Bank Branch
Head to your chosen bank's nearest branch. It's advisable to visit during non-peak hours for quicker service.
Speak With a Bank Representative
Upon arrival, approach the service desk and express your intent to open an account. They'll direct you to the right representative.
Review Account Options
The bank representative will present various account types. Discuss your financial goals to get recommendations tailored to your needs.
Complete the Application
Fill out the bank's application form. Ask the representative to guide you through any unclear sections.
Make an Initial Deposit (if Required)
Some accounts may require an initial deposit. You can do this via cash, check or a transfer from another account.
Set Up Online or Mobile Banking
Having online access can be beneficial even if you prefer in-person banking. The representative can help set this up and guide you on its usage.
Collect Your Banking Tools
Once your account is set up, you'll receive items like a checkbook, debit card and any relevant brochures or information.
Confirm All Details
Before leaving, ensure you understand all features of your new account, fees and any other relevant details.
When opening your account, ask your bank representative about potential fees to avoid surprises. Some common ones include:
- Monthly Maintenance Fees: Some accounts charge a fee if you don't maintain a minimum balance or meet other criteria.
- ATM Fees: Using an ATM outside your bank's network might incur charges.
- Overdraft Fees: You could be charged an overdraft fee if your spending exceeds your account balance.
- Wire Transfer Fees: Sending or receiving money — especially internationally — might come with a fee.
How to Open a Bank Account Online
Opening a bank account online offers speed, flexibility and the comfort of handling finances from anywhere. If you're considering this approach, here are the steps to take to ensure a smooth online banking setup.
Research Banks and Account Types
Explore different banks and the accounts they offer. Look for online reviews, products, fees and any digital features that appeal to you.
Visit the Bank's Website or App
Navigate to the official website or mobile app of your chosen bank. Look for "Open an Account" or a similar option.
Choose the Desired Account Type
From savings to checking or specialized accounts, select the one that aligns with your financial goals.
Fill Out the Application Form
Provide personal details such as your name, address, employment information and SSN or ITIN. Ensure all details are accurate to avoid any hiccups.
Upload Necessary Documentation
Scan and upload required documents like your government-issued ID and proof of address. Most banks have secure systems for document submission.
Review and Agree to Terms
Carefully read the terms and conditions, fee structure and any other relevant policies. Once you understand and agree, proceed with the application.
Make an Initial Deposit (if Required)
Some online accounts require an initial deposit. This can be done via a bank transfer, credit or debit card or a check through mobile deposit.
Set Up Online Banking Credentials
Create a username and strong password for your online banking portal. Ensure these details are unique and secure.
Activate Additional Features
Set up features like mobile banking, e-statements and account alerts for a tailored banking experience.
Await Confirmation
Once you've submitted your application, the bank will review it. You'll typically receive an email confirmation once your account is active.
What to Do When Can’t You Open a Bank Account
Although banks aim to serve a broad spectrum of customers, some individuals face challenges in opening a bank account. Understanding the potential roadblocks and your alternatives can help you find the banking solution for your needs.
Opening a Bank Account as a Non-US Resident
Navigating the U.S. banking system as a non-resident can be challenging due to stringent regulations and varied requirements across institutions. Here are some tips:
Bank Account Options for Minors
Opening a bank account for a minor is a great way to start teaching kids about money. Here's what you need to know.
Required Documents
Gathering the proper documents is the first step to a smooth account opening process for your child. Here are the things you'll need to prepare:
- Adult's identification (e.g., driver's license or passport).
- Adult's Social Security number.
- Adult's existing bank account details (some banks link the child's account to the adult's).
- Minor's identification (e.g., birth certificate or school ID).
- Initial deposit, which can range from $0 to $25.
Choosing the Right Account
Select the right account that works for you and your child:
- Determine the account's purpose: savings, spending or both.
- Consider your banking habits as a parent. If you're comfortable with online banking, an online account for your child may be suitable.
Account Management
Effective account management ensures your child's financial journey is safe and educational. Consider the following:
- Some accounts have features allowing parents to oversee transactions, set withdrawal limits and receive alerts.
- Be aware of age-specific rules, such as minimum age requirements for account holders and transition points where account control or type may change.
- Some accounts transition to traditional savings accounts once the child reaches a certain age.
- Stay informed about potential fees like monthly charges or fees for using out-of-network ATMs.
Opening a Bank Account as an Unhoused Person
Having a bank account can be a crucial step towards stability and building one's life. But for individuals experiencing homelessness, accessing basic financial services can be a significant challenge for the following reasons:
- Lack of Documentation: Many unhoused individuals may not have the identification documents — such as a driver's license, passport or birth certificate — typically needed to open a bank account.
- No Fixed Address: Banks often require proof of address, which someone without a permanent residence may lack.
- Banking Fees: Monthly maintenance fees, minimum balance requirements and overdraft fees can be burdensome for those with limited income.
Solutions and Workarounds
Despite the challenges, there are tailored banking solutions that cater to the needs of those experiencing homelessness:
- Alternative Identification: Some banks accept alternative forms of ID, such as ID cards issued by shelters or nonprofit organizations.
- Second Chance Accounts: For those who have had banking challenges in the past, some institutions offer "second chance" accounts that come with certain restrictions and can be a stepping stone to getting a regular account.
- Prepaid Debit Cards: Although not a replacement for a bank account, prepaid cards can facilitate monetary transactions. Be aware of any fees associated with these cards.
Seeking Assistance
Explore supportive organizations and services that actively bridge the gap between banking and the unhoused community:
- Local Nonprofits: Organizations like Health Care for the Homeless assist individuals experiencing homelessness in navigating the banking system.
- Financial Counseling: Some shelters, agencies and organizations like the National Foundation for Credit Counseling (NFCC) offer financial counseling to help people understand banking and money management.
Frequently Asked Questions About Opening a Bank Account
To help make the process more understandable, MoneyGeek has compiled answers to some of the most frequently asked questions about opening a bank account:
Although many banks allow customers to open an account with no minimum deposit, some require an initial deposit ranging from $25 to $100. It's best to check with the specific bank for its requirements.
Typically, you must be 18 to open a bank account independently. Minors can open joint or custodial accounts with an adult co-owner.
Depending on verification processes, opening an account in person can take a few hours to a day. Online applications may get approved instantly or take a few business days.
Yes, several banks offer accounts with no initial deposit requirement. However, it's wise to be aware of any potential monthly fees if a minimum balance isn't maintained.
About Nathan Paulus
sources
- Federal Reserve. "Changes in U.S. Family Finances from 2016 to 2019: Evidence From the Survey of Consumer Finances." Accessed September 5, 2023.
- Federal Reserve. "Economic Well-Being of U.S. Households in 2021." Accessed September 5, 2023.
- Financial Crimes Enforcement Network. "“USA PATRIOT Act." Accessed September 5, 2023.