Do you need to open a new bank account? If you’re armed with the right information, opening an account online or in person won’t take long. In some cases, you can apply for a checking or savings account in a matter of minutes.
Whether you’re a first-time banker or changing from one financial institution to another, here’s information that may help make the process easier. We’ll review what you’ll need to open a bank account and highlight the differences between checking and savings accounts. We’ll also share some details about how to use a new bank account. Ready? Here we go!
What Will I Need to Open a Bank Account?
Here’s a list of what you are likely to need when opening a bank account. Gathering them before you actually begin the process of starting a new account will help you save time and frustration:
1. Qualifying information: First, you’ll need to make sure you’re eligible to open a bank account. If you’re under 18, many (but not all) banks may require a parent or legal guardian to open the account with you.
2. Identification: You’ll also need to provide a valid government-issued photo ID such as a driver’s license, non-driver state ID card, or passport.
3. Personal information: Be prepared to provide basic information such as your birthdate, Social Security or Taxpayer Identification number. You’ll also need to give contact information such as your address, phone number, and email.
◦ Other account holder information: If you’re opening a joint account, you’ll need the identifying and personal information listed above for all the account owners.
4. Initial deposit: You will likely need an initial deposit when opening a bank account. The minimum amount required to open an account varies from bank to bank but in some cases, it can be as low as $25. In some cases, it may even be absolutely zero! (We’ll share more on this in a minute.) If you’re transferring the minimum deposit from another bank, you will likely need the routing and account numbers.
5. Username and password: If you’re applying online or opening an account at an online-only bank, you’ll need to establish a username and password.
6. Signatures: If you are applying for an account in person at a branch, you’ll be able to sign all documents there. If you’re applying online, you may be able to use an e-signature, or, depending on the bank, you may have to wait and sign documents that are sent to you via the mail.
Why Open a New Bank Account?
You probably know that bank accounts offer convenience, safety, and flexibility. In fact, if you’re like most people, you probably already have an account or two up and running. But sometimes, there’s a good reason to start a new bank account. Perhaps you want to open a savings account in addition to your checking and earn more interest as you work towards a goal, like the funds to pay for a vacation. Or maybe an online bank offers a great incentive (say, a higher interest rate and fewer fees) than the bricks-and-mortar financial institution you are currently using.
Bank Account Types to Choose From
There are two main types of basic bank accounts: checking and savings accounts. Many people choose to open multiple types of bank accounts at the same time.
|Type of Account
If you’re looking for a bank account to use primarily for paying expenses, a checking account with no or low fees is probably best. If you are trying to save for short-term goals such as a car, vacation, or down payment on a home, a savings account may fit your needs. Here’s a closer look.
A checking account is held at a financial institution and allows withdrawals and deposits. Checking accounts are liquid. In most cases, you are allowed an unlimited amount of deposits and withdrawals. That’s different from most savings accounts that may limit transactions.
You can get to your money using checks, ATMs, electronic debits, and debit cards tied to the account. You can deposit using ATMs, direct deposit, and over-the-counter deposits.
Some checking accounts may pay interest on your balance, but at a very low rate. Almost all bank checking accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per individual. This protects your money against sudden bank closures and other crises.
Many banks offer apps and other digital tools that help keep track of your checking account balance. They also enable you to make deposits, transfers, and automatic bill pay, as well as provide general budgeting and financial information.
Depending on where you open the account, there may be minimum balance requirements and other fees to contend with, such as overdraft or non-sufficient funds (NSF) fees, if your balance dips below zero.
A savings account is an interest-bearing account also held at a financial institution. Savings accounts are an important source of funds for banks and other finance companies to use as loans. Just about every bank and credit union offers them, and they can be a good place to save funds you’ll need in the short term while still earning a modest amount of interest. The minimum deposit is usually in the range of $25 to $100. A word to the wise, though: High-interest savings accounts may charge a monthly maintenance fee that can erode your interest earned and your savings.
Like checking accounts, most savings accounts are FDIC-insured. The amount of withdrawals you can make over a certain period of time may be limited (often six per month). Savings account interest rates vary, but in most cases, the amount of interest paid is quite modest (though online banks tend to offer higher rates than bricks and mortar banks). This is especially true when comparing them to less-liquid savings vehicles such as CDs. With most savings accounts, banks may change their rates at any time.
One last thing to remember: Any interest earned on a savings (or checking) account is considered taxable income and will be reported to the IRS. You will also want to check with banks to see what the minimum deposit and balance requirements are and what kinds of fees are applied to savings accounts.
💡 Recommended: How Does a Savings Account Work?
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How Much Money Do You Need to Open a Bank Account?
You will likely need an initial deposit to open your checking account or your savings account. For checking accounts, this can be as low as $25 or $100, depending on the bank and the account services you’ve signed up for. In some cases, though, a bank (usually an online bank) may let you open an account for less – even with no money until your first paycheck is deposited, for instance.
You can transfer money from an existing account at a bank or credit union into your new account, but be aware the existing account may charge a fee for this. If you’re opening an account in person, cash or a check will work. In some cases, you may have to wait several days for a check to clear before you have access to those funds.
Using Your New Bank Account
After your account is opened and funded, you’re ready to go. Be sure to keep an eye out for anything coming to you in the mail, such as a debit card or paper checks.
• Utilize Online Features: Next, you’ll want to sign up for any electronic features associated with your account that may help you manage your money. This includes online bill pay, which allows you to pay bills electronically, eliminate paper checks, and take advantage of remote check deposits. Account alerts are another benefit of electronic bank accounts, as they can warn you about unusual activity in your account and if your balance is getting low.
• Track Activity: This last feature is important: You’ll want to keep close track of the activity in your checking account to make sure you don’t overdraw. Most banks charge hefty overdraft fees for purchases that put the account in the red. Those fees can add up fast.
• Consider Linking Accounts: If you’ve opened both a savings and checking account, you may want to consider linking the two. This way, you may be able to avoid overdraft charges and have a place to put any extra money from your checking account into a more lucrative, interest-bearing account.
As you see, starting a bank account takes just a little bit of time and information. Doing so is an important step towards optimizing your financial life and giving you a place to keep your money, access it – and even grow it and put it to work for you.
Bank Better With SoFi
Looking for one-stop banking? With high interest banking from SoFi, you can quickly open qualifying accounts that earn a healthy APY, banish fees (overdraft, monthly maintenance, and more), and give you access to your direct-deposit paycheck up to two days earlier! And you’ll have access to 55,000 fee-free ATMs within the Allpoint network worldwide just to make things even more convenient.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.