Opening a bank account for the first time can seem daunting. If you open the account in person, a banker is there to help you through the process. But you may or may not understand what you are agreeing to when you fill out the forms needed.
If you sign up for a bank account online, as many people are forced to do in our current situation, then you have neither the information nor the help to guide you.
This article seeks to help with at least one of these issues by giving all of the available information on setting up different kinds of bank accounts. We will also detail things to keep in mind when setting up different specifics with an account, whether you create the account online or with a banker.
General Information
How do bank accounts work? What do I need to set up a checking or savings account? What other sorts of accounts can I set up through a bank? These are all questions that trouble people before they set up a bank account for the first time. Some people do not even know all of the ins and outs of bank accounts after having a checking account for ten years running.
Simply put, a bank account is nothing more than a portion of a bank’s money that you are entitled to whenever you make a withdrawal. You add money to it in the form of deposits, and you make cash or credit withdrawals via checks or atm withdraws. These days, most people use checks quite rarely in favor of debit or credit cards issued by the bank.
What You Need
To set up a checking or savings account, all you need is a sum of money set aside for an initial deposit. Some banks even offer special interest deals for signing up for a certain card with a certain starting deposit.
For example: “earn up to 0.30% APY with My Savings when you open a My Checking account and set up a $1,000 direct deposit or You can still earn 0.20% APY with a My Savings account if you are not ready for a My Checking account.”
Other things you need to open an account (with any bank) are valid photo ID cards of some variety — both diverse licenses and state IDs work just fine. You will also need a valid social security number. In fairness, you need a social security number to get a photo id as well, so all of these things ultimately go together anyway.
If someone seeking to open a bank account is under 18, they will also need a co-owner on the account for legal reasons.
Different Types of Bank Accounts
While checking and savings accounts are the most common types for people to have, they are not the only kinds that exist. Even within these two categories, there is some variation. Checking accounts are accounts you can use to deposit and withdraw money without issue or intervention. They tend to have relatively low interest rates and can be overdraft in some cases.
Savings accounts exist for building up savings and are not intended for the money to be withdrawn often. These accounts may have higher interest rates, but money taken out of them needs to be deposited into a separate account to be able to be spent.
Loan accounts are closer to savings accounts in that you, as the account holder, can put money in but cannot take it out. The point of a loan account is to pay a sum of money withdrawn from either the bank you received the loan from or a separate creditor. The account charges extra interest over time, which you then have to pay.
The last relevant kind of bank account to discuss here is a joint account. This is an account between two parties, be it a married couple or an individual and a brokerage firm, where both parties have the rights to put money into and take money out of the account. The terms of this kind of account can vary based on the specifics.
How to Open A Bank Account In Person
If you choose to go into a branch location of your preferred bank, say you go to your local Bank of America, there are some significant benefits and drawbacks to the process that begins there. The most apparent benefit is that a knowledgeable individual is there to guide you through the process of setting up your account.
Say you want a standard checking account to rout paychecks too. Or say you want strict savings to account to build up funds for a decade or two, a banker will be able to help you set up all of the specifics you need.
Moreover, there is almost no waiting. When the process is complete, you get your new bank card immediately. Most places even print the card right in front of you.
The Downside
Taking these things into account, there are few drawbacks to opening a bank account in person as they did during the days of yore. A teenager opening their first bank account could also benefit from the hands-on experience of a banker walking them through the process.
However, there is a single glaring issue when it comes to opening a bank account in person through a regional branch of a bank. The issue is that you rob yourself of the chance to shop around for deals and better options.
When you go to a bank’s branch to set up an account, you are dealing with that bank and that bank alone. Better interest rates may exist elsewhere, but you will never know about it.
Even with someone helping you to set up your bank account, it is still good to educate yourself on the exact type of account you want and which bank can give it to you.
Create A Bank Account Online
The obvious benefit of creating a bank account online is that you have nearly unlimited options at your fingertips. The obvious drawback is that some of those options do not have your best interest in mind. There are as many scammers offering too-good-to-be-true interest rates as banks are offering reasonably good ones.
Online-only banking can famously offer lower fees and higher interest rates, and some prominent banks and creditors even offer this as an option. Still, there will always be the looming chance that the bank you are signing up with is either an outright scam or is more vulnerable to hackers than a traditional bank might be.
Paperless Banking
Paperless banking is still growing increasingly common as time goes on, and it is not very hard to see why. Banks offer 24-hour support for your account, and you can price match one service provider to another easily to ensure that the bank you choose is the right one for you. Any online bank is also available anywhere in the world through your phone or computer, unlike physical banks that may be regional.
However, certain types of transactions are more difficult, such as cash transfers and other things requiring physical currency. Moreover, there is often very little if any ATM support for entirely online bank providers or printed checks should you need them. If the bank is paperless, you will not have access to any paper if you decide you want it.
What You Need
The process of setting up an online bank account through one of these providers is in some ways far simpler, and other ways far more complex. The exact series of events needed may change, but in most cases, it will simply consist of online forms through the bank in question.
The most important thing to consider is that paperless banking will still require an initial deposit in the form of a check or virtual payment. Without an existing banker or another financial provider, this can be somewhat tricky to do. The easiest way is to move money from an existing account is through a cash app of some kind, or a check would work. Alternatively, use a PayPal loan to start the account.
Ultimately, you still need all of the same information. You will put in your driver’s license number, social security number, and other personal information that a banker would ask you for if you were sitting in a bank cubical. The difference is that these documents are only stored as data to both the bank and your computer. Any malware in either will be able to get the data.
The main thing to keep in mind is that paperless online banking is less beginner-friendly and requires the person setting up the account to know what they want and what they are doing.
There are some great deals with banks charging lower fees and higher interest rates to a skilled eye. But there is also a higher chance of something going wrong and causing a much bigger issue than anyone would have to worry about from in-person banking.
What are The Best Banks to Open a Bank Account With?
There are a lot of banks out there, as well as local Credit Unions. So which are the best? Well, we will leave that up to you to research for your own needs. However, here’s a list of some banks to help get you started.
- Bank of America
- Wells Fargo
- Chase Bank
- BBVA Compass
- U.S. Bank
- Citi Bank
- Comerica Bank
- Regions Bank
- Citizens Bank
- Synovus Bank
- Whitney Bank
- Valley National Bank
- Umpqua Bank
- First Bank
- Carter Bank And Trust
- Bancorp South Bank
- Key Bank
- Zions Bank
- Great Southern Bank
- Rabobank
- Union Bank and Trust
- Assiciated Bank
- United Bank
- WesBanco Bank
- Huntington Bank
- TCF Bank
- Washington Federal
- Renasant Bank
- Banner Bank
- M&T Bank
- Fifth Third Bank
- Columbia State Bank
- First National Bank
- BMO Harris Bank
- First Interstate Bank
- Santander Consumer Bank
- Centennial Bank
- First Commonwealth Bank
- Commerce Bank
- First Tennessee Bank
- First Midwest Bank
- Capital One Bank
- Woodforest National Bank
- PNC Bank
- South State Bank
- Trust Mark National Bank
- Pinnacle Bank
- Sterling National Bank
- Investors Bank
- Glacier Bank
- BB&T Bank
- Arvest Bank
- First Merchants Bank
- Old National Bank
- People’s United Bank
- Frost Bank
- First Citizens Bank
- NBT Bank
- TrustCo Bank
- East West Bank
- Great Western Bank
- MUFG Union Bank
- Simmons Bank
- Flagster Bank
- Chemical Bank
- TD Bank
- HSBC
- Iberiabank
- Webster Bank
- Sun Trust Bank
- Bank of the Ozarks
- Bank of the west
- Fulton Bank
- Park National Bank
- Navy Federal Credit Union
Final Thoughts
Whether you’re doing it online or in person, opening a bank account doesn’t have to be hard, stressful or confusing. Now that you have all the information you need, you’re ready to choose the right bank for you and get started!