Procedure and Practice in Opening and Operating Accounts of different Customers

Finding and opening a bank account can seem intimidating given the sheer number of options out there. Fortunately, most banks and credit unions follow a straightforward process similar to the one described below. Getting your account open is just a matter of picking a bank, providing certain details, and funding your account. Once the formalities are done, you can start using your account—and save time and money.

Choose a Bank or Credit Union

You might already know where you want to bank even if you don’t know how to open an account there. If not, shop around. Start by finding the best match for your immediate need (a checking account or savings account, for example). As you compare institutions, be mindful of account usage restrictions and fees that can eat into your savings.

There are three basic categories of financial institutions:

Banks, including community banks and big banks: These might be well-known brands in your local community (or nationwide). They offer most of the basic services you need. Local and regional banks tend to have more friendly fee structures, but it may be possible to get fees waived at big banks.

Credit unions: A credit union is a customer-owned financial institution that provides many of the same services and products that banks provide. If you join one of these not-for-profit institutions, you’ll often enjoy competitive rates because they’re not necessarily trying to maximize profits. But that’s not always the case so review fee schedules carefully.

Online banks and credit unions: These institutions operate entirely online. There’s no branch to visit (or pay for), and you’ll handle most service requests yourself. If you’re comfortable with your computer or mobile device and performing basic banking transactions an online bank can help you reduce your fees, earn higher interest rates on savings accounts, and even get free checking.

You don’t have to pick just one type of bank. For example, it’s wise to open an online bank account and keep your brick-and-mortar bank to keep your fees low and maintain the ability to visit a bank in the event of a financial emergency.

Visit the Bank Branch or Website

The easiest way to open an account is to visit the institution’s website. Search for the bank online, or visit the website listed on the bank’s marketing materials (be careful when you type in the web address impostor sites with similar names may exist).

The advantage of opening accounts online is that you can do it at any time, from anywhere. But if you’re only comfortable opening accounts in person, show up at the branch during business hours. Before you leave the house, have the following items ready:

• Your government-issued ID (such as a driver’s license, passport, or military ID)
• Your Social Security Number
• Your physical and mailing address
• An initial deposit (if required)

Pick the Product You Want

Once you settle on the bank where you want to open an account, you’ll generally have a variety of account types and services to choose from, including:

• Checking accounts: Use these for making payments and receiving direct deposits.
• Savings accounts: These accounts allow you to earn interest.
• Money market accounts: These products sometimes earn slightly more interest than savings accounts (while maintaining your access to cash).
• Certificates of deposit (CDs): These products can earn much more than savings accounts but require you to lock up your funds for a certain period.
• Loans: You can take out one of several types of loans (auto, home, personal loans, for example).

Within one of the above categories, a bank may offer multiple products, each with a different name and level of service. Premium accounts that come with more features have correspondingly higher fees (like monthly service fees, ATM fees, and overdraft fees) and higher thresholds to avoid the service fee.

Pick the option that has a mix of features and fees that meet your needs and budget. For example, if you’ll keep a low balance in the account, you may want to open a bank account with no or low fees.

When viewing a bank’s products online, you might have to drill down to the product that is right for you. For example, you might have to click “Open an Account,” and then click “Checking” and peruse the options for free checking. If you open your accounts in person, chat with a banker to find the best account for your needs. Of course, you’ll only want to bank where your money is protected by FDIC insurance (or NCUSIF coverage if you use a credit union).

Provide Your Information

As you open a new bank account, you’ll need to provide sensitive information to the bank. To protect themselves and comply with regulations such as the Patriot Act, banks can’t open an account without verifying your identity.

You’ll need to provide simple details like your name, birthday, and mailing address, as well as identification numbers (in the United States, this is most likely your Social Security Number). You’ll also be asked to present a valid government ID (such as a driver’s license or passport).

If you’re opening a bank account online, you’ll type this information into a text box. If you set up your accounts in person, be prepared to hand your ID to the banker, who will probably photocopy it.

Your Financial History

You don’t need a squeaky clean history for a bank account, but it helps. Many banks check your credit to see if you’ve had problems repaying loans in the past. These credit checks are usually “soft” pulls that do not damage your credit but it’s best to ask, if you’re concerned. You don’t necessarily need good credit to get a bank account, but having bad credit can sometimes lead to denials.

Consent to the Terms

You’ll have to agree to abide by certain rules and accept responsibility for certain activities in your accounts. When you open an account at a bank, you form a relationship based on an important subject: your money. Therefore, you should know what you’re getting into. If you open bank accounts online, you’ll complete this step by clicking the “I Agree” (or similar) button and moving on to the next step.

Under 18?

If you’re under 18 years old, you’ll need somebody over age 18 to open the account with you. You still might be able to use a debit card and online banking, and you can eventually get your own account. But banks need at least one adult on an account to get you started.

Joint Accounts

If you’re opening a joint account of any kind, you’ll need the personal information for all of the account holders and a signature from each of them. It’s best to get everybody together in one place to complete the application.

Although disclosures have improved over time, there are a lot of important details buried in the fine print when opening a bank account. In particular, you’ll want to know about any fees applicable to your account, and when your funds will be available for withdrawal.

In addition to bank agreements, federal law dictates your rights and responsibilities as an account holder. For example, if somebody takes money out of your account fraudulently, you might be protected against losses. However, you may need to report the withdrawal quickly for full protection.

Print, Sign, and Mail (If Required)

If you’re opening a bank account online, you may have to print, sign, and mail a document to the bank before the account is opened. Some banks use electronic disclosure and consent to make the banking relationship legally binding you can do everything online. Others still require a signed document to open an account. Until they receive the documents, your account is not active.

Fund Your Account

If you’re opening a checking or savings account, you’ll often need to make an initial deposit into the account. Sometimes, this is required as part of the opening process, and other times, you can do it after the account is up and running. There are several ways to fund your account:

• Deposit cash: It should be available for spending with your debit card by the next day.
• Deposit a check or money order: The funds should be available within a few business days after you make the deposit.
• Set up direct deposit with your employer: Instead of getting a paycheck, your earnings will be sent directly to your new account.
• Transfer funds electronically: Move money from an external bank account to make your initial deposit.