It is possible to go through life without a bank account, as about 14 million Americans do. It’s not ideal, though: cashing checks at a cash advance store instead of depositing them is expensive while getting your salary by direct deposit makes payday come a few days early. You will also earn money in the form of interest, which can really add up over time, and get easier access to other financial products like personal loans.
What do you need to open a bank account, though? Do you have to pull down a big-league salary each month, or does someone who lives on 1000 dollars a month have some good options? What is needed to open a bank account at an online-only bank, and are they trustworthy? Will anyone tell you how much money to keep in a checking account before you should look at higher-yield investments?
You might not know the answers to these, or figure out which other questions you ought to ask. Don’t fear, however: any of this is complicated and this article will walk you through all the basics in only 5 minutes. If you know how to send a money order or fill out a check, you shouldn’t have any problem with the application process.
Table of Contents
- 1 The Requirements for Opening a Bank Account
- 2 How to Open a Checking Account: Everything You Need to Know
- 3 How to Choose and Open a Savings Account
- 4 Is a Money Market Account a Good Choice? How to Open One
- 5 How to Open a CD Account: A Step-by-Step Guide
- 6 How Do I Choose the Right Bank?
- 7 What to Expect When You Open a New Account
- 8 Why You Might Want to Close Your Old Account
- 9 How Much Money Do You Need to Open a Bank Account?
- 10 In Conclusion
The Requirements for Opening a Bank Account
Some high-grade investment accounts aren’t accessible to everybody since you need to deposit several thousand dollars immediately. If all you’re interested in is shopping for mother’s day ideas online, paying bills automatically, keeping your working capital in one place (where you can instantly see how much is available, which is by itself a boost to your financial planning) and performing basic transactions, nearly anyone can set up a bank account.

Teenagers can get one in minutes, though they will need to get a parent to co-sign the forms. People with bad credit or a criminal record have plenty of options when applying for a basic savings account. Even foreigners who’ve never even stepped foot in the U.S. can if they’re willing to jump through some hoops, register a limited liability company in Delaware and use that to a bank (and pay tax on) business earnings in America.
In most cases, you’ll need the following documents to open a bank account:
- A government-issued, photo ID (driver’s license, passport or military ID).
- A Social Security number or ITIN code the IRS can use to figure out who you are.
- Proof of your physical address, like a utility bill or rental contract. This is not so the bank can spam you with junk mail, but to prevent money laundering and other shady stuff.
You may also have to provide an initial deposit, which is often purely nominal: $10 or $25 are common amounts. If in doubt about any of the above, simply visit the bank’s website.
How to Open a Checking Account: Everything You Need to Know
A checking account is almost a necessity: it allows you easy access to your cash, lets you pay bills online and write your own checks. Most of them operate in much the same way, but they’re most certainly not identical.

Interest rates on the balance you keep in your checking account are usually zero or close to it. If you’re using your checking account only as a convenient way to move money around, this doesn’t matter much, but the APY (yearly interest rate) becomes very important if you plan to maintain a balance of several thousand dollars. For most people, the fees are what you should be paying attention to. When shopping for the best deals, try to estimate how often you withdraw money, pay by debit card, write checks and so on, then use this information to calculate which bank will charge you the least each month.
Especially if you apply online with all your documents already scanned, approval for your new checking account will often take less than one hour. You will most likely have to wait several days to get your ATM card in the mail even if you visit a bank branch in person. This isn’t due to banks being inefficient, but a security measure meant to ensure that only the customer ever has access to both the card and its PIN number.
How to Choose and Open a Savings Account
In theory, a savings account should be less about making daily transactions easier and more about growing your nest egg or rainy-day fund. In practice, though, this is not the case. Some savings accounts come with a few features normally associated with checking accounts, and few of them offer anything close to a good interest rate. Their main advantage is that they charge low fees.

This is why it’s very important to compare various banks’ APY, or Annual Percentage Yield. At the time of writing this (2020), Wells Fargo offers only an anemic 0.01% on its entry-level savings accounts. Bank of America will triple that, which in practice means multiplying one nothing by another nothing (though their Preferred Rewards program does go up to 0.06%). An online account like this one from Discover Bank, by contrast, pays as much as 1.50%, with zero monthly fees.
In general, all you have to do to apply is to gather all the things needed to open a bank account, take them with you to a bank branch or scan and upload them if you prefer to do things online. You should really read the fine print before you sign anything. Citibank’s Accelerate Savings account, for instance, pays up to 2.36 percent APY but charges a $4.50 monthly fee if your balance dips below $500.
Is a Money Market Account a Good Choice? How to Open One
One of the main ways in which banks make a profit is this: they accept money for safekeeping from people like you and me, then lend it out at interest to others. Part of this interest is then kicked back to you as a thank-you from the bank for keeping your cash with them.
One of the most lucrative ways to lend out money is called the “money market”: a highly competitive arena where companies borrow funds for short periods. Ordinary working people have no way to invest in it directly, but opening a money market account with your bank lets you participate. Legally, the same identification requirements to open a checking account apply. However, if you need to ask “How much do you need to open a bank account?”, this kind of short-term investment might not be for you. You will typically have to maintain a balance of over $2,000 to avoid penalties, even though you can withdraw money at any time you like.
MM accounts are a little more complicated than savings or checking products. If you want to find out how to open a bank account of this type, you should probably talk to a representative of your bank, perhaps someone from the private banking division. They are not legally allowed to lie to you, but they may neglect to mention a few important points. Ask questions until both of you are blue in the face if you feel you don’t understand anything. You can expect a higher interest rate than with most savings accounts, but understand that this varies with inflation.
How to Open a CD Account: A Step-by-Step Guide
Certificates of deposit generally come with interest rates comparable to money market accounts. Their main drawback is that you will usually be charged a penalty fee if you withdraw your funds before a fixed period has expired. This time ranges from a few months to several years – in other words, unlike with most bank accounts, you don’t normally have access to your money whenever you want it.
Current CD APY’s are around 1.50%; some have no minimum deposit amount, while others require you to invest at least $1,000. If you’re looking for a place to park a large sum you’re not likely to need soon, CD accounts are definitely worth looking at. In time, you can even build a CD ladder, meaning a basket of CD’s with different maturity periods. In this way, you’ll have money available for general use or re-investment at predictable intervals and still get good returns.

Finding the right CD for you requires more work than opening a savings or checking account. Most banks and credit unions offer them, but their specific terms can be quite different. Do you want your original deposit back within a year, or are you willing to keep it locked away for 36 months and possibly get a higher APY? Do you want to receive your interest payments monthly, at the end of the year or re-invest them automatically?
It is possible to open a CD account online, but this is one case where you really want to speak to someone face to face, especially if you find financial topics confusing.
Special Considerations
While most standard bank accounts should suit the majority of people just fine, some of us have particular needs and preferences. While you can probably get by with a generic, run-of-the-mill package, you may enjoy knowing that a couple of specialized accounts are available.
Online vs Offline
Main street banks have a number of things going for them: you can request cashier’s checks easily, deposit and withdraw large amounts of cash and ask for trustworthy advice tailored to your situation. All those vaults and personnel cost a lot of money, though, which is why online-only banks can offer much higher interest rates.
Still, traditional banks have made great strides in catching up when it comes to managing your money remotely. If you prefer to deal with your bankers face to face, make sure that they at least support any mobile payment system you may want to use, especially if you plan to receive payments this way.
Rewards Programs
The idea of earning points and getting access to special points is mostly associated with credit cards. Still, some checking accounts have similar perks, which may mean your fees being waived, cashback on debit card purchases or airline miles. This isn’t a reason to choose a particular account, but if some bank’s rewards system suits your lifestyle, you may as well benefit from doing what you would have anyway.
Senior Banking
Though it might seem that all companies are trying to attract only millennials, several banks offer specialized banking packages tailored to the needs of retirees. Some of their special features include enhanced fraud prevention, personalized advice on money management in your golden years and free checking.
On the downside, these accounts usually entail fairly high monthly fees and/or minimum balance requirements. For some people, the benefits will be worth it, but it’s a very good idea to compare “senior” and garden-variety checking accounts side by side.
Business Banking
If you’re self-employed or have a side business, you may want to look into bank accounts designed specifically for SME’s. These make it easier to separate your personal and commercial expenses, allow you to accept credit card payments and often come with accounting features not found in personal accounts.
How Do I Choose the Right Bank?
Normally, opening a bank account is not hard, but it’s also not anyone’s idea of fun and not something you want to do every other week. While many companies offer nearly identical packages, who you choose to bank with is also important.

Customer Service and Trustworthiness
Banks have a (somewhat deserved) reputation for sometimes placing their own profits above the welfare of their clients. It’s easy to find out which are worth doing business with and which to steer clear of.
Some common sense is also in order here. By law, banks can’t lie to you, but they’re rarely under any obligation to make sure you understand every last one of their terms and conditions. If their advertising seems like a hard sell and doesn’t explain the potential disadvantages of an account frankly, it may be better to look elsewhere.
Very importantly, you’ll also want to be sure that your deposit is FDIC insured. Almost all banks in the U.S.A. are, but it doesn’t hurt to check.
One Bank or Many?
While we at ProMoneySavings will always recommend shopping around for the best deals, there are some advantages to doing all of your business with a single bank. You may only need a basic checking account right now, but in a few years, you might be looking for investments, mortgages or car loans. Being a loyal customer will often get you better terms, extra features, and a faster approval. Bank of America, for instance, lets you open a fee-free savings account as long as you do your checking with them. Even if you find a good deal somewhere else, chances are that your preferred bank has a similar, competitive package.
Local or National?
While there are advantages to going with one of the top national banks, don’t neglect local operations. They typically have the same depositors’ insurance, lower fees and allow you to build up a relationship with a manager rather than dealing with a faceless machine. More importantly, shopping locally means that more money stays in your community. Since your deposits are used to back up the loans they make and they tend to lend to local businesses and families, this helps keep wealth in your area rather than having it flow off to the city.
On a related note, there’s little practical difference between banks and credit unions from the customer’s perspective (assuming you qualify to join the latter). Credit unions are however run for the benefit of their members, while banks try to maximize profit, meaning that their interest rates and fees are often worse.
Fancy Extras
Banks are always on the hunt for new clients. While the APY and fee structure are important, look out for freebies like text alerts about account activity, introductory offers as well as budgeting apps and even financial planning assistance – some of them still hand out toasters. Especially with large institutions, it’s possible to start out with a basic checking account and later upgrade to advanced services like CD’s and wealth management.
What to Expect When You Open a New Account
Although going to the bank in the middle of the day is a hassle, many people don’t entirely trust online banking and some aren’t sure what to bring to open a bank account, the whole process is actually pretty fast and painless. As long as you haven’t forgotten details like your date of birth and have your documents handy, applying is easy and there will be help available if you get stuck or need more info.

Why You Might Want to Close Your Old Account
If having a bank account is good, having as many as possible must be better, right? Actually, no:
- Even a bank account you haven’t used in years may still have fees piling up against your name.
- If someone gains access to a dormant account, you could become the victim of identity theft.
- You’re supposed to keep your bank updated on changes in address, but it’s easy to forget. If they can’t get in touch with you, for example when their terms and conditions have changed, they will still consider you notified as long as they sent you a letter.
Just make sure you close your old account properly. Check to see that all automatic payments have been canceled and there are no charges or transactions pending. If you fail to do so, it could ding your credit rating. You should also request written confirmation that you’ve fulfilled all your obligations in case of any later disputes.
How Much Money Do You Need to Open a Bank Account?
The good news is that there are several kinds of accounts that don’t require you to deposit any money at all when opening one. Others may ask for $10 or $25 to show that you really intend to use it (this sum is refunded only when you close the account). Some specialized products that require a lot of management and administration, like high-yield money market accounts, may require you to keep a balance of $10,000 or even more.
A better way to frame this question would be “How much money do you need to make a bank account worth having?” Certainly, money deposited in the bank can’t be stolen or lost like physical cash can. On the other hand, at 1% APY, each dollar will only earn you one extra cent per year, making the interest a negligible factor. If you choose an account that has a monthly maintenance fee, you may actually end up losing money.
In Conclusion
Opening a checking, savings or investment account is a big part of growing to financial adulthood. Unfortunately, many people do so without knowing exactly what they’re getting into or exploring all their alternatives.
This is a major and easily avoidable mistake. Remember that proverb about a penny saved is a penny earned? Just spending half an hour making sure that you’re opening the right account at the right bank can easily mean having a few hundred dollars more at the end of the year. This is basically free money and can buy you a lot of pizza.
Frequently Asked Questions
- What your name is (driver’s license or passport).
- Where you live (utility bill or rental agreement).
- What the government calls you (social security or taxpayer-identification number).
In some cases, the bank may have to see the second form of identification, a valid work or study visa (if not a U.S. resident) and perhaps other documents. If the account you’re applying for has a minimum initial deposit, you may also want to bring this along as a check or in cash.
Individual banks also carry out more or less stringent background checks to verify this information. Many prepaid debit cards and online accounts can be opened without an official-looking proof of address.
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They bother us with nonsense at school but nobody teaches us how to open a bank account. So thank you for stepping up and teaching us these important staff.
Thank you, Kassandra!
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Thank you too!
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Thank you too, Yvette!
If you ask me, online banking has been the best thing to ever happen to me. I cringe when I think of the hours wasted waiting in lines.
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