Why a Bank Account?

Checking and savings accounts with a federally regulated bank or credit union provide a secure and cost-effective way to manage your finances and reach financial goals. Bank accounts can:

1. Keep your money safe. Regular savings and checking accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA) for up to $250,000 for each individual per account. 
2. Provide easy access to your money. Bank accounts provide easy access to your money through ATM/Debit cards, checks, branches, and online banking apps. Checking accounts allow an unlimited number of transactions per month, making them ideal for paying daily household expenses.
3. Provide money management tools. Many banks provide tools for you to track your spending and account activity. Most banks provide online and mobile banking, monthly statements, and various alerts on your account activity. 
4. Help you save money. Traditional bank accounts are generally lower cost than non-banking alternatives such as money orders and check cashing stores. 
    

Step 1: Assess your needs. 
 

• Will you make multiple transactions throughout the week? 
• Is it important to you to have acess close to school? Close to work? Close to home? All three?
• Are you looking to save for a goal? 
• Do you need access to conveniently located banking centers or ATMs? 
• Do you need access to a bank teller on weekends? 
• What kinds of accounts do you qualify for (i.e. student, senior citizen, income-based, or military accounts)?
   

Step 2: Choose the right account.

A clear understanding about your personal needs will help you choose the right financial product. Here are a two basic bank account options:

Checking Account

• Good for daily/multiple transactions
• Accounts are easily accessible
• No fees for too many withdrawals
• Debit cards and checks allow you to make purchases and pay bills
   

Savings Account

• Good for medium- to long-term goals
• Vary in type such as regular savings and money market
• Account accrues interest on funds
• By law accounts have a withdrawal limit of up to 6 times every month and penalties for too many withdrawals can result in bank fees and account closure
   

Step 3: Gather information.

In order to open a checking account, banks require a few pieces of documentation:

• A U.S or foreign government-issued form of photo identification. Some banks might have differing policies on which foreign IDs they accept;
• A secondary form of ID such as a Social Security card, birth certificate, or a bill with your name and address on it;
• A Social Security or Individual Taxpayer Identification Number. If you do not have either, you may only be able to open a no-interest account;
• An initial deposit to open the account.
   

Step 4: Compare products and institutions. 

Choosing the right account for you also depends on finding the product and institution that offers the best set of features at the lowest cost. Compare products from different institutions. There a few important questions to ask the bank representative: 

• What is the minimum balance required to avoid monthly service fees? 
• What are the monthly service fees?
• If I set up direct deposit does it eliminate the monthly fee?
• Are there per-check or transaction fees?
• Are there ATM fees? 
• Can I access my account online and are there any costs associated with that?
• Can I pay bills online and are there any costs associated with that? 
• How can I avoid overdraft fees?
• Are low balance alert notifications an option? 
   

Step 5: Open your account.

A number of convenient options for opening a bank account exist. Many banks allow you to open your new account in person, on the phone, and online. Choose the option that best fits your schedule.

What if I have a ChexSystems record? Can I still open a bank account?

ChexSystems is the consumer reporting agency for banking activity. Their report shows if you owe money to banks. This debt will not show up on your credit report. If you aren’t sure whether or not you have a ChexSystems record, see our resource on ChexSystems If you have a record within the system, you have a few options for opening a bank account. 

• Pay the amount owed and get the record updated. If there is an error on your record, see our guide on how to dispute ChexSystems records. 
• Utilize the Basic Banking search tool to identify banks that will still allow you to open an account. There is a drop-down menu titled “payment of previous overdraft required before opening new account.”
• Second Chance Accounts, specifically created for individuals with a ChexSystems record, can also be an option. These accounts may have fewer features and more fees. Some banks also offer second chance accounts that transition into regular bank accounts after a period of responsible use. See Key Terms for Banking for a list of second chance accounts. 
• Explore lower-risk checking accounts
   

What banking products or services can help me get ahead?

The right banking products and services can be good resources for budgeting, building credit, and progressing on the path to homeownership. 

1. Budgeting: Online bill pay and budgeting tools can be helpful for establishing a budget. The option to open multiple savings accounts can help you have different accounts for different savings goals. Some banks will also offer multiple overdraft service options, including the ability to block overdrafting. 

2. Credit: Banks can offer credit cards with no annual fee, that report credit activity to all 3 credit bureaus, and that offer a free FICO score. Other credit building products include secured credit cards and credit building installment loans. 

3. Homeownership: Representatives can meet with prospective homebuyers to informally provide homeownership and mortgage guidance without a hard credit pull. Important questions to ask a representative include: 

• How much can I borrow?
• How will a lender evaluate my income and credit?
• Am I eligible for the lowest interest rate at my current credit score?