How to open bank accounts

The benefits of having a bank account and how to open one with any of the major banks in the US.

It has been estimated that in 2009 over 17 million people in the USA do not have a bank account and many more have accounts but don’t actively use them. The reputation of banks has taken a hammering during the financial crisis.

For those of us who still think keeping our cash in the sock drawer or under the mattress is a bad idea it is now a “buyer’s market” for opening a new account, with banks being encouraged to offer no-frills, low-cost checking and savings account to draw people back in to the fold, even though the days of  “free banking” may well be over.

Why do I need a bank account?

1. To keep your money safe. People who keep large amounts of cash in insecure places are more likely to fall victim to theft or fraud.
2. Cash under the mattress garners no interest. Even in the current climate of low interest rates if you do have cash to spare , having a bank account is a way of making this money work for you
3. Many online transactions require a bank account, and the cash card that comes with them, e.g. to transfer money from PayPal
4. Having your money in an account makes it much easier to manage your money. Most banks now offer an online banking service which makes checking your balance, setting up standing orders and transferring money between accounts very easy
5. Establishing a credit record which will be beneficial for future loans or large purchases, such as buying a vehicle or house
6. Access to other bank services, such as check-books, ATM card, credit cards and loans

Although many people now have a negative view of banks and a few high-profile bank failures have caused depositors to be nervous, banks are still closely regulated and  your money is protected.  Regulation of banks is also likely to become even more strict now. The Federal Deposit Insurance Corporation (FDIC) protects your individual accounts up to a limit of $250,000.

Which kind of account should I open?

Having decided that a bank is the best place for your cash there are two basic kinds of account to consider.

Checking accounts: these are the most convenient for your everyday transactions such as paying bills and depositing pay checks. Each bank will have different rules for  minimum balances required, available overdrafts, charges etc., so it is important to study the options available in the bank of your choice.

Savings Accounts: these accounts are designed as long term investments for any money you may have, above and beyond your monthly needs, and will pay interest at a higher rate. If you have a problem opening a checking account due to a poor credit history, savings accounts may well be available to you and allow you to build a relationship with your bank so that you may be able to open a checking account with them in the future.

How do I open an account?

Shop around: there are many banks available in the USA offering slightly different account packages so you will need to do some research before choosing the account and bank that is right for you. The Internet can provide some initial information but visiting a branch of the bank itself is important. Here you can judge the atmosphere of the bank, the responsiveness of the staff to your questions, and the counter facilities available.

Compare the features and charges of each account, the location of bank branches, the availability and ease of use of the bank’s online banking facilities, hours of opening, minimum balance requirements etc.

Make sure that the bank does not charge for withdrawals from ATMs outside their company and, if you travel frequently, chose a bank with a large network of ATMs.

Take your identification: Most banks will require two forms of ID including passports and drivers’ permits. Other forms of ID maybe be accepted so ask which are allowed during your initial research.

An initial deposit: most banks will require a minimum deposit so make sure you take this along with you in cash or checks made payable to you.

A good credit history: Banks will check you credit history before opening your account. If you have had financial problems in the past it is best to be open and honest about these as some banks have services available for those with poor credit histories.

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