How much is it to start a bank account

Has your piggy bank filled up? Maybe you need a safer place to keep the money you’ve saved from the lemonade stand in your driveway — or maybe it would be handy to have a credit or debit card in your wallet.

Whatever you’re looking to do with your money, it might be time to open a bank account. There are many potential benefits to having a bank account, including convenience, security and even access to credit. 

According to Balancing Everything, over 94% of American households had bank accounts in 2019. Now, banking continues to be an important part of the average American’s finances.

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What you need to open a bank account

You should prepare the following items, according to Chase.

1. The most basic information you will need is your contact information, including name, address and phone number.
2. Chase suggests you also have at least two forms of government-issued photo ID, like a valid driver’s license or a passport. The Consumer Finance Protection Bureau, though, says some banks accept foreign passports and consular IDs if you don’t have United States identification.
3. You will need your social security number or individual taxpayer ID number, according to Chase.
4. You’ll likely need proof of your address, like a utility bill with your current address on it.
5. Depending on the financial institution you’re applying to, you may need additional documentation. For a student checking account, you may need proof of enrollment in an eligible school like a student ID or an acceptance letter to the institution in question.
6. You may also need to provide a deposit at the time of applying, especially if your state has a minimum deposit requirement.

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How to open a bank account

According to Chase, you’ll have to take the following steps to open an account at most banks:

1. Choose a bank based on benefits (account management, withdrawal limits and more) and convenience (ATM locations and access to bank locations).
2. Confirm you are eligible. Many banks have age requirements or require parental involvement.
3. Start the application process. Call the bank or go in-person to get your questions answered.
4. Choose the accounts you want. Do you want a checking account, a savings account or both?
5. Make sure you understand your new account after you’re approved.

How much money do you need to open a bank account?

Some states have minimum deposit requirements for opening a bank account.

According to the Consumer Finance Protection Bureau, you will typically need an initial deposit between $25 and $100 for a checking or a savings account.

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A bank account can be convenient if you need a place to deposit paychecks or a way to pay bills and cover everyday spending. But not everyone has a bank account: Federal Reserve data shows about one-fifth of U.S. households are either underbanked, meaning they rely on nontraditional banking options, or unbanked, meaning they have no bank account at all.

Opening a bank account has its benefits, and the process isn’t as complicated as it may seem. Whether you’re preparing to open your first bank account or you’re ready to switch to a new bank, it helps to know what to expect.

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How To Choose a Bank or Credit Union

If you’re in the market for a new bank account, you’re likely considering traditional banks, online banks and credit unions. Though all three offer a range of products and services, it’s important to choose the option that fulfills your specific financial needs.

Traditional Bank

Traditional brick-and-mortar banks typically offer a range of account types, including personal and business checking and savings accounts. The main advantage traditional banks offer is local branch access. If you need to deposit cash, you can do so at a drive-through or in person at a teller window. Under the umbrella of traditional banking, you’ll find big banks as well as smaller, regional or community banks.

Online Bank

Online banks and banking services offer many of the same account options you’d find at traditional banks. The difference is that you’re banking through a website or app versus accessing your money at a physical branch. Online banks typically charge fewer fees and offer better interest rates on deposit accounts than on traditional banks. Neobanks, fintech firms that offer banking services, are included in the online bank category.

Credit Union

A credit union is a financial institution in which each account holder is a member. Typically, you need to meet certain requirements to join a credit union. Some cater exclusively to military members and their families, while others target state employees or people who live in certain geographic regions. Other credit unions are nationally available. Credit unions often charge fewer fees, and they may offer more favorable interest rates for savers and borrowers.

Which Is Best for You?

If you like having access to cash, a traditional bank with a wide ATM network might make sense. If your primary goal is to earn interest on your money, online banks and credit unions may offer better rates than traditional banks.

When deciding where to open a bank account, consider your lifestyle and preferred money management style first. Then, think about what you need from a bank and a bank account. Here are some questions you’ll want to ask as you compare traditional banks, online banks and credit unions:

• What types of accounts are offered?
• How will I be able to access my money?
• What fees does the bank charge?
• What kind of rates can I expect on savings?
• Is there a minimum deposit or minimum balance requirement?
• How can I contact customer service?
• How secure is online and mobile banking?
• What features are included with online and mobile banking?

Reading online reviews of the best banks can help you narrow down the list of places where you might like to open an account. You also can ask friends and family what they like—or don’t like—about their current banks.

Types of Bank Accounts To Consider

Once you decide where to bank, it’s time to choose the type of account to open. Again, the answer depends on your specific banking needs.

Here are the most common types of bank accounts:

• Checking account: A checking account is a place to deposit money you can use to make purchases, pay bills and withdraw cash. Because the primary use of checking accounts is spending versus saving, checking accounts tend to have lower interest rates than other accounts.
• Savings account: A savings account is where you can deposit money you don’t plan to spend immediately. Most savings accounts pay annual percentage yields (APYs) that may fluctuate over time and vary based on the account balance.
• Money market account: A money market account has features of a checking account and a savings account. Money market accounts help you earn interest on your balance—like a savings account—and they typically come with a debit card and check-writing privileges—like a checking account.
• Certificate of deposit (CD): A CD is a savings vehicle that allows you to deposit money for a set period of time, like one, three or five years. In most cases, you can’t access money in a CD before the end of the term without paying a penalty. Due to their lack of flexibility, CDs are best for those who won’t need access to their money right away.

Checking vs. Savings vs. Money Market Account

Checking accounts, savings accounts and money market accounts are all deposit accounts. But they work in different ways and don’t always share the same features and benefits.

A checking account, for example, is designed to hold the money you’ll use to pay bills or cover everyday expenses with a linked debit card or by writing checks. Some checking accounts earn interest or offer rewards, but that’s usually not the main purpose of having a checking account.

Savings accounts and money market accounts can also earn interest, and both are designed to hold the money you don’t plan to spend right away. You may use a savings account for your emergency fund, or you could save money toward a down payment on a home in a money market account.

Some money market accounts offer debit cards or check-writing capabilities. Both money market accounts and savings accounts have been subject to federal rules limiting the number of withdrawals you can make each month. (In response to the Covid-19 pandemic, the Federal Reserve lifted the restrictions in 2020, but many banks still impose limits.) Checking accounts are not subject to these limitations, although the bank or credit union may set limits on withdrawals.

CD accounts are one more type of bank account you may open. A CD lets you save money and earn a guaranteed rate of return. These are time deposits, which means you agree to save for a set period of time. Your money earns interest and, once the time is up and the CD matures, you can withdraw your original savings deposit along with the earned interest. Just be aware that taking money out of a CD ahead of its maturity date could trigger an early withdrawal penalty.

What To Expect When You Open Your New Account

Opening a bank account is something you can do relatively quickly, either online or at a bank or credit union branch.

Generally, you can expect the bank to ask you to fill out an application for a new account—that’s usually the first step. From there, you’ll need to verify your identity and provide any other information the bank asks for, such as your address or phone number.

If the bank requires a minimum deposit, you’ll have to make that deposit when you open your new account. If you’re opening an account online or making your first deposit using an ACH transfer from another bank, you’d need to give the new bank your routing number and account number to complete the transfer.

Some banks require further verification before you can start using your new account if you’re linking it to an account at another financial institution. For example, the bank may make one or two small test deposits into your new account. You will have to verify these amounts to activate your account, which can take a day or two.

Also, keep in mind that there may be a holding period on your initial deposit. For example, if you’re making your first deposit by check, it could take a few days for the check to clear. You may also be waiting several days for your debit card or first order of checks to arrive.

What Do You Need To Open a Bank Account?

Every bank is different when it comes to opening new accounts but, typically, you’ll need a government-issued photo ID, a Social Security number or Individual Taxpayer Identification Number (ITIN) and your minimum initial deposit

Almost any bank or credit union requires some form of a government-issued ID to verify your identity. This can be a driver’s license, state-issued ID card, passport or birth certificate. In some cases, you may need more than one form of ID.

Banks can also require you to complete an application for a new account. This means providing additional information such as your physical address, phone number and email address. If you’re opening a joint account, that person also has to provide their ID and Social Security number.

How Long Does It Take To Open a Bank Account?

Opening a bank account is generally a fast process that can take anywhere from a few minutes to a few days, depending on the financial institution and the type of account. Most banks can open accounts on the same day when you apply in person.

Opening a bank account online can take minutes, but you’ll have to wait five to seven business days for a physical debit card if you plan to use the account for purchases at retailers that don’t support digital wallets.

How Much Money Do You Need To Open an Account?

When opening a new bank account you’ll need to consider how much the bank requires you to deposit initially, generally referred to as a minimum opening deposit. This amount can vary by bank and credit union.

Some banks, for example, may let you open a bank account with no minimum deposit required or a minimum deposit as low as $1. Others may expect you to have amounts ranging into the thousands of dollars to open a new account.

If a bank or credit union requires a minimum deposit, there are a few ways you can make it. For instance, you can use cash or a check that’s written out to you to make your initial deposit. If you already have a bank account, you also can use an ACH transfer to move money from it to your new account electronically.

How Old Do You Have To Be To Open a Bank Account?

Typically, you need to be at least 18 years old to open a bank account on your own.

Children’s Accounts

Some banks and credit unions offer teen checking and student checking options for kids under 18. These usually require a parent or guardian’s signature to open.

Financial institutions may also offer savings accounts for kids, with parents acting as the custodian until the child turns 18. Once the child reaches their 18th birthday, they automatically assume ownership of the account.

Joint Accounts

A joint bank account has more than one owner. You may open a bank account with your spouse if you’re married, or you may set up a joint checking account with an aging parent if you’re helping them manage their finances.

Joint accounts typically belong to both account owners equally. This means you both have access to funds for making purchases or withdrawals and you can both add to the account. Normally, both people have to be 18 or older to open a joint account. Your financial institution may, however, offer joint accounts for parents to share with minor children.

Closing Your Old Account, If Needed

If you already have an existing bank account and you’re moving to a new bank, you may need to close the old account. There are a few important things to do here to make sure the transition is a smooth one, including:

• Update your direct deposit information with your employer, so your paychecks go to the right bank.
• Update direct deposit information with anyone else you receive money from, such as government benefits or child support.
• Switch any automatic bill payments over to your new account.
• Cancel recurring transfers between linked accounts.
• Update your bank account information in mobile payment apps.
• Set up new text and email notifications for your new account.
• Destroy paper checks and the debit card linked to your old account.

You also should consider what needs to be done with any accounts you plan to leave open at your previous bank.

For example, if you have CD accounts there, think about what you want to do with them once they mature. You could roll them over into new CDs at the same bank, but if your new bank offers a higher annual percentage yield (APY), you may be better off withdrawing your savings and starting fresh.

It’s also a good idea to get a written statement from the old bank specifying that your account is closed. This can help you avoid situations where the bank may reactivate your old account, triggering fees.

Bottom Line

Opening a bank account is relatively straightforward once you decide where to bank and which type of account you want to open. Start by assessing your current financial situation, then choose the option that best matches up with your needs.

Frequently Asked Questions (FAQs)

How long does it take to open a bank account?

It’s possible to open a bank account online in just a few minutes. You can decide which type of account you need, enter the relevant information and link an external account to make your initial deposit. If you’re opening a bank account at a branch, the process may take longer.

When should I open multiple bank accounts?

Opening multiple bank accounts could make sense if you need to keep different funds separate from one another. For example, you may want to open a checking account for spending and paying bills and a savings account to stash your emergency fund. Married couples may choose to share a single joint account and maintain separate accounts. If you run a business, it’s likely you will want to have both a personal and business checking account.

Is my bank account safe from creditors?

Creditors can levy your bank account to collect certain debts. But bank accounts that only hold government benefit payments can’t be garnished. Opening a bank account in a state that doesn’t allow bank levies or garnishment is another option. There also are other ways to fight a creditor’s levy on your bank account.

How do I open a business bank account?

To open a business bank account online or in person, you’ll need to share some personal information about yourself as well as information about your business. You’ll also need to make the minimum required deposit to open an account. Business bank accounts include checking and savings accounts, as well as credit card and loan accounts. The best bank at which to open a business account is one that offers the best combination of features, services and costs based on what you and your growing business need.

What do I need to open a business bank account?

There are certain requirements to open a business bank account you’ll need to meet. Banks may ask for your Social Security number or employer identification number (EIN), a copy of your business license, your “doing business as” (DBA) name and your organizing documents to open a business bank account. You may also need to share details about your business revenue and the number of employees you have if any.

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