What do you need to open a bank account?

Opening a bank account is an important early step in managing your finances and saving for your future. There are a variety of different types of bank accounts available, each with its own unique features and benefits. If you’re asking, “What documents do you need to open a bank account?” or wondering what you need to know about choosing a bank, the tips below can help you get on the right track. 

What are some different types of bank accounts?

When it comes to the types of bank accounts available, there are several options to choose from. Different types of bank accounts include savings accounts, checking accounts, certificates of deposit (CDs), money market accounts, and individual retirement accounts (IRAs).

Savings accounts 

Savings accounts are a wise choice for people who want to save money for short-term and medium-term goals, says Chanelle Bessette, a personal finance writer. There are many good reasons to open a savings account: They tend to be easily accessible, have a low minimum deposit requirement, and can help your money grow through compound interest. High-yield savings accounts offer a higher interest rate than the national average, according to Bessette. 

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Checking accounts

Checking accounts are designed for everyday transactions and typically come with a debit card and a checkbook. Checking accounts usually don’t feature high interest rates, but they’re ideal for daily expenses and paying bills, Bessette says. Typically, you can link your checking account with other accounts (like your savings account), making it easy to move your money around.

Certificate of Deposit

CDs are a type of bank account that commonly offers a higher interest rate than a traditional savings account. You’ll earn a set amount of interest in exchange for securing your funds for a certain term length, according to Bessette. When opening a CD account, keep in mind that if you wish to withdraw funds before the end of the term you’ve agreed to, you will likely face a penalty. 

Money market accounts

Money market accounts can offer interest rates close to those of savings accounts, while also offering a debit card and check writing abilities, Bessette says. These types of bank accounts can be a smart choice if you want to grow your money with interest but also need easy access to your cash.

IRAs

IRAs are retirement savings accounts that offer tax advantages. They are meant to be used for long-term savings and can be used to invest in stocks, bonds, exchange-traded funds, and other assets, Bessette says. Depending on what they’re invested in, IRAs can produce strong returns over a long period of time, though they may also face risk of losses. IRA CDs and IRA savings accounts are two types of bank accounts you can use in your retirement savings strategy.

What documents do you need to open a bank account?

So, what do you need to open a bank account? In general, banks require you to provide a form of government-issued identification and proof of address, Bessette advises. Here’s a checklist of information and documents your bank may request: 

• Full name and contact information
• Social Security number or taxpayer identification number
• Government-issued ID (e.g., driver’s license, passport, Social Security card)
• Employment information
• Proof of address (e.g., utility bill, lease agreement)

Some bank accounts also require a minimum deposit upon opening. If you’re opening a joint account, you may need documentation for both individuals, and if you’re co-signing for a minor, you’ll need to sign additional documents with the bank, Bessette says.

You can open your bank account at an in-person branch—just make sure to check their website or call in advance to ensure you know what documentation is required. Or, if convenience is your thing, you can open an online bank account through your bank’s website. This can be a fairly quick process, and most banks provide assistance along the way if you have any questions.

What should you consider when choosing a bank?

Whether you’re picking a new checking account, opening a CD account, starting an IRA, or opening another type of bank account, it’s important to choose the right bank for your goals and lifestyle. Here are some key considerations as you go about choosing a bank: 

Reputation

When it comes to choosing a bank, it’s important to start by evaluating the bank’s reputation. You can do your due diligence by consulting review sites to see what others are saying about the bank, Bessette recommends. “You might also want to search for recent news about the bank to see if it has been hit with any fines or lawsuits, which could factor into your decision,” she adds. 

FDIC insurance

Make sure the bank is insured by the Federal Deposit Insurance Corporation (FDIC), which means that if the bank fails, your deposits are insured up to $250,000 per depositor, per account ownership category. To find out, Bessette suggests asking the bank or using the FDIC’s BankFind tool to make sure your money will be protected by FDIC insurance, so you won’t have to worry about a potential financial disaster wiping out your savings. (Discover Bank is an FDIC Member.)

Fees and features

You’ll also want to look for a bank that offers high interest rates and low or no fees, advises Bessette. (Some banks have monthly maintenance or account fees that can eat into your savings.) You should also research whether the bank has a minimum deposit requirement upon opening an account, Bessette says, since that could limit your options.

Additionally, it’s a good idea to look for a bank with features that accommodate your lifestyle. For example, an easy-to-use mobile app or a large ATM network might be bank features that are important to you. Convenient customer service options, like online chat or phone support, might be another plus.

Interest rates

Choosing a bank that offers accounts with higher-than-average interest rates can be a big benefit, since higher rates can provide a boost as you work toward your financial goals. A savings account with a high interest rate offers a safe way to steadily grow your savings, Bessette says. 

Brick-and-mortar vs. online banks

Another consideration is whether to choose an online bank or a brick-and-mortar one. Brick-and-mortar banks usually offer in-person customer service at their branch locations, Bessette says, while online banks have remote customer service options. “Because online banks don’t have the overhead cost of running branches, they can typically offer higher interest rates,” Bessette adds.

Ready to open a bank account?

“What do you need to open a bank account?” is an important question to consider when you’re ready to take control of your finances. By understanding the types of bank accounts available and what you need to do to open one, you can make an informed decision about which kind of account is right for you. Just remember to choose a bank wisely and consider the bank’s reputation, customer service, and fees when making your decision.

Open an online savings account today to start managing your finances and preparing for the future.

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The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. Please consult your tax advisor with respect to information contained in this article and how it relates to you.