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Providing a safe, convenient way to access your money, make day-to-day purchases and pay bills, a checking account is the foundation of your financial life. Whether you're ready to open your first checking account or already have an account and are shopping for one with better perks, the steps to opening a new checking account are the same. Here's a step-by-step guide to opening a checking account.
Find Checking Accounts
1. Compare Checking Accounts
While a traditional bank may be the first place you think of when seeking a checking account, you can also get a checking account at a credit union or an online-only bank. Many financial institutions offer different types of checking accounts for different needs. When comparing checking accounts, consider how important each of the following is to you.
You may want a bank with lots of physical locations if you'd rather transact business with a teller than online or via a bank's mobile app. Credit unions typically have fewer branches than traditional banks. Online-only banks have no physical branches at all, so they're best for those who are comfortable doing everything online.
Cash Deposits and Withdrawals
Many credit unions and online-only banks now offer access to a large network of ATMs, just like traditional banks. This makes it easy to withdraw cash. If you deposit cash frequently, however, make sure the ATMs accept these deposits.
Minimum Balance Requirements
Some checking accounts require keeping a certain amount of money in your account to avoid fees (more on this below). If you think you may have trouble keeping a cash cushion in your account due to an irregular income or other factors, you may want to look for a checking account with no minimum balance requirements.
Other Financial Services
Having access to other financial services, such as savings accounts, money market accounts, certificates of deposit (CDs) and mortgage or auto loans in one place can be convenient, so check out what other features the bank or credit union you're considering offers.
Interest Earning Potential
Standard checking accounts generally earn little or no interest. However, some banks and credit unions offer high-yield checking accounts that have annual percentage yields (APYs) up to 5%. You'll typically have to meet criteria, such as having a certain number of debit card transactions or direct deposits or using online banking, to earn the highest rates.
High school or college students may want to consider a student checking account. Designed for student needs, these accounts may offer features such as low fees, no minimum balance requirements, linking with your student ID card and cash signup bonuses for opening an account.
Make sure any bank or credit union you're considering is federally insured. This protects your deposits up to a certain amount if the financial institution fails. Banks are insured by the Federal Deposit Insurance Corporation (FDIC), while credit unions are insured by the National Credit Union Administration (NCUA).
Checking accounts can involve multiple fees; however, some fees can be avoided or waived if you meet certain criteria. Find out what the bank you're considering charges for each of the fees below.
- Monthly maintenance fees: Banks may charge a monthly fee to keep your account up and running. On average, maintenance fees cost about $14 per month. However, many banks waive maintenance fees if you meet their minimum balance requirements, open multiple accounts at the bank or have your paycheck directly deposited into the account.
- Minimum balance fees: Some checking accounts require maintaining a certain minimum balance to avoid paying the maintenance fee. Find out how the bank calculates whether you've maintained a high enough balance. Depending on your bank's policy, you may be charged if your balance goes below the minimum at any point in a single day, at the end of each day or on a monthly average.
- Overdraft protection fees: When you sign up for overdraft protection, your bank will authorize a transaction even if there's not enough money in your checking account. They'll charge an overdraft fee, currently about $30 on average. They may even charge the fee daily as long as your account is overdrawn.
- Nonsufficient funds fees: If you don't have enough money in your account to cover an ACH or check transaction, the bank will decline it and charge a nonsufficient funds fee. These fees typically average $27 per transaction.
- ATM fees: You may pay a fee to use an ATM that's not in your bank's network. In some cases, both your bank and the ATM network will charge a fee. At $2 to $5 on average, these fees can make withdrawing cash expensive.
- Inactive account fees: If six months or more go by without any transactions on your checking account, some banks charge an inactivity fee or dormancy fee, ranging from $5 to $20.
- Stop payment fee: When a paper check gets lost or you have a dispute over an ACH payment, you can ask the bank to stop the payment so the money stays in your account. The average stop payment fee is about $30.
- Check fees: You may rarely write checks, but sometimes it's the only way to pay a business or individual. A bank may charge a per-check processing fee (typically a percentage of the amount) or impose a fee if you exceed a certain number of checks in one month. Having checks printed by your bank usually involves a fee, too.
2. Gather the Necessary Information
Once you've chosen a bank or credit union, gather the documents and information you'll need to open your account. Some common requirements include:
- Current government-issued identification (such as a driver's license, passport, military identification card or state identification card)
- Social Security number or taxpayer identification number
- Proof of address, such as a utility or cable bill or mortgage statement
- Date of birth
- Contact information
If you're opening a joint checking account with someone else, they'll need the same information.
If you're opening a student checking account, you usually need proof of enrollment at a qualifying school.
3. Submit an Application
Use the information you collected to fill out an application for a checking account. You can generally apply for a checking account online at both traditional and online-only banks. However, you can also fill out a paper application at a bank branch if you prefer. You'll then sign the application; if you are under 18, you may need an adult cosigner.
4. Make an Opening Deposit
Banks may require an initial deposit, typically at least $25, to open a checking account. You can deposit cash (if you're applying at a physical branch) or transfer money from another bank or credit union. If you plan to transfer funds, make sure to have your account and routing numbers handy.
5. Use Your Account
Once your checking account is open and funded, review the account's terms and conditions to be sure you understand any fees and requirements. Then take advantage of all the ways a checking account can make your life easier.
- Set up direct deposit of your paycheck so you can get your money faster.
- Use online bill payment to schedule payments in advance so you never miss a due date.
- Take advantage of online and mobile app features that can help you manage your money better. For example, you may be able to track your spending, get alerts when your balance dips below a certain level or set up automatic transfers to a linked savings account.
The Bottom Line
Because banks don't report your account information to credit bureaus, your checking account won't directly affect your credit score. However, it could impact your credit indirectly if you fail to pay overdraft fees and the bank sends your account to collections. Keep an eye on your checking account to make sure you always have enough money to pay your bills—and keep an eye on your credit by signing up for free credit monitoring from Experian. You'll get notified of changes in your credit report, which can help prevent identity fraud and other unpleasant surprises.