7 Things to Know when Opening a Bank Account

In a world that’s moving increasingly paperless, you might not think a checking account is necessary. But a checking account still makes it easy to pay bills, provides a way to track your spending, and can get you the fastest access to your paycheck or other payments via direct deposit. Getting those benefits requires opening a checking account that’s right for you. Find out what to ask when opening a checking account and get some other tips below.

What to Know to Open a Checking Account

1. Research your checking account options
2. Understand FDIC-insured
3. Check your credit
4. Know what you need to open a checking account
5. Make sure you understand all the fees
6. Find out what happens if you overdraw your account
7. Decide whether you also need other banking products

1. Research Your Checking Account Options

One of the things to know before opening a bank account is that you have a lot of options. Begin by deciding whether you want an online-only checking account or one with a local branch.

Accounts with banks that have branches in your area mean you can make deposits in the drive-through, speak face-to-face with tellers when necessary, and withdraw cash at the teller’s counter without paying ATM fees. In many cases, you also don’t pay fees at the bank’s ATMs. 

Online-only financial services like Chime don’t offer access to a local branch, but they typically let you make deposits via mobile apps. Some also waive a certain amount of ATM fees if you make withdrawals at ATMs in your area. One benefit of these types of accounts is that the savings the bank experiences by not staffing local branches may be passed on to you in the form of fewer fees.

After you decide whether local or online-only is right for you, you can choose from many options:

• A traditional checking account, which lets you write checks on your account and usually comes with an option for a debit card. If you don’t plan on writing a lot of checks each month or can meet minimum transfer or deposit requirements, you may be able to find a free traditional checking account.
• A premium checking account, which may provide access to rewards or other extra features. To qualify for this type of account, you may need to deposit a larger amount or hold a large minimum balance in your account.
• Interest-bearing checking accounts, which allow you to earn some interest on the balance you hold in your account.

2. Understand What FDIC-Insured Means

FDIC stands for the Federal Deposit Insurance Corporation. It’s an agency set up by the federal government to help protect deposits with insured banking institutions. 

The standard amount of deposit insurance is $250,000 per depositor per bank. That’s for each covered category, which means you’re covered up to $250,000 total for checking accounts with each bank.  

However, this insurance is only in play if the checking account you open is with an FDIC-insured bank. If you’re considering a new account, ask whether the bank is insured. You can also search the FDIC’s database via the BankFind Suite.

3. Check Your Credit

Some banks run a credit check or otherwise look into your personal financial history when you apply for a checking account. Some might be hesitant to let you open an account if you’ve demonstrated irresponsible or questionable money management in the past. Typically, if you’re just starting out building credit, you shouldn’t have an issue getting a traditional checking account with most banks.

Potential black marks on your record that might impede your ability to open a checking account with some banks might include:

• A very low credit score or a lot of negative items on your credit history
• History of bounced checks with systems such as ChexSystems
• Collections or other items that might indicate you left another bank on poor terms or owe money on a previous account 

4. Know What You Need to Open a Checking Account

While the details might differ slightly at each bank, typically you need the following items to open a banking account:

• A valid form of ID, typically a government-issued ID—some banks may require multiple forms of ID
• A Social Security number or Taxpayer Identification Number
• Money or a check to deposit to start your balance off—some banks may require a certain minimum amount 

5. Make Sure You Understand All the Fees

Read all the fine print before you sign on the dotted line to open your account. Pay particular attention to fee structures so you know how much your checking account might cost. Here are some potential fees to be aware of:

• Monthly or yearly charges just to have the account
• Fees for making deposits in certain ways, such as at the teller window
• Withdrawal fees or fees for using nonbank ATMs
• Fees for writing checks over a certain amount each month
• Fees for overdrafts
• Charges for paper statements

6. Find Out What Happens if You Overdraw Your Account

Overdrawing your account can cause a lot of financial stress and even result in extra fees. But that’s not always the case, and how an overdraft is treated depends on the policies of your bank.

While it’s best to ensure you’re keeping track of your checking account and budget to minimize the chance of overdrawing your accounts, mistakes do happen. Find out whether you’ll be hit with large fees for overdrafts, what type of overdraft protection your account comes with, and whether you can link the checking account to a savings account for added protection. 

Overdraft protection helps ensure your charges are covered so you don’t have to deal with additional insufficient fund (NSF) fees or collections from merchants. It can also help reduce inconvenience at checkout if you try to use your card when there’s not enough money in your account. However, overdraft protection can come with hefty fees in some cases, so makes sure you know how much it might cost.

7. Decide Whether You Also Need Other Banking Products

If you might also be interested in a savings account, business checking account, or other banking product, it could make sense to get them at the same bank. The questions to ask a bank before opening a business account or savings account are similar to those detailed above. Ultimately, the more educated you are about the decision, the better you’re able to choose the right checking account or other product for you.

Tip: If you’re interested in business checking accounts or building business credit, check out the Business Credit 101 article to get started.

If you’re researching getting a checking account as part of building strong personal finance and credit habits, learning more about your credit history and score can be a good idea. Start with the free Credit Report Card to learn how you’re doing with the five major factors that make up credit scores—and where you might have room for improvement.

You might also consider signing up for ExtraCredit®. This financial tool lets you see 28 of your FICO® scores and discover what’s on your credit report with each of the three major credit bureaus. ExtraCredit includes features such as Build It, which provides you tools to build your credit history for the future, and Reward It, which lets you earn cash rewards for signing up for eligible offers.

Disclaimer: Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC

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