How to Open a New Bank Account

Different Types of Bank Accounts

Before you open a new bank account, think about what you’re going to do with the money and how long the money is going to stay in the account.

In a savings account, people set aside money for future use. The deposits collect interest every month and your balance will grow over time, thanks to these interest payments. A savings account is usually the first type of bank account that someone has. Many parents will open this type of account to teach kids about money and establish a pattern of saving and help them learn how to manage money early in life. A savings account is an excellent place to hold funds for specific financial goals or emergencies, since it’s separate from the money you use for ongoing expenses. Savings accounts are typically not linked to debit cards, making it slightly more difficult to access the money on the fly.

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Checking accounts are intended for everyday spending and are typically linked to a debit card that can be used for purchases or withdrawals from an ATM. These types of accounts allow you to deposit checks or cash, and pay bills, either through automatic bill paying or via paper checks. Traditional checking accounts do not earn you an interest on your account balance, but some banks now offer interest-bearing checking accounts. These basic accounts are best used to hold money needed for immediate use. They can be essential for managing your income, and it’s wise to balance your checkbook every month to evaluate how cash is coming in and going out of your account.

A money market account has features of both checking and savings accounts. They offer some check writing privileges and collect interest, usually at a higher rate than a traditional savings account. They tend to have higher minimum balance requirements than other types of bank accounts and the number of monthly withdrawals is typically capped at six. However, they can be great accounts for people who tend to hold higher everyday balances and appreciate higher interest returns.

A certificate of deposit, or CD, is a type of short-term savings account with a higher interest rate. They’re a great place to park money you won’t need to access for a set amount of time; the longer you agree to keep the money in the account, the higher the interest rate typically is. They can be great for money you don’t need right away but can incur harsh financial penalties if you withdraw funds before the CD’s designated end date.

Retirement accounts are a way to save money for the future that have certain tax advantages. This money typically earns more than a savings account or a money market account because it’s invested in the stock market. While returns are subject to market volatility, they can be substantial if the money is invested wisely. There are a few different types of retirements accounts, all with different tax implications: a 401K is handled through your employer, and there Traditional and Roth individual retirement accounts (IRAs). Talk to a financial adviser about how these accounts function and learn which is the best option for your own retirement savings.

What do You Need to Open a Bank Account?

Once you’ve decided what kind of bank account to open, you need to choose a bank, have funds for the account, and provide certain personal information that can be used to identify you. Before you gather all your information, first confirm that you are eligible to open an account. Many banks require you to be at least 18 years old to open a checking account, and some may require a parent to be part of the process for opening an account for a minor. Once you’ve confirmed your eligibility, in order to open a bank account, you’ll need the following:

• Valid Photo ID. This could be a driver’s license, passport, or state ID. Some banks may require two forms of photo ID.
• Identifying Information. You’ll need to provide your social security number or individual taxpayer identification number. The bank will need your full contact information, including your phone number and address. If your current address differs from the one shown on your ID, you’ll need to bring a current utility bill to confirm where you’re living. If you’re applying for a student checking account, you may be required to provide proof of enrollment.
• Your initial deposit. Many banks and accounts have initial deposit requirements, and you’ll need to provide those funds when you apply for the account. If the funds are coming from another bank account, you’ll need information for that account as well.
• Additional account owners. If a married couple is opening a joint account, each person who has access to the account must supply their personal information. Some banks require a cosigner when someone under 18 is looking to open an account, so a parent or guardian must be present. That adult must also provide identifying information to the bank.

Keeping Banking Information Secure

Your personal financial information is just that: personal. A paper record of transactions is easily misplaced or destroyed and keeping your account information secure is important to prevent fraud or theft. Thankfully, Microsoft 365 a few ways to help keep your financial information safe and secure.

With all bank accounts, you should keep track of funds that move in and out of the account. For a checking account that you use for everyday spending, this is especially important to have an idea of where your money is going. If you’re keeping up with your monthly bank reconciliation, you’ll be able to rectify any errors in your financial statement. This Microsoft template helps to track your deposits and withdrawals and keeps a running total of your account.

Another way to stay on top of your spending is with a check register with spending summary. It can be easy for spending to get out of hand thanks to online payments, paper checks, and debit cards. Use this helpful template track your spending and sort your outgoing money into categories like groceries, utilities, and entertainment.

Tracking your spending is important but keeping that financial information private and protected is paramount to protect you from identity theft. Thanks to OneDrive Personal Cloud Storage, you can save your sensitive financial documents to the cloud and access them from any device at any time.

When you open a new bank account, having your personal information organized can go a long way to managing your finances.