Open a bank account isn’t as simple as walking up to a teller and handing over your money. Creating a new account requires a bit of preparation and thought. For example, you’ll need to decide which type of account you want and how you want to use it. Luckily, while banking jargon can be intimidating, this process isn’t difficult once you know a few banking basics
Some steps are followed to open a bank account
Follow along step-by-step to set up your account.
Make sure you are eligible to open an account
Before you head to the bank, it’s advised to check whether you meet all the criteria for opening a bank account.
As a general rule, most banks will require the following
- If you’re under 18, some banks might require your parents to sign some forms when you make your account. Not all banks do this, so if you don’t want your parents to be involved with your banking, try emailing banks before you go into them asking whether they require your parents to sign.
- You’ll need to have valid identification and be willing to share basic information about yourself. In the US, you’ll usually need your Social Security number.
- You’ll need to have at least the minimum amount of money for opening an account. This can vary based on the bank and account you choose. For example, a basic Bank of Pakistan current account requires a minimum deposit of Rs.1000.
Choose the bank that’s best for you
Not all banks are the same, even when it comes to basic personal accounts. It can be very wise to contact the banks in your local area to discuss what exactly you’d get if you opened a basic account. While all banks are different, they can generally be lumped into two general categories: large chain banks and smaller local ones. See below
Detail of banks
- Large chain banks: Large banks usually have branches in most towns and cities across the country, which means you’ll be able to get basically the same service no matter where you go. This wide coverage can help you avoid fees you’ll have to pay for using other banks’ services (like ATM fees, etc.) Large banks also usually have the resources to offer services like 24-hour helplines for their customers and build trust with them.
- Smaller local banks: Small banks offer a more personal, human experience. They tend to be friendlier than big banks in several ways — not only will they be willing to offer more personal, one-on-one attention, but they’ll often be willing to “work with you” when something goes wrong (like you overdraft from your account). Smaller banks also usually charge a little number of fees for using their services. Smaller banks often invest their money into the local community, rather than in national, or multinational large projects that chain banks might be investing in. On the other hand, smaller banks fail more frequently than large banks (this is still very rare, though). In addition, credit unions are another option for banking. Credit unions are not-for-profit financial institutions, often with a mission to be “community-oriented” and “serve people, not profit. Credit unions have successfully made their services more accessible by partnering with other credit unions to offer shared branch banking and ATMs.
Pick the type of account you want
Most of the time, when someone opens his or her first bank account, it is a regular checking or savings account (or both). Both of these types of accounts allow you to safely store your money with the bank and withdraw it when you need it. However, each type of account is best for different tasks. See below:
- Checking:A checking account is what most people use for day-to-day purchases. With a checking account, you’ll get a checkbook and a debit card that you can use to pay for things with the money in your account. Money in a checking account doesn’t change over time — if you want more money, you have to put it in yourself.
- Savings: As its name suggests, a savings account is best for saving money long-term. Money in a savings account slowly gains interest — in other words, the bank will pay you a small amount for storing your money with it. The more money you have in the account and the longer you save it, the more interest you get. You can still withdraw money from a savings account at banks and ATMs, but you can’t generally use it for checks and debit card payments.
- If you have enough money to meet the minimum deposit for both, having both a checking and a savings account is usually best. You can use the checking account for your daily expenses and put extra money in your savings to make interest.
Visit your bank and ask to open an account
Opening an account in person is usually the best option for first-time account holders. One big advantage of opening an account in person is that you can ask the teller all of your questions and get immediate answers (as opposed to the waiting you’ll have to do online or on the phone). Also, because you can sign the forms and receive your confirmation documents on the spot, the process of opening an account is also usually speedier in person.
- The rest of this section will assume you’re opening an account in person. However, depending on your bank, you may also be able to open an account over the phoneor even online. These options vary from bank to bank — not all banks will let you open your account these ways.
Ask important questions before you finalize your account
Now is an excellent time to ask for clarification on any issues regarding your account that you don’t understand. Below are a few suggestions for questions you may want to ask, but don’t be afraid to ask any others that occur to you.
- Is there a monthly fee for maintaining this account? If so, what is it?
- Is there a minimum balance that I must keep within this account? If so, what is it? What sorts of fees apply if I go under that limit?
- What is the interest rate of my savings account? How often does interest generate?
- Is there a limit to the amount of transactions (deposits/withdrawals, check writing, ATM uses) I have per month?
- Where can I withdraw cash without paying any fees? What is the fee for using an ATM that doesn’t belong to this bank?
Is the account I’m applying for insured by a Deposit Guarantee Scheme (DGS)?
Provide the necessary information to create your account (H6)
As noted above, opening a checking account requires a few basic pieces of personal information. You may or may not have to provide documentation to prove this personal information. This depends on the exact bank you’re opening an account with. In general, it’s a good idea to have:
- Proof that you are who you say you are: Have a government-issued ID with your photo on it with you (a driver’s license or a passport are best).
- Proof of address: A phone bill, driver’s license, or any other official document with your name and address will usually do.
- Proof you are a registered citizen: The bank will ask for your Social Security number, taxpayer identification number, or employer identification number to ensure that you are “on record” with the government. As long as you know this number, you don’t generally need to have your Social Security card, etc. with you.
Keep the account documents you receive secure
When you finish completing your bank account, you will receive documents that contain important information about your account. Keep these in a safe place, like a strongbox. Don’t let people you don’t trust access these documents — they may be able to use them for malicious purposes. If you can, it’s a wise idea to commit the following information to memory so that you don’t need to rely on the documents in the future:
- Your four-digit PIN number: You need this to use your debit card for purchases.
- Your bank account number: You need this for financial tasks like setting up direct deposits.
- Social Security number: You need this for various tax and financial tasks in the future.
- If you believe your bank account information has fallen into the wrong hands, you can always contact your bank and request a “freeze” on your account to prevent unauthorized use.
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Written By Waqas