What happens when you open a bank account

Opening a bank account means you give a bank or credit union your personal information, they verify who you are, and they create a record that lets you deposit money, withdraw it, and move it between accounts. The bank holds your money in trust and pays you interest on some account types. In return, the bank uses your deposits to lend to other customers and keeps the difference.

The process takes between 15 minutes and a few days depending on whether you do it in person, online, or by mail. Most banks will ask for a government ID, proof of address, and your Social Security number or tax ID. Some will run a background check through ChexSystems, a system that tracks banking history. If you have been flagged there before, some banks will still open an account for you, but others will not.

You do not need much money to start. Many banks have no minimum opening deposit, though some require $25 to $100. Once the account is open, you can use a debit card, write checks, set up direct deposit, and transfer money online.

Key Takeaways

  • You will need a government-issued ID, proof of your current address, and your Social Security number or ITIN to open an account at most banks.
  • Opening an account online usually takes 15 to 30 minutes and you can start using it the same day, while in-person and mail applications may take a few days.
  • Banks check ChexSystems, a record of past banking problems, so if you have been flagged there, call ahead to find banks that will still work with you.
  • You can open an account with no money down at many banks, though some require a small opening deposit of $25 to $100.
  • Once your account is open, you can set up direct deposit, use a debit card, and transfer money online within hours or days depending on the bank.

Documents you need before you start

Bring or upload a government-issued photo ID. A driver's license, passport, or state ID card all work. If you do not have one, some banks will accept a tribal ID or a foreign passport with a visa. A few will accept a non-photo ID like a birth certificate, but this is rare and you should call first.

You will also need proof of your current address. A utility bill, lease, mortgage statement, or bank statement dated within the last 60 days usually works. A government letter with your name and address on it also counts. If you just moved and do not have a recent document yet, some banks will let you use a temporary address or will mail you a debit card to confirm it.

Have your Social Security number or ITIN ready. If you do not have a Social Security number, some banks will open an account with an ITIN (Individual Taxpayer Identification Number) instead, though fewer banks offer this. Credit unions are more likely to work with you if you have an ITIN but no SSN.

If you are opening an account online, you will need to upload photos of these documents or type the information in. If you are going in person, bring the originals. The bank will usually make a copy and return them to you.

Opening an account in person at a branch

Walk into a branch during business hours with your ID, proof of address, and Social Security number. Tell the employee you want to open a checking or savings account. They will ask you questions about how you plan to use the account — whether you want direct deposit, whether you need a debit card, how often you expect to withdraw money. These answers help them recommend the right account type for you.

The employee will enter your information into their system and run a ChexSystems check. This takes a few minutes. If you pass, they will print forms for you to sign. Read them before you sign. They explain the account rules, fees, and what happens if you overdraw. Some banks charge $30 to $35 per overdraft. Others offer overdraft protection, which links your account to a savings account or credit line so money transfers automatically if you run short.

Once you sign, the account is usually open when ready. You can use it the same day. The bank will give you a temporary debit card or order one to be mailed to you within 5 to 10 business days. If you need cash right away, you can withdraw from the teller.

Opening an account online

Go to the bank's website and click "Open an Account" or "Sign Up". You will enter your name, address, date of birth, Social Security number, and phone number. The bank will ask you to create a username and password. Then you will upload photos of your ID and proof of address, or type in the information by hand.

The bank runs a ChexSystems check automatically. If you pass, the account opens in minutes. You will get a temporary account number and routing number so you can set up direct deposit or receive wire transfers right away. A debit card will arrive in the mail within 5 to 10 business days.

Some online banks have no physical branches, which means you cannot deposit cash at a teller. Instead, you deposit checks by taking a photo of them with your phone and uploading them through the app. You can also transfer money from another bank account. If you need cash, you can withdraw from ATMs that are part of the bank's network, or you can transfer money to another bank and withdraw there.

What happens if ChexSystems blocks you

ChexSystems is a database that tracks closed accounts, overdrafts, and fraud. If a bank reports you to ChexSystems, other banks can see it. Some banks will deny you an account based on this report. Others will open an account but charge higher fees or limit how much you can deposit.

If you have been reported to ChexSystems, call the bank before you explore and ask whether they work with people who have ChexSystems records. Credit unions are often more flexible than large banks. Some banks specialize in second-chance accounts and will open one for you even with a history of overdrafts or closed accounts. They may require a larger opening deposit or charge monthly fees, but the account works the same way.

You can also request your ChexSystems report for free at www.chexsystems.com. If there is an error on it, you can dispute it. If the information is correct but old, some banks will overlook it if you explain what happened.

Debit cards and accessing your money

Once your account is open, the bank will send you a debit card. This card lets you withdraw money from ATMs and pay for things at stores without writing a check. The card usually arrives within 5 to 10 business days. Until it arrives, you can withdraw cash at a teller or transfer money online to another account.

When you use your debit card, the money comes out of your account when ready or within one business day. If you spend more than you have, the bank may decline the transaction, or it may let it go through and charge you an overdraft fee. Check your account agreement to see which one your bank does.

You can also access your money through online banking. Log into the bank's website or app, and you can see your balance, transfer money to other accounts, pay bills, and deposit checks by taking a photo. Most transfers between your own accounts happen when ready. Transfers to other banks usually take 1 to 3 business days.

Setting up direct deposit

Direct deposit means your employer or a government agency puts money straight into your account instead of giving you a check. It usually arrives 1 to 2 days before payday. To set it up, you need your account number and routing number. The bank gives you these when you open the account.

Give this information to your employer's payroll department or to the government agency sending you money. They will set it up on their end. The first deposit may take an extra week or two while they verify the account. After that, it happens automatically on the same day every pay period.

You can also set up automatic bill payments from your account. Give the bank the account number of the company you want to pay, and the bank will send them money on the date you choose. This works for utilities, insurance, rent, and loan payments.

Frequently Asked Questions

Do I need a job to open a bank account?

No. Banks do not require you to be employed. You can open an account with no income, or with income from Social Security, disability, unemployment, or other sources. The bank just needs to verify your identity and address.

What if I do not have a Social Security number?

You can use an ITIN (Individual Taxpayer Identification Number) instead. Credit unions are more likely to accept an ITIN than large banks. Some banks will not open an account without an SSN or ITIN, so call ahead. You can get an ITIN from the IRS if you are not a U.S. citizen but have a reason to file taxes.

Can I open an account if I have been in trouble with a bank before?

Yes. Even if you have unpaid overdrafts or a closed account on your ChexSystems record, some banks will still open an account for you. Credit unions and second-chance banking programs are your best options. You may pay higher fees or have limits on deposits, but the account works the same way.

How long does it take to use my new account?

If you open online or in person, you can use the account the same day to receive transfers or set up direct deposit. Your debit card arrives in 5 to 10 business days. If you need cash before then, you can withdraw at a teller or ATM.

What if I want to close the account later?

Call the bank or go to a branch and ask to close the account. They will ask why, but you do not have to explain. Make sure you have withdrawn all your money and paid any outstanding checks. The bank will close it within a few days. If you have a negative balance, you will owe that amount.