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 assigns you an account number. You get access through a debit card, online login, or both. The whole process usually takes 15 minutes to an hour if you walk into a branch, or 10 to 20 minutes online.
Most banks and credit unions now let you open an account without visiting a branch. You provide your Social Security number, date of birth, address, and sometimes a photo ID scan. The institution checks you against a database called ChexSystems, which tracks people who have had problems with bank accounts in the past. If you pass that check, the account opens when ready or within one business day.
Key Takeaways
- You will need a Social Security number, proof of identity (driver's license or passport), and a current address to open an account at most banks.
- Online account opening takes 10 to 20 minutes and you can start using the account the same day or next business day.
- Banks check ChexSystems, a database of past banking problems, so having been closed for overdrafts or fraud can block you at some institutions.
- If you cannot pass a standard bank account, credit unions and second-chance banking programs exist specifically for people with banking history issues.
- You do not need a minimum deposit to open most accounts, though some banks require you to keep a small balance to avoid monthly fees.
What documents and information you need to bring or provide
Banks require a government-issued photo ID — a driver's license, passport, or state ID card. They need your Social Security number, which they use to check your credit and verify your identity. They need your current address, usually a utility bill or lease to confirm it. Some banks ask for a phone number and email address.
If you are opening an account online, you will upload a photo of your ID or take a photo of yourself holding it. Some banks use video verification, where you speak briefly with someone who watches you provide the information. If you open in person at a branch, you hand the ID to the teller and they scan it.
You do not need to bring money to open most accounts. Some banks have a minimum deposit requirement — usually $25 to $100 — but many have removed these. Check the specific bank's website before you go.
The difference between checking and savings accounts
A checking account is designed for regular deposits and withdrawals. You get a debit card, you can write checks, and you can set up automatic payments. Banks expect you to move money in and out frequently. Most checking accounts have no limit on how many withdrawals you can make per month.
A savings account is designed to hold money and earn interest — a small amount of money the bank pays you for letting them use your deposit. Savings accounts traditionally limited you to six withdrawals per month, though that rule has loosened at most banks. Interest rates on savings accounts vary widely, from nearly zero to 4 or 5 percent depending on the bank and the current economic environment.
Many people open both at the same institution. You use the checking account for daily spending and bills, and the savings account to set aside money for emergencies or goals. Money moves between them when ready if they are at the same bank.
Online banks versus brick-and-mortar banks versus credit unions
Online banks have no physical branches. You open an account on their website, deposit checks by photographing them with your phone, and withdraw money at ATMs or by transferring to another bank. Online banks usually have higher interest rates on savings because they have lower costs. Examples include Ally, Marcus, and Discover Bank. The tradeoff is that you cannot walk into a location if you have a problem.
Traditional banks have branches where you can deposit cash, speak to a person, and get a cashier's check. They usually have lower interest rates on savings and may charge monthly fees. They are often part of a large network of ATMs. Examples include Chase, Bank of America, and Wells Fargo.
Credit unions are member-owned institutions, not corporations. They often have lower fees and higher interest rates than traditional banks. You must be a member to open an account, which usually means you work for a certain employer, live in a certain area, or belong to a certain organization. Credit unions are insured the same way banks are — up to $250,000 per account through the NCUA (National Credit Union Administration).
What happens if you have been denied a bank account before
If a bank closed your account because of overdrafts, fraud, or too many returned checks, that information stays in ChexSystems for five years. When you try to open a new account, the new bank checks that database. Some banks will deny you automatically. Others will review your case and may open an account anyway, especially if the problem was years ago.
If you are blocked from standard accounts, second-chance banking programs exist at many banks and credit unions. These accounts have higher fees and lower limits on deposits and withdrawals, but they let you rebuild your banking history. After 12 to 24 months of good standing, you can often move to a regular account. Chime, LendingClub, and some local credit unions offer these programs.
You can also check your own ChexSystems report for free at ChexSystems.com. If there is an error — a closed account you did not cause, for example — you can dispute it and have it removed.
How long it takes and when you can use the account
If you open online, the account usually opens the same day or the next business day. You get an account number when ready and can see it in the app or online portal. You can transfer money in right away, but the bank may hold the funds for one to three business days before you can withdraw them — this is called a hold, and it protects the bank against fraud.
If you open in a branch, you walk out with a debit card or a temporary card number, and you can use it the same day. Your permanent card arrives by mail in 7 to 10 business days.
If you are depositing a check, the bank holds it for one to five business days depending on the amount and the bank's policy. Large deposits ($5,000 and up) may be held longer. Transfers from another bank take one to three business days.
Monthly fees and how to avoid them
Many banks charge a monthly maintenance fee — typically $10 to $15 — unless you meet certain conditions. Common ways to avoid the fee: keep a minimum balance (often $500 to $1,500), set up direct deposit, or make a certain number of debit card transactions per month.
Online banks and credit unions often have no monthly fees at all. If you are comparing accounts, look at the fee structure before you open. A bank with a $12 monthly fee costs you $144 a year even if you never use the account.
You also pay fees for overdrafts (spending more than you have), ATM withdrawals outside the bank's network (usually $2 to $3 per transaction), and wire transfers. Some banks charge to close an account if you close it within a certain period, usually 90 days.
Frequently Asked Questions
Can I open a bank account without a Social Security number?
Most banks require a Social Security number. If you do not have one, some credit unions and banks will open an account using an ITIN (Individual Taxpayer Identification Number) instead. Call ahead to confirm the specific institution accepts ITINs, because policies vary.
What if I do not have a government ID?
You will need some form of government-issued photo ID — a driver's license, passport, or state ID card. If you do not have one, you can get a state ID card from your local DMV. Some banks may accept other documents like a tribal ID or military ID, so ask before you assume you cannot open an account.
Can I open an account for someone else?
No. The person whose name is on the account must be present or must authorize it in writing. If you want to manage money for a minor, you open a custodial account in their name, and you are the custodian. When they turn 18, the account becomes theirs.
How much money do I need to open an account?
Most banks no longer require a minimum deposit to open an account. Some still ask for $25 to $100. Check the bank's website for the specific account you want to open. Even if there is no minimum to open, some accounts require you to keep a small balance to avoid monthly fees.
Can I open multiple accounts at the same bank?
Yes. Many people open a checking account and a savings account at the same bank. You can also open multiple checking accounts if you want to separate money for different purposes. Each account is insured separately up to $250,000 by the FDIC (Federal Deposit Insurance Corporation).