How to Open a Checking Account

For most people, a checking account serves as the central hub for income and expenses. Paychecks go into that account and bills are paid out of it. To open a checking account, you usually just need to choose a bank, complete an application and make a minimum deposit.

A checking account is a liquid account set up at a financial institution such as a bank or credit union. “Liquid” simply means that you can access the money in the account as often as you want. Some other types of accounts limit your transactions.

When you set up a checking account, you're typically issued a debit card and/or an ATM card for withdrawing cash. Some debit cards can also be used at ATMs, so you may only need one card. You can use your debit card to make purchases just as you use a credit card.

In addition to plastic, you may also be issued paper-based checks for paying bills or making purchases. You’ll have access to an online banking login where you can manage your funds, transfer money and pay bills. You can also set up your paycheck to be directly deposited into your checking account.

​Read More:​ Checking Account Facts

There are multiple routes to go when it comes to checking. Here are some of the top options, along with their advantages.

• ​Brick-and-mortar banking:​ This traditional option usually gives you a local branch that will allow you to get help in person if you need it. If it has a strong local presence, you’ll also have access to multiple ATM machine locations for withdrawing cash when you need it.

• ​Online lenders:​ It’s easier than ever to do all your banking through an online lender. If you go this route, look for a lender that refunds ATM fees or has an agreement with lenders near you for fee-free ATM transactions. Also, make sure you can get customer support if you need it.

• ​Credit unions:​ In some cases, you can get a good deal on a checking account by opting for a credit union. This is especially true if you work for an institution or in an occupation that has a credit union attached to it as a perk.

Once you’ve decided on the type of lender you want, be sure to shop around. Look at the interest and fees specific to various online and local lenders, no matter which way you’re going. This may give you leverage in negotiating a better deal.

The days of checking fees are waning, thanks to the number of lenders offering free checking. But maintenance fees aren’t the only thing to look at here. Pay attention to the fees a lender charges for overdrafts, wire transfers, account transfers and international transactions.

Fees aren’t the only thing to compare as you’re shopping around. Some banks have free checking but require you to keep a minimum balance or have limited access to ATMs. Another bank may have a monthly maintenance fee but pay interest on your balance or offer generous cash-back rewards.

Once you’ve found a lender, you need to fill out an application for a bank account. Checking accounts typically require some form of government-issued identification, such as a driver’s license. Your application may also require proof of address and a Social Security number.

Some lenders run a credit check on checking account applicants. If that’s the case, ask the lender whether they run a hard or soft credit check. A hard check impacts your credit score, while a soft check won’t.

If the lender requires an opening deposit, you need to have those funds available to transfer. You should be able to easily transfer the funds from another account into this one, but make sure neither lender charges you for this. You can also simply write a check on the existing account to make the deposit.

Some special types of accounts may require additional legwork. If you’re applying for a student account, for instance, you may need to show that you’re enrolled in school. If your student ID is a photo ID, this may suffice, but contact the lender in advance to ask what proof you need.

When multiple people open an account together, it may be necessary for both parties to verify their identities. Your joint account holder may need to show a photo ID and proof of address, as well as signing some paperwork. If you’re banking locally, the other person could be required to visit the branch with you when you finalize opening the account.

If you have children, chances are you’ll want to teach them financial literacy at some point. For many parents, this starts by setting up a bank account and working together to learn how to manage money. For this purpose, many banks offer a custodial account to let minor children start making deposits and withdrawals.

Once your child reaches a certain age, you may opt to put some money on a prepaid card for making purchases. If your child is making money though, it may be time for a debit card. Monitor spending habits carefully, even if your child has always been conscientious. This is the perfect time to work together to learn responsible spending habits.

You can also set your child up with a way to save money. Advocate for setting a sizable chunk of any income aside for the future. Just seeing how that small amount adds up can make a difference.

It’s one thing to apply for a checking account and get approval. It’s another to get your bills and paychecks flowing through the account. You start by taking your account information to your current employer, or anyone else who issues payments to you. If direct deposit is offered, you need to give the payer authorization to put the money in your account. You'll also need to supply your account and routing numbers.

Once you have money coming in, it’s time to start sending money out. You can either pay your bills using the online bill pay feature on your checking account or authorize your creditors to take the money out. If you opt for the latter, you need to authorize each creditor to take the funds out of your account.

If you move your funds to a new bank, you have to go through the process of closing things out. To play it safe, keep your account open for a while with enough money in it to cover any automatic debits that come through. This gives you a chance to make sure every creditor is notified of your change in account information, whether it’s your utility bill, credit card bill or student loans.

In addition to clearing out all the money, you also need to shut down your mobile banking account and delete the app from your devices. You and any other accountholders need to notify all payers of the change so that you can redirect your paycheck to the new bank. Also, destroy any remaining paper checks and deposit slips you have for the old account.

​Read More:​ Rules for Closing a Joint Checking Account

A checking account is only one way to store your money. Chances are, you’ll choose it as the pass-through for your bill-paying activity, but you’ll want any excess money in an account that earns interest. Savings accounts typically earn interest, but you may get higher interest rates with a certificate of deposit or a money market account.

Although there’s currently no federally-mandated limit on the number of transactions you can have on your savings accounts, this is temporary. Eventually, the limits will likely be reinstated. For that reason, you can use your checking account as the place you deposit checks and pay bills, and use your savings and money market accounts as a place to set money aside for the future.

Setting up your checking account is only the first step. Keep an eye on your account balance to make sure it doesn’t drop below a certain threshold. You should also set financial goals that ensure you’re setting money aside in addition to staying on top of your bills.

Another thing to keep in mind is that your money is FDIC insured, but there’s a limit. The FDIC covers up to ​$250,000​ per depositor per institution per account type. So as long as you keep less than ​$250,000​ in each account, you should be safe. If you share an account with someone, it's ​$250,000​ per depositor, so that means up to ​$500,000​ per account for both of you.

As useful as a checking account can be, it won’t help you build the strong credit score you’ll need in the future. Paying your bills on time will help, of course, but just having the account in place won’t be enough. The same goes for your savings and money market accounts.

To help with your score, look into your bank’s lending options. Having a credit card can be a big help, especially if you can charge a small amount and pay it off before interest kicks in. You can also look into taking a loan to buy a car or smaller purchase, then paying it off diligently. When combined with paying your bills on time every month, you’ll gradually start building credit.

What happens if you take all your information to a bank, complete the application and receive a denial? The first step should be to see if the lender will give you a reason for the rejection. It may be a misunderstanding that can be cleared up easily.

Chances are, if you’ve been rejected, it’s because of your ChexSystems report. ChexSystems collects information on closed checking and savings accounts, then provides it to lenders upon request. As with your credit report, you can request a copy of your report and take action to clean it up.

You can request your ChexSystems report by calling 800-428-9623 or going to the ChexSystems website and completing a request form. If you find inaccurate information on the report, you can dispute it through the dispute section of the ChexSystems site. You may also be able to settle up with the previous lender to improve your history.

​Read More:​ Can I Open a Bank Account If I Owe Money to a Bank?

A “no” for a checking account is not the end of the road. First, you can shop small, local lenders like credit unions or online banks. They can be more forgiving. There are also some lenders that cater to those with a less-than-ideal credit history. You may not get the perks you’d get with other banks, but it will at least get you started.

But you may opt to do without a bank altogether. Here are some ways around the traditional banking model for your income and expenses.

• ​Money orders:​ You need a way to pay your bills without cash or electronic debit. Money orders can help you with this. You can purchase them at the post office, convenience stores or grocery stores and use them as you would a personal check.

• ​Prepaid cards:​ Prepaid cards let you make purchases wherever credit and debit cards are taken. Some prepaid cards even let you direct deposit your paycheck.

• ​Checkless debit accounts​: In recent years, checkless debit accounts have emerged as an alternative to checking accounts. This type of account has everything you need to pay bills and make purchases. You typically get a debit card and mobile bank funds transfer options like Zelle to help you pay for things.

• ​Cash:​ Of course, there’s always cash, but you need to be careful with it. If you plan to keep oodles of cash on hand, a fireproof, waterproof safe may be well worth the investment.

Opening a checking account is easy, typically requiring minimal identification. But it’s important to shop around and make sure any bank account you’re choosing is offering you the best deal on fees with the most perks.