Opening a bank account

I hope you don’t keep large amounts of money in your pockets or house. Keeping money for long in your pockets or under you matters has the risk of being stolen or lost. What can you do to protect your money? Use a bank account. Your money is protected there and insured by Deposit Insurance Corporation (or FDIC). The FDIC provides banks with insurance to protect their customers’ money. If your bank closes and is FDIC insured, the FDIC will pay you the amount of the money in your account up to a certain amount. So make sure you choose a bank is a member of the FDIC to protect yourself in case the bank goes under.

CD account and general bank account applications
CD account and general bank account applications

A bank account is a safe place to keep your money. Banks offer variety of accounts including checking, savings, Certificate of Deposit (or CD), money market, and so on. Each of these accounts has advantages and disadvantages so choose the one that best suits your need. Checking accounts, for example, are great for paying bills while savings accounts and CD accounts help you earn interest while you keep the money in your account.

A quick tip

Many stores offer check-cashing services but these cost money. If you don’t need your money immediately, try depositing your money in a bank account to let your money grow. In other words, chances are if you use a bank account, you may be able to hold to your money longer versus pocketing your cash from a check-cashing service. If you don’t have a bank account, consider opening one.

If you need to use money-wiring services (to overseas or within US), open an account that is best suited for this purpose. Some banks charge you a fee for using money-wiring services regardless of the type of account you have with them. Other banks charge you some or no money if you are already a bank customer. Check with the bank to ensure you can use such services without paying hefty fees.

You can open a bank account for yourself or a joint account with your spouse or another person. Banks may charge you fees for some of their services. Shop around, look in the local newspaper, and review websites to find new bank account offers. Your employer may have a credit union that you can join. Credit unions banks provide most of the same services as banks, but many offer extra services. When you are deciding to choose among your choices of where you want to bank, compare:

  • services offered,
  • fees,
  • hours,
  • locations,
  • specials for opening a new account,
  • reputation and age of the bank,
  • size of the bank (if applicable). Ask yourself: do you want to bank with a local, regional, national or international bank?,
  • easiness of access to your money, and
  • customer service

Some banks offer free gifts when you open a new checking account. You may be contacted directly by mail of such offers or you have to search for them on your own (in newspapers, internet ads, tv or radio ads).

When you open a bank account, you will be asked to prove your identity; typically, your driver’s license and a credit card are sufficient. With some banks, you have to fill out an application for each new bank account. You may do this either online or in bank branch. In other banks, the bank representative fills out all the papers involved in opening a new account and you just answer a few questions. If you are opening account in a bank, inquire if you can have online access to your account, if you need such access. Beyond proving your identity, you will need some money to put in the bank. The initial deposit is also important! Your initial deposit can be cash, check or an electronic transfer.

For your future deposits, you will be mailed bunch of deposit slips for your specific account. When you want to deposit money in the account, simply write the amount and date your deposit slip. If you are depositing checks, you will need to sign in the back of each check.

A debt card (or check card) for withdrawing money from checking account
A debt card (or check card)

To withdraw money from (meaning taking money out of) your checking account, you can use a paper check, debt card, or make payments online to your creditors. (Savings accounts typically don’t have checks or debt cards.) Make sure you don’t withdraw all or more than you have in your account. If you withdraw more than what you have in your account, you will be charged a fee (around $35 for each occurrence).

At the end of your banking cycle (typically one month), you will receive a banking statement. The statement will list your withdrawal, deposit activities that took place during the previous banking cycle. Make sure you compare your bank statement with your own records (particularly with your checkbook). Remember to balance your check book! If your numbers don't agree with what your statement has, contact your bank immediately.

Posted on 4/30/2007
by Raj Singh