While not everyone will open a bank account, for most people out there, there comes a moment in their life, when they need to open one. Opening your first bank account is the first step you take towards financial independence. However, before you take it, you should have some basic knowledge of what it is, and how you can get one. If you want to learn more about what bank accounts are and how to open one that best suits your specific needs, keep on reading below.
What Is a Bank Account?
A bank account is simply a record maintained by a bank or other financial institution. It records your transactions, accounting for all cash inflows and outflows, credits, investments, etc. in your name. Having a bank account is the best way to keep your funds safe and secure, it gives you easy access to your money and saves you money, by eliminating fees from check-cashing.
One important thing to keep in mind is that not all bank accounts are the same. There are several types of bank accounts, including current accounts, credit card accounts, deposit accounts, and financial organizations may offer several of them. Each bank or financial institution has different terms and conditions. One individual can hold more than one bank account.
Choose a Bank
The first thing you need to do is learn what best suits your needs. This will help you determine the type of services you need and learn what your options are. Secondly, you should choose where you want to open your money account and find out the terms and conditions offered by the chosen institution.
There are many financial institutions out there you can choose from, both physical and online. Nowadays, like with many other things, there is an increasing interest in opening a bank account in an online bank, especially but not exclusively amongst younger people. To choose a bank or a credit union for your account, you should visit the branch or the website.
Choose an Account Type
Regardless of the institution, there are several account options. You can choose one based on their purpose and your needs, so you need to know whether you need it for savings or to hold your money and allow you to spend and pay bills. The most common types are: checking accounts, savings accounts, money market accounts, and certificate of deposit accounts.
For receiving direct deposits, spending, and paying bills, you need a checking account. To earn interest, you can get a savings account, a money market account, or a certificate of deposit. Saving accounts offer interest and have limitations on how often money can be withdrawn from it; money market accounts have no limitations and earn more interests; certificates of deposits earn the biggest interest, but you won’t have access to your funds for a previously established period.
Online vs Traditional Banks
Next, you need to choose whether you want an online money account, or you prefer the more traditional option. The main reason why more and more people turn to institutions that operate online is convenience. Online banks allow you complete access to your accounts, without having to go to a physical bank – on your computer, smartphone, or another mobile device.
Another advantage of online banks is that you can open it at any time, without moving – naturally, since there isn’t a branch to go to. Some people, however, prefer to open a bank account in person. If you want to do that, you will have to locate the branch, learn when they are opened and go there.
No matter what you decide, whether you open an account in person or online, there are several things you should have with you: a government-issued ID, like a passport, a driver’s license, or something else. To open an account the bank will require several personal details, such as your social security number, your address, your date of birth. Some physical banks may also require an initial deposit.
Тhe process of opening a bank account is fairly straightforward. First, you need to learn what kind of bank accounts you can get, then find a bank or a credit union, decide whether you want one that operates online or a traditional one, and finally, go to the website or to the branch to request an account.
To open a bank account, you will have to provide the details required by the financial institution you choose. To qualify for a bank account, you must have a social number and an address. Generally, you also need to be over 18, and in some cases, you may need to provide an initial deposit. However, for some types of accounts, you may need more information and not everyone can qualify for them.