Choosing a Bank Account
There are a dizzying number of banks out there, and they are not all the same. Taking time to choose the right bank account can be difficult, but it is worth the trouble. Here are some things to consider:
Convenience. It’s important that the bank be accessible, particularly for people who move or travel a lot. Features like online banking and direct deposit can help. Some people even prefer to have a fully online bank, while others want to know there is a bank branch they can actually walk into if they have any questions or concerns. Neither option is better than the other—it is an individual choice.
Minimum balance. “Free” checking accounts are very popular these days. Unfortunately, sometimes “free” really means something like “free is you keep at least $500 in your bank account every second of the month.” Before opening an account, people need to determine whether there is a minimum balance requirement, and what the fee is for going under the limit.
Service charges. All banks charge for certain things, like bouncing checks, even ones with “totally free checking”. But some banks charge for a lot of little things, like writing too many checks in one month or seeing a human teller. Checking accounts (as opposed to saving accounts) can be particularly costly. People should ask to see a schedule of fees before opening up any bank account.
ATMs. These little machines can be convenient, but they can also be expensive. Many banks charge for using another bank’s ATM, and the other bank charges as well. Each visit to an ATM can easily cost $3-5, which adds up over the course of a year. People who plan to use ATMs a lot should make sure their bank has free ATMs nearby or that the bank reimburses ATM expenses every month.
Credit Unions. Credit unions are non-profit cousins of banks. While credit unions sometimes offer fewer services than bank, they usually charge fewer fees and give out more interest. Not everyone can join a credit union; to open an account, people must be eligible for membership. Many large colleges, employers, and even cities have credit unions. People can also often join a parent’s or spouse’s credit union.
Opening a Bank Account
Once someone has selected a bank, opening up an account is easy. Bank accounts can usually be opened in person or online, though an online account might require that a signature be mailed to it. The requirements can change a bit from bank to bank, but basically people must:
- Fill out and sign paperwork
- Show government-issued identification (like a driver’s license)
- Show proof of residency
- Make an initial deposit (can be cash or check)
Now on to the next step: choosing and using a credit card wisely.
Estela Kennen - Estela is a doctoral student in Public Administration and a freelance writer and editor.
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