Opening a bank account is often a requirement when you move to a new job or shift to a smaller city where all banks do not have a branch. We take a look at what you need to do,when you open a bank account and the features and facilities you should look for when creating one. As the facilities linked to a bank account also differ according to the type, we look at what documents you need to open one. We also examine what type of identification is required to open a basic bank account with a checking facility, and whether the process of opening one can be done online.
Understand the advantages and disadvantages of opening a new bank account
Setting up a new account brings with it several advantages but also a few disadvantages. One of the bad points is that switching to a new bank often results in a credit check being performed and it causes a slight lowering in credit score. This is one reason why people do not open a new account or switch to another bank when they are applying for a loan or a new mortgage. However, several banks provide a higher interest rate on balances which are in-credit and this is especially helpful when saving for a mortgage deposit.So, if you want to take advantage of a higher interest rate then open a bank account about a year before applying for a new mortgage.
Documents and information needed for opening a new bank account
Whether you are looking to open an account in a bank that only has an online presence or one that also has brick and mortar branches, you will need appropriate documentation. When opening a bank account documentation such as photo identification issued by the government is required, and this is normally something that is akin to a driver’s license or passport. Other information required for opening a bank account includes a social security number and date of birth. With most banks operating online it is often required that people provide a phone number to which text alerts can be sent.
Opening a checking or saving account
Savings and checking accounts provide different benefits which should be considered carefully. A checking account is ideal for paying monthly bills, for debit card purchases and often comes with no monthly fees and can be accessed easily via an ATM. While a savings account also comes with very low or no monthly fees and provides a higher interest rate. A savings account is therefore suitable long terms saving or for putting away money in an emergency fund.
Provide the initial deposit
Most banks require a minimum initial deposit to be made in an account whether it is opened in the bank’s branch or online with the aid of an electronic signature. This initial deposit can be sometimes as low as $25 or as high as $100. In some banks the initial deposit has to be made when opening the account, while others require that it be transferred to the account within a specified period.
In addition to an initial deposit a bank will often require that a minimum quarterly balance be maintained in an account. When opening an account, it is therefore vital that you do a good amount of research and ensure that you adhere to the rules pertaining to a bank,especially when you are switching to a new one.