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How to open a bank account

In today’s world, bank accounts are essential financial tools. Whether you open one with a bank or a credit union, these accounts help you manage your money and cashflow. That’s why the team at SABEResPODER put together this guide to answer all your questions about bank accounts. 

What Is a Bank Account?

Offered by financial institutions such as banks and credit unions, bank accounts allow clients to manage their money and perform a variety of transactions. These include paying bills, making purchases, or sending money to family members within the United States and abroad.

What Are Bank Accounts For?

Opening a bank account provides many important benefits that help you control your finances. The most important advantages of having a bank include:

Greater security

Forget about keeping your money under the mattress or carrying around large wads of cash. You can attain greater control over your finances and in particular your savings thanks to a bank account. Your money is safer with a bank account as it’s protected by the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA).

Access cash anywhere

Having a bank account gives you access to an expansive network of ATMs, which are available 24 hours a day and can be found nearly anywhere. This means that if you need more cash, you can pick it up at the nearest ATM instead of trekking back to where you’ve stashed your savings.

Access to helpful financial services

Opening a bank account gives you access to a variety of helpful financial services. Things like direct deposit, which is a recurring, fee-free bank transfer of your salary. You’ve also potentially got access to a checkbook, bank cards for in-person and digital transactions, as well as low-cost money transfers, among others.

Develop a financial history

Having a bank account allows you to build a banking history which, in turn, can make it easier to get access to loans and other financial products. This is particularly important if you’ve not built a credit history in the U.S. yet.

Types of Bank Accounts

It’s important to understand the types of bank accounts that are available before you visit a financial institution. Banks offer a wide array of accounts, each with different solutions to meet our needs. Some of the most popular types of bank accounts include:

  • Checking account
  • Savings account
  • Low-risk account
  • Second chance checking account
  • Payroll account
  • Money market account
  • Commercial bank account
Keep in mind: To learn more, visit our guide on the different types of bank accounts. This article goes over the characteristics of each account type, as well as its main advantages and disadvantages.

How to Open a Bank Account, Step-By-Step

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If you’re ready to open a bank account, the first step is informing yourself on the necessary steps and having the right documentation at hand.

What documents do I need to open a bank account?

Depending on the bank or credit union you’ve selected, you’ll be expected to bring specific documentation to prove your identity and set up the account. Typically they’ll ask for the following:

  • A photo ID issued by the federal government or the state where you live, your foreign passport, or your Mexican Matricula Card.
  • Your Social Security Number (SSN), birth certificate, and/or a utility bill with your name and address.
  • A minimum amount of money to make the initial deposit. This ranges from $25 to $100, depending on the institution and the type of account.

Keep in mind: You don't have to have an SSN to open a bank account. If you find yourself in this situation, you should know that some banks offer accounts that accept alternate forms of identity such as your passport, Mexican Matricula Card, or even your Personal Taxpayer Identification Number (ITIN). To get your ITIN, you will need to fill out an IRS form and, once it is granted (in about 6 weeks), you’ll be able to open a bank account.

Be sure to confirm that your bank of choice offers this option. Some banks, such as Chase and Bank of America, require an ITIN. Others, such as Citibank and PNC, allow you to open an account without this number. It’s a good idea to confirm this information when you’re opening the account.

Ways to open a bank account

There are two ways to open a bank account.

In-person

Up until a few years ago, this was the most popular way to open an account at a traditional bank. Here are a few characteristics of in-person banking:

  • The bank has many physical branches, which are open during business hours. At the branches you can find administrative staff, tellers, and business bankers who offer their services to clients.
  • You must visit one of the branches to complete your transactions in person.
  • Your visit to the bank may take a long time, depending on the desired transaction.
  • You can also check your balances, transaction history, and transfers using an ATM.

To open a bank account in person, you’ll need to visit your banking institution of choice. You will also need the documents mentioned previously for the bank staff to review.

Digital

Digital banking is more popular than ever. Thanks to technological advances and the widespread use of the Internet, digital banks offer ease of use and speedy services. Their main characteristics include:

  • You use your phone, tablet, or computer to complete transactions without having to visit a bank branch.
  • Your banking institution is available 24 hours a day, which makes it easy for you to check your balance and complete transfers at any time.
  • Since there’s no need to visit a branch, transactions take less time and tend to be more efficient.
    • In many cases, digital banks charge lower commissions and management fees than traditional banks.
    • It is also common for them to offer better interest rates, especially on savings accounts.

Opening a digital account is a quick and easy process. All you’ll need is a smartphone, tablet or computer with internet access to do the following:

  1. Choose the bank or credit union where you want to open your bank account.
  2. Download the app or visit their website.
  3. While browsing the app or website, look for the option to open a new bank account.
  4. Provide the information and documents requested.
  5. Read the contract carefully and, if you agree, sign it to accept its terms.
  6. You’re all set! You can now start using your digital bank account.
Keep in mind: Despite technological advances and the growing use of the Internet, many people are still reluctant to open accounts in a digital bank. However, online banking is on the rise. These services are a necessity these days, because they are the quickest and most efficient way to bank. Give it a try to experience the benefits of digital banking!

How Do Bank Accounts Work?

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Many people delay opening a bank account because they don’t know how these work. To help you with this process, the team at SABEResPODER put together this helpful guide. It includes the main components that you need to know about, as well as the transactions that you can perform with your account.

Main Components

A bank account is made up of several components. Understanding what these are can help you manage your money. These are the most important features of a bank account:

Primary account holder

The primary account holder is the legitimate owner of the funds in a bank account. This could be an individual, an organization, or a business.

PIN/Password

Your Personal Identification Number (PIN) is a security code used by financial institutions to verify the account owner’s identity. Unlike other passwords, your banking PIN is made up of only numbers. It cannot be combined with letters or other characters.

Because your PIN offers access to multiple banking services, financial institutions recommend you keep your PIN secret or only share it with people you trust. This is especially important to avoid unauthorized cash withdrawals from ATMs.

Bank account number

Your bank account number is provided by the bank or credit union as the only identifier of each account. The method to determine and assign an account number varies from one bank to another. However, it’s important not to confuse your account number with your routing number, which we will go over in the next section.

Routing number

The routing number is a nine-digit identifier managed by the American Bankers Association (ABA). It lets institutions know which U.S.-based bank should receive a money transfer. Routing numbers are unique to each bank, though the larger institutions can have several routing numbers depending on their locations.

SWIFT Code

The SWIFT code (acronym for Society for Worldwide Interbank Financial Telecommunications) is the code that banks and credit entities use to identify an international transaction. It’s made up of 8 to 11 characters, which allow institutions to identify the financial entity that initiated the transfer. This helps ensure that the client’s funds are received by the correct beneficiary.

Most Popular Banking Transactions

Whether you bank online, in-person or at an ATM, having a bank account allows you to complete a variety of transactions. The most popular ones include:

Checking your account balance

The account balance is the amount of money that a person has in their bank account. It is calculated by adding your deposits and subtracting your withdrawals. There are three ways to check your account balance:

  • Using online banking. The easiest way to check your balance is by logging onto your bank’s or credit union’s website or app. You can do this from your phone, tablet, or computer.
  • Visiting an automated teller machine. Just like you use an ATM to withdraw money from your bank account, you can also choose the option to check your balance. This will show your balance on screen and can also offer the option to print a receipt with this information.
  • Visit your bank. The most traditional way to check your balance is by visiting the bank in person and walking up to the teller. Once you’re there, the teller will ask for your account number and an official ID to print out a receipt with your balance.

Paying your bills

One of the advantages of having a bank account is that you can use it to pay bills such as water, electricity, phone, or Internet. Making these payments online is the quickest and easiest option. However, many financial institutions also let you make these important payments at the ATM or in-person at the teller.

Transferring money to other accounts

Another benefit of having a bank account is that it allows you to transfer money from one account to another. This process is easy to do online by following these steps:

  1. Log into your bank’s website or app.
  2. Choose the “transfer” option from the menu.
  3. Enter the account number where you want to send money.
  4. Enter the amount that you want to transfer.
  5. Enter a memo, which is the reason for the transfer.
  6. Enter the name of the recipient.
  7. Make sure that all the data you entered is correct and click on “accept”.
  8. Save the transfer receipt for your records.

Reviewing your bank statement

Your bank statement is the document that shows all the transactions of your account during the month. It’s important to review your statement to make sure everything is in order. You can request a printed statement from your branch, or download a digital copy from your bank’s website or app.

How to Choose a Bank to Open an Account?

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Did you already decide to open an account but don’t know which bank to choose? With so many banks and credit unions, it’s normal to take your time to decide which institution is right for you. Here are some things to consider when choosing where to open your account:

Your needs

One of the most important questions to ask yourself when opening an account is if the institution you’re considering can satisfy your banking needs. Before opening an account, consider speaking with a banker to ask the following questions:

  • Can I transfer money between accounts in the United States and outside of the country?
  • Can I use my account to pay for basic services?
  • Can I receive deposits and verify them online?
  • Can I shop safely at stores?
  • Can I verify my balance and access my bank statements easily?

Branches

Another important factor to take into account when choosing a bank is if the institution has a branch near your home or place of work. Usually, banks provide online listings of their branches and addresses.

Interest rates

Interest is an additional payment that you must make when you borrow money from the bank. The interest rate is an annual percentage that you can pay in different ways. This is why it’s important to learn more about the types of interest that a bank offers before choosing to open an account. The most common types of interest are:

  • Fixed interest. Fixed interest rates are the most common type of interest that consumers pay. Since they don’t fluctuate, these interest rates are also easier to calculate and understand. With a fixed interest rate, the borrower and the bank know exactly how much the interest represents. For example, if the fixed interest rate is 3%, the real cost of a $100 loan is $103.
  • Variable interest. These types of interest rates are associated with variations in base interest rates. These are the rates used by banks to calculate interest. These fluctuations can sometimes benefit borrowers or cause them to pay more at other times.

Bank fees

Bank fees are what the financial institution charges for setting up and maintaining your account. These could be a fixed amount or a percentage of your balance.

Types of fees

Banks can charge fees for a variety of services. Some of these include:

  • Withdrawals
  • Sending transfers
  • Receiving transfers
  • Low balance
  • Payments
  • Maintenance
  • Creating documents
  • Mortgage closing

Keep in mind: Fees vary from one bank to another. Before opening an account, we suggest you research the bank’s fees and ask if they are fixed or percentage-based. This information will help you decide which is the right bank for you.

Security Tips for Using Your Bank Account

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Once you’ve opened your bank account, make sure you use it responsibly and safely. These are some good ways to protect your bank account:

  1. Change your PIN regularly, memorize it, and don’t write it down on a piece of paper that you keep in your purse or wallet.
  2. Don’t share your PIN with anyone you don’t trust.
  3. Never let a stranger borrow your bank card.
  4. Report lost or stolen cards to the bank immediately to have them blocked.
  5. Don’t use public networks to complete transactions online.
  6. Try to choose well-lit ATMs where you feel safe.
  7. Before stepping away, wait until the ATM confirms the transaction as completed.
  8. If you withdraw cash from an ATM or branch, don’t count your money in front of strangers and store it in a safe place.
  9. Don’t provide your bank account details to any phone polls or other suspicious phone calls.
  10. Verify your balance frequently and review your bank statement every month to report any suspicious activity immediately.

Frequently Asked Questions about How to Open a Bank Account

How do I close a bank account?

Canceling your bank account is an easy process that’s usually quick and free of charge. These are the steps to follow to close your bank account:

  1. Make sure you can close your account without any problems. Some accounts must remain opened for a certain amount of time.
  2. Confirm that you don’t have any pending transactions, such as automatic withdrawals.
  3. Don’t leave a balance in your account. Withdraw all your money before closing the account.
  4. Take all cards and checkbooks back to the banking institution.
  5. Visit your nearest branch to sign the document that certifies the account closure.
  6. Ask for a copy of the account closure certificate.

How long does it take to open a bank account?

This depends on the type of account you want to open and the institution that you choose. It also varies depending on whether you open the account online or in person. In most cases, you can open an account within one business day. Sometimes, it may take between 2 and 10 business days.

What does IBAN mean in banking?

IBAN is an acronym that stands for International Bank Account Number. It’s an alphanumeric code that identifies an account internationally. With an IBAN, institutions can identify each bank account as well as the bank, branch, and country where an account was opened.

What is a bank statement?

A bank statement is a document that reflects deposits and withdrawals for a specified period of time. The information you can find in a bank statement include:

  • The client’s personal information
  • The date of each transaction
  • The types of transactions performed (payments, transfers, withdrawals, etc.)
  • The amount of each transaction
  • The available balance before and after each transaction

You can request a bank statement at any branch, though the quickest and easiest way to access your statement is by downloading it from your bank’s website or app.

How do I open a bank account in Mexico from the United States?

If you’re interested in opening a Mexican bank account while living in the United States you should feel relieved that the process is easier and more accessible than ever. Here’s how you can set it up:

  • Online: Many Mexican bank accounts have an online portal where you can open an account. Just keep in mind that the debit card associated with your account will be sent to an address in Mexico, so we recommend that you contact a family member for them to forward the card to your address in the United States.
  • In-person: Another way to open a bank account in Mexico is through a family member who can carry out the procedure at a physical bank location. In doing so, your family member must name you as the co-owner of the bank account. This way, the bank will issue two cards, one of which you’ll have sent to your U.S. address.

Manage Your Finances with a Bank Account

We hope this guide helped you learn all about the benefits of opening a bank account. We suggest that you consider PODERcard, a safe solution designed with our community in mind.

If you have more questions on how to open a bank account, don’t hesitate to ask! The team at SABEResPODER is always here to help.