In the realm of personal finance, opening your first bank account will be one of the easier actions you perform.  With that said, there are a few terms you should be familiar with and a few points to consider before marching down to your bank of choice to open an account.


Your first account is likely to be a checking account and you may also open a savings account if it helps avoid fees.  Usually your checking account is used for ATM transaction, bill pay and debit card purchases.  Your savings account will be useful for saving funds, but you probably won't be earning a lot from interest as rates are low right now.  As your savings balance grows, you can check out our investing section for some ideas on how to earn better returns on your money.

Doing Your Homework

The first step in your process should be to confirm you are eligible to open an account. Most likely you will need to be at least 18 years old, have valid identification and have the minimum deposit required to open an account. The minimum deposit may vary by bank. I use Bank of America and I believe I was required to have only $25.

Next, decide what type of account you want. Your initial account will usually be a checking or savings account. Each of these accounts provides unique benefits, but can also be subject to fees if misused. For example, some banks charge a fee when savings accounts have excessive activity in a period. You may be limited to a certain amount of transfers out of the account and if you exceed this limit, you could be charged a fee or the account could be converted into a checking account.

Once you have decided on the account type, it's time to do some research on the bank you would like to work with.

Before you make a trip to the bank to open your first account you should consider a few important factors. Most of these answers can be found online, but, if not, be sure to ask a banker before opening your account.

1. Fees - You earned your money.  Be sure to understand the bank's fee structure and how you can keep your accounts free. Ask about fee reversals and forgiveness. Also ask about fees regarding overdraft and using out-of-network ATMs.

2. Minimum Balances - Some accounts require you to maintain a minimum balance. be sure to understand what this balance is and the penalty if you fall below it.

3. Locations - You might already know this from driving around town, but it is always nice to know that your bank has enough ATMs and physical branches around town to service your needs. If you are planning on moving soon, this is even more important since you want to be sure your bank will have a branch in your new town.

4. Interest Rate - The interest rate is the rate the banks will pay you for using your money.  Unfortunately, this is nothing to be too excited about today since rates are very low and are usually very similar at different banks.

5. Other Services - As you grow you want to be sure your bank is there for you. You might not need a financial adviser or mortgage right now, but it's good to know your bank has these options available when you do need them.

Opening Your First Account!

You've done your research and it's time to open that first account! Now it's time to gather the necessary documents and schedule an appointment with a banker.  To open an account, assuming you are 18 years or older, you will need:

     1. Driver's license/state ID

     2. Social Security Card

     3. Minimum deposit (check with your bank)

     4. Name, address and date of birth

When you schedule an appointment with a banker ask if you need any other documents so that you are prepared.  The process of opening your account should not take long.  Once you are done you should receive an ATM/debit card and welcome folder that provides important details regarding your account.

Normally the banker will help you setup your online banking service and give you a quick tutorial. If you didn't receive this tutorial, it's a good idea when you get home to create your login and take a quick tour. Learn how to view account balances, setup alerts for when you reach a spending limit and understand how to use bill pay features. All of these can help make your life much easier. As with many things today, your bank will most likely have an app you can download on your smartphone so that you can manage your accounts wherever you go.

Online Banking

Not a fan of going to a physical bank? Check out these online banks for an alternative:

Bank5 Connect



Annual Percentage Yield (APY): Amount of interest that will be received during one year, includes compound interest.

Annual Percentage Rate (APR): Amount of interest that will be received during one year, does not include compound interest.

Bank Statement: Usually issued monthly, this shows the amounts you have deposited into and withdrawn from your account. Includes transactions made with your debit card.

Credit: When money is put into your account (IE. reversing a transaction).

Debit: When money is taken out of your account (IE. charged a fee).

FDIC: The Federal Deposit Insurance Corp. insures bank accounts up to $250,000 should the bank fail.

Insufficient Funds: Attempting to make a purchase that is more than the amount you have in your account.

Overdraft: Spending more than you have in your account.  Banks will usually charge a fee when this happens.