I recently wrote an article explaining what a checking account is and some of the different types of checking accounts you might find at a bank or credit union. In it, I touched on some of the info and documentation you typically need to sign up for a new checking account.
In this article, I’ll explain the steps you typically need to take to open a checking account in greater detail. But before I do, let’s take a look at some of those types of checking accounts so you’ll know what type of account is best for you.
6 types of checking accounts
- Personal checking account
- Business checking account
- Student checking account
- Rewards checking account
- Online checking account
- Interest-bearing checking account
If you’re thinking about opening a checking account, you’ll need to choose the type of account that best suits your needs. Keep in mind that these different types of checking accounts can go by different names.
Here are the 6 most common types of checking accounts:
1. Personal checking account
Personal checking accounts are the checking accounts you normally find at most traditional banks and credit unions. They can come with a debit card and unlimited check-writing or no check-writing at all for the most basic of accounts; they may offer online banking capabilities; they can be free or low-cost, or they can come with minimum balance or monthly deposit requirements or even a monthly service fee.
The specifics of the account will vary from one bank to another. In general, a personal checking account is a blanket term for the basic types of checking accounts you might find at most brick-and-mortar banks and credit unions.
2. Business checking account
Business checking accounts are reserved for business use. As you start earning or spending money as a business, business checking accounts help you stay legally compliant and protected by keeping your business funds separate from your personal money.
The process for opening a business account isn’t much different than a personal checking account, but you’ll notice the required documentation is different. Banks may require that you have an Employer Identification Number (EIN), a business license, and other various business documents to complete the process.
Generally speaking, a business checking account will often come with many of the same features as a personal checking account, such as writing checks and debit card use. Fees or account requirements will vary from bank to bank.
3. Student checking account
Several banks offer checking accounts designed with college students in mind. To open one of these accounts, you may be required to verify your age and provide proof of student status. You typically need to be between 17 to 24 years old to qualify for a student checking account.
Depending on the bank, monthly service fees and minimum balance requirements might be waived. On the other hand, some of the best banks may waive monthly service fees only if the student maintains a certain balance or if a direct deposit is made to the account each month.
4. Rewards checking account
Not necessarily the most common, but some banks do offer checking accounts that allow you to earn rewards on your spending. Similar to a cashback credit card, these accounts tend to let you earn around 1% cash back on your purchases. Depending on the bank, it may or may not have a monthly spending cap on earnings. Whether there are monthly service fees and minimum account balances will also depend on the specific bank.
5. Online checking account
Although most competitive banks offer mobile or online banking by now, an online checking account is a little different. An online checking account usually refers to a checking account with an online-only bank, not a brick-and-mortar bank that allows customers to make transactions online.
Online banks don’t usually have physical retail branches, which allows them to save money on overhead expenses such as rent, repairs, and employee costs. These savings are then passed to customers in the form of higher interest rates and lower fees. In most cases, online banks don’t require you to maintain a minimum balance, nor do they charge you a monthly service fee just for having the account.
6. Interest-bearing checking account
Interest-bearing checking accounts allow you to earn interest on the money you maintain in the account each month. This type of checking account is most often found with an online bank. As mentioned above, the best online banks pass some of their savings to customers in the form of higher interest rates. Although these rates aren’t typically as high as online savings account rates, they still allow you to earn some money on your funds.
According to the Federal Deposit Insurance Corporation, the average national interest rate for interest checking accounts is 0.07% (as of Oct. 11, 2023). Many online banks, however, offer slightly higher rates. You shouldn’t have much trouble finding interest-bearing checking accounts with online banks that pay interest rates between 0.10% and 0.15%.
How to choose the right checking account
There are several types of checking accounts to choose from, so how do you know which is the best checking account for you?
This will depend on your specific needs, but you may consider the following tips to help you decide:
- Think about your priorities/needs. What’s important for you to have in a checking account? Do you prefer in-person banking or do you like to bank online? If you prefer to bank online, do you want to earn interest on your money? Different types of checking accounts offer different features, so think about what you want out of your account.
- Know your fees. There are several fees you shouldn’t be paying — overdraft fees, for example — but you may feel as though the features that come with the account justify them. Alternatively, you might be OK with having to meet certain requirements to have certain fees waived. However, you may instead want a banking experience without the threat of fees hovering over your head.
- Research account minimums. Checking accounts are designed for frequent use, which means you may not always have a certain balance in your account. If you want a checking account that allows you to spend your money how you want without the restrictions of maintaining a minimum balance, you may want to skip the banks that have this requirement.
- Review account products and features. What comes with the checking account? You’ll likely receive a debit card, but does the account pay interest? Does it come with a bank account bonus? Does it offer an automated savings feature, online billpay, overdraft protection, or mobile banking? You might be OK with a checking account without all the perks, or you might want the most bang for your buck.
- Think about ATM access. How often do you use cash? Is it important for you to have access to an extensive network of ATMs? Will you be using ATMs outside your bank’s network? Some banks charge a fee for this; others give customers a number of non-network ATM transactions fee-free. Some waive fees for out of network ATM transactions entirely.
How to open a checking account: 6 simple steps
If you’ve decided you want to open a checking account, then it’s time to get yourself set up with an account. Each bank or credit union will have its own account setup process, but the steps you need to take to open an account are generally the same.
Here’s the general process for opening a checking account:
1. Find the right option for you
The first step is to shop around and start eliminating checking accounts that don’t meet what you’re looking for in an account. Once you have a few banks that do meet your requirements, compare them, and decide on an account that aligns best with your needs. The great thing is you can open as many checking accounts as you want. So if you choose a bank and it doesn’t provide the ideal banking experience, try another one until it feels right.
2. Collect the personal info you’ll need to open an account
The info and documentation you will need to open an account will vary from one bank to another. You may also find that these requirements are different for online banks than for in-person banks. Typically, however, you will need the following info:
- Driver's license or other government-issued ID
- Your Social Security number
- Date of birth
3. Follow the process outlined on the bank or credit union website
Some banks or credit unions may require you to visit your local branch to set up an account, while others (and online banks) may allow you to open an account online from the comfort of your home. If you’re opening an account in person, a bank employee will set up your account for you. With an online bank, the process is entirely online and takes just a few minutes to complete.
4. Submit your information
Whether you open an account in person or online, have all your documents ready when it comes time to apply. Enter your information on the application and provide any supporting documents needed to open the account.
5. Make your initial deposit
In some instances, you may be required to make an opening deposit. This amount will vary from bank to bank, but it’s typically no more than $25 to $100. If your bank doesn’t require an opening deposit, you will likely still have the option to make one if you choose.
6. Set up direct deposit
Some banks may require you to set up direct deposit when opening an account. Or they may offer to waive certain fees if you set up direct deposit. If no such fees or requirements exist, it’s up to you to decide whether you want to set up direct deposit for your new checking account.
Checking account FAQs
Why open a checking account?
A checking account offers an easy and convenient way to manage the money you use for everyday expenses — like groceries and gas — and to pay bills. It also gives you other options besides cash to pay for things, such as checks and debit cards.
Where can you open a free checking account?
When most people think of the term free checking account, it’s usually a checking account that doesn’t have a monthly maintenance fee or a minimum balance fee. The following are examples of companies that offer checking accounts without these sorts of fees and requirements:
- CapitalOne: 360 Checking (no monthly fees or account minimums)
- Ally Bank: Interest Checking (no monthly fees or account minimums)
- LendingClub: Rewards Checking (no monthly maintenance fees and no minimum balance requirements after $100 opening deposit)
- Chime: Checking Account 1 (no monthly fees or account minimums)
- Stash: Stash Banking (no monthly fees or account minimums)
- Current: Basic Personal Checking (no monthly fees or account minimums)
What kind of account is a checking account?
A checking account is a demand deposit account that typically allows you to deposit and withdraw any amount of money as many times as you like — as long you have the funds in the account to withdraw, that is.
Can I open a checking account with no money?
Several banks don’t require you to make an opening deposit when you sign up for a checking account, especially online banks. This depends entirely on the bank, though. Keep in mind that your account may be closed if there is no deposit or activity on the account for a certain amount of time.
The bottom line on checking accounts
Checking accounts are useful for managing money that you use for everyday expenses. Considering all the different types of checking accounts out there, you shouldn’t be hard-pressed to find one that best suits your needs.
Once you’ve decided on the type of account that’s best for you, you’ll need to choose your bank. Take some time to compare checking accounts to find the one that offers what you’re looking for. In most cases, it shouldn’t take more than a few minutes to open your new checking account. And remember, there are no restrictions on how many checking accounts you can open. If you find that a particular bank isn’t working for you, there’s no harm in finding a new one.
Disclaimer: All rates and fees are accurate as of May 9, 2023.
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