When I was about thirteen or so, my mom brought me down to the local branch of the regional bank and helped me set up my first checking account. I had diligently saved $100 of my babysitting money, which I deposited in my brand new checking account.
And suddenly, I was an individual with a bank! I had the ability to deposit and withdraw cash from that account. I could use my debit card to buy things with the money in that account. And I could transfer money from that account to others as I grew older and my financial needs expanded. When I got my first jobs, my employers could automatically deposit my paychecks directly into that account. Heckin’ magical.
I thought this was a pretty damn normal step toward adulthood. So imagine my surprise when I learned, years later, that not everyone goes through the rite of passage of opening a bank account when they’re young. Or at all.
There are, in fact, 17 million American adults who do not have a bank account of any kind. These individuals are known as the unbanked. The unbanked or underbanked represent 25% of U.S. households. And while many of them choose to be unbanked for various legitimate reasons (a distrust of financial institutions, for example), many of them are unbanked because of circumstances beyond their control (an inability to open an account due to legal status, or an inability to maintain minimum balances due to long-term poverty, for example).
Having a bank account is important and useful. So allow your beloved Internet auntie to take you under her downy, cloud-like snow goose wing and walk you through everything you need to know about how and why to open your very first bank account!
What even is a checking account?
A checking account is basically a deposit account held at a financial institution like a bank or credit union. What that means is you can put money in (deposit) and take money out (withdraw) at your convenience.
It’s also sometimes called a “demand account” or “transactional account” and it’s the absolute most basic level of banking available to private individuals.
It has the benefit of being liquid (i.e., not tied up in investments) so it functions like a pile of cash in a vault only you have access to (even though that’s not literally how it works).
You can use the money in your account by writing checks, withdrawing cash from an ATM (automatic teller machine), or swiping your debit card at a store. There are no limits to how often you can withdraw or deposit money, nor how much money you can keep in the account, making it pretty versatile, simple, and user-friendly.
If you’re completely unbanked and you want to get banked, you start with a basic checking account. Savings accounts, investment accounts, retirement funds, certificates of deposit… all of these come later, once you’ve got that initial checking account. Trust me.
You need a bank account
I get it: financial institutions haven’t exactly earned our trust in recent
years decades centuries.
There was the Great Recession of 2008; that time Elizabeth Warren read Wells Fargo for filth for creating fake accounts; that other time HSBC Holdings and Wachovia separately laundered money for terrorists and drug cartels; the time Bank of New York Mellon stole from pension accounts; oh yeah, and when banks literally funded the Nazis—yes those Nazis.
The history of shady dealings and predatory practices and outright criminality by financial institutions doesn’t exactly inspire confidence. I’m not here to deny or defend! Instead, I’d like to gently encourage you to open a checking account for the following super important and useful reasons.
Proof of payment
Having a bank account makes it real easy to prove you’ve paid someone. Back when dinosaurs roamed the Earth, this was accomplished through a literal paper trail: a check register, a monthly bank statement, a carbon copy of the cleared check.
But it’s 2019, bitches, and we’ve got an app for that now!
If I’m ever worried about whether or not I paid a bill, I just have to log onto my bank’s website and view my list of transactions to see what I paid to who and when.
Convenient access to a payment method
Carrying a debit card linked to your checking account is as good as carrying all of your cash with you. But considerably lighter.
That means you’ll never get up to the register and realize you’re $4 short on cash and have to put some groceries back. You can just swipe your debit card instead and exact change will be deducted from your account.
End up at a store where they only take cash, and you don’t have any on hand? No sweat. With a debit card you can withdraw cash from any ATM. (Though keep in mind there’s a fee for withdrawing from an ATM that doesn’t belong to your bank in most cases.)
My Young Millennials and Gen Z kids are saying “I’m broke, I don’t buy shit at stores.” Fair point, my loves. Which is why you can link your Venmo and PayPal accounts to a checking account to pay your roommate for your half of the electric bill. And with your checking account, you can write an actual paper check to your elderly landlord for your half of the rent.
If someone steals your cash… you’re fucked. That shit isn’t insured, and you have no way to prove you actually had it in the first place, let alone that it was stolen. Your money’s just gone, baby, gone.
But if someone steals your debit card or hacks into your checking account, you have all the proof you need. And many banks offer theft protection and insurance for your account. Meaning if someone uses your debit card without your permission, or steals your identity to empty your account, you’ll get your money back.
Try that move with the stacks of cash in your mattress.
Some employers won’t pay cash
A lot of employers won’t pay their workers in cash. And many, especially in the white collar professions, won’t even cut you a paper check anymore. Instead, they pay you via direct deposit to your checking account. For which you… need a checking account.
When I was hired at my current job, I didn’t even get the option to receive checks in the mail. It was just assumed that I had a checking account for direct deposits! So thanks, mom!
Automatic, convenient, and instantaneous bill payment
I can’t remember the last time I paid a bill through the mail. I can’t remember the last time I paid a bill with cash!
Instead, I have all my bills linked to my checking account. And for most of them, I’ve set up automatic payments. This means my bills get paid without me lifting a finger every month. Time saved, headache averted.
But let’s say I do forget a bill one month. Instead of frantically searching for an envelope and a stamp and rushing out to the mailbox or Post Office, I just hop online to my bank’s app and pay the fucking bill electronically.
The benefits outweigh the costs
Sure, you can get a paycheck cashed at a check cashing business. And you can definitely use a prepaid debit card that’s as good as cash without having a bank account.
But the fees associated with these unbanked methods of getting by are far higher than those associated with having a checking account.
With a checking account, you’ll need to keep a monthly minimum balance in the account or pay a fee. You’ll also be charged an overdraft fee if you withdraw more money than you have in the account. And some banks charge an annual fee just to have the checking account.
To me, it’s worth it to avoid the 391% interest charged on payday loans.
Choosing a bank
Not all banks are created equal! And not all of them work the same way or offer the same products. You need to weigh your current and future needs against what different kinds of banks have to offer before trusting one with your money.
Bank or credit union?
A bank is a for-profit organization. A credit union is a non-profit. This means that the bank is owned by its shareholders, just like every other big corporation in America, while a credit union is owned by its members, i.e., their customers.
Credit unions can be pretty dreamy in that they boast better customer service and lower fees. Buuuuuut they also can be less convenient because they have fewer branches nationwide and are sometimes slower than banks to adopt new technology like online banking (and let’s be real… you want online banking). Also their interest rates tend to be higher.
Banks, on the other hand, can be extremely convenient, with user-friendly apps and online interfaces and multiple branches throughout the country. But their fees are higher and their interest rates lower.
Online or brick and mortar?
We’re living in a golden age of Internet banking. Some banks don’t even have physical locations! They exist only in the Matrix—I mean online.
Yet some people prefer to trust their money solely to brick and mortar institutions.
And I get it! There’s something comforting about walking into my bank’s local branch to deposit a check from a client and get a few Tubmans back while I chat with Carlos the friendly bank teller about his three puggles. And it’s certainly convenient to know that my bank has ATMs all across my state where I can get cash without paying a fee.
But more and more I’ve traded in my quality gossip time with Carlos for the convenience of the bank’s app. I hardly ever go in to deposit a check—I just use my phone.
Local or national?
Do you move around a lot? Do you often travel for work? Is it important to you to work with a bank that invests in local businesses?
Local banks (different from credit unions), are locally owned and operated. This means they have the finger on the pulse of your community, and the people making decisions about interest rates and loans are aware of the challenges of the local economy. They make those decisions accordingly, and to stay competitive with the larger national banks, they tend to offer higher interest rates. And by virtue of being smaller and localized, the customer service is a little more streamlined.
National banks, on the other hand, are monstrously large financial companies that operate across the country and sometimes even the globe. They’re required to be members of the Federal Reserve System (rather than a state banking department, like local banks), which means they’re overseen by the federal government.
The biggest advantage to a national bank is ease of access. They tend to lead the way with online banking technology (again, we see you KIDS THESE DAYS with your PHONES and your MEMES) and they have locations fucking everywhere.
Gather your arsenal
So now that you’ve done your research and chosen a bank, you’re ready to open your first checking account!
You will need:
- A valid, government-issued photo ID. If you don’t have a passport or driver’s license, your state’s Department of Motor Vehicles can issue you a state ID.
- Your birth date.
- Your social security number. Some banks ask for this, some don’t. ¯\_(ツ)_/¯
- Your contact information: telephone number, mailing address, residential address, and sometimes even your email address.
- An initial deposit, i.e., some money. Many banks will have a required minimum balance (usually around $25-$100), so you might need to save up to make sure you have enough to fill the account.
If you’re a minor
If you’re under the age of 18, you’ll need to find a legal adult. We recommend the classic Parent/Guardian, but any old person will do, provided you trust them with your money and they’re, y’know, not running from the law or otherwise ineligible to sign legal documents.
This person will be a co-owner on the account until you reach the age of majority, at which point you can have the bank remove them from the account. Don’t forget this part: when you’re a legal adult, you and you alone should have full control over your money, regardless of your relationship with your Parent/Guardian.
The reason you need an adult co-owner for your bank account is because by law, children cannot sign legally binding contracts. It’s inconvenient, but it’s also for your own protection: as with many more dangerous scenarios, the law does not want predators taking advantage of people too young to consent.
If you’re a foreign national living in the United States
It should be pretty apparent by now that your humble Bitches are red-blooded ‘Mericans, writing for other ‘Mericans. We don’t feel qualified to explain how all this works in other countries, but in most cases, the process is pretty similar.
But let’s say you’re a citizen of another country living in the United States. You can still have an American bank account if you want one! You’ll just need to bring different stuff:
- Valid ID from your home country, such as a passport.
- The identification number from your green card, work visa, or student ID. Make sure you bring originals, as the bank won’t accept photocopies. This is to ensure you’re a legal resident. (Fun fact: undocumented immigrants represent a huge percentage of the unbanked because there are so many hurdles and risks involved for them in opening bank accounts.)
- Social Security Number, or if you can’t get one, an individual taxpayer identification number (ITIN), which you can apply for by filing a W-7 with the IRS.
Individual banks might have additional requirements, so check their website before going in to set up a bank account. Oh yeah, speaking of which: you will definitely need to go to a physical bank to open your account, as you won’t be allowed to open one online without being a citizen.
Open an account
When you put money in a bank, the bank makes money. Therefore, they’re pretty fucking welcoming to anyone who walks through their doors and says “Hey, I’d like to open an account.”
Which is exactly what you should do.
Once you’ve gathered your arsenal and your legal adult if necessary, head to the bank of your choice to open your account. Keep your hat on, because the four-step process usually only takes about 15 minutes:
- Fill out an application.
- Verify your identity.
- Provide your basic contact information.
- Fund the account.
You can also stay home in your jammies and open an account online through the bank’s website. You’ll need all the same information, but you’ll need your initial deposit in the form of a check or transfer from another account, rather than cash.
During the process, you’ll be asked to sign a bunch of legally binding documents (or your pet grown-up will). READ THESE CAREFULLY. The last thing you want is to be blindsided by fees or penalties hidden in the fine print.
Once your account is all set up, you can start using it immediately! Deposit and withdraw cash with wild abandon! Swipe that debit card far and wide! You have now joined the ranks of the banked! Be proud and haughty about your newfound financial acumen!