With today’s hectic schedules, keeping your money safely stored in your checking account isn’t such a bad idea.
The days of concealing your money beneath your mattress are long gone. The risks of leaving large quantities of cash around unprotected, as well as the need to optimize every penny of your investment as a retirement nest egg. The task may appear intimidating at first to someone who has never had a checking account. All of the forms you must fill out and the documentation you must bring with you can be perplexing. The good news is that opening a checking account is a natural aspect of financial adulthood and should be something that everyone feels comfortable doing. Take time to consider these five guidelines before going to the bank, and you’ll be able to breeze through the process smoothly and painlessly.
Organize Your Documents
The first step in creating a checking account is proving your identity. Banks and financial institutions are now responsible for validating the identity of anyone wishing to create a checking or savings account in the post-9/11 period. That means you’ll need two forms of identification before heading to the bank. The first is photo identification, such as a driver’s license or a state ID card, and the second is your Social Security card. The name on your identification must match the name on your checking account. If you have just married (or divorced) and wish to use your new name on your checking account, you must first obtain identification in your new name or bring a copy of the marriage certificate or divorce decree with you to the bank.
Your Social Security card should also show your current name. When your name changes, it is a good practice to request updated identification. That way, you’ll always have a valid, up-to-date ID.
What Kind of Bank Account Do You Desire?
Do you prefer a checking or a savings account, or both? A checking account will provide you with a safe place to deposit your money, checks to pay bills or make purchases, and, in most cases, an ATM or Debit card to make it easier to access your money. On the other hand, many checking accounts charge a monthly fee, and very few regular checking accounts give you interest while your money is in the bank. One advantage of checking accounts is that they rarely have minimum balance requirements, which means you do not have to retain a certain balance to keep your account open.
A savings account is a deposit account where you can safely store your money in exchange for a monthly interest payment based on an annual rate from the bank. For instance, if you have $1,000 in the bank and the yearly interest rate is 6%, you will earn $60 every year. Divide that by 12, and you’ll get a five-dollar interest payment every month. Of course, your interest payments increase as you deposit more money. Many savings accounts have minimum balance requirements, so keep your balance over that amount to avoid penalties.
The disadvantage of many traditional savings accounts is that your money grows at a very sluggish rate while it is still quite liquid. Although six percent was used in the example, most banks currently pay between three and four percent.
Combination or interest-bearing checking accounts are other good options if you want to keep your money liquid while still earning something. Working in the same way as a checking account, these combo accounts frequently have a minimum balance of $2,500. Still, anything above that amount earns interest daily, even though the account can function as a checking account with checks, ATM cards, and automatic deposits and withdrawals.