Opening a new bank account - what should I know?

I’ve had a savings account with a large New England bank ever since 1998. A couple of years ago, a different large New England bank bought the branch that I joined, and that new bank doesn’t have a branch where I live now, so I want to open a new bank account. I’m pretty dumb when it comes to this stuff, so I want to ask what I should need to know before I walk into the bank and ask for a new account, specifically:

  • checking or savings? what’s the difference? I want the ability to write checks or maybe have one of those bob dole check cards (works like a visa, but without paybacks, right?). And ATM access of course.

  • right now I’m probably gonna deposit $500-700 every month or so…I don’t have a full time job yet…so I need an account that would suit this kind of money flow. I’ll probably withdraw about half of that every month.

  • right now, I have about $10 in my wallet, and a $700 paycheck. Are they gonna ask me for cash or any other kind of payment when I open the account? Can I just give them the paycheck as my first deposit?

  • is there any special kind of information I’ll need to know? I know most of my personal info, and I have ID…am I gonna need to know anything that might catch me off guard?

  • that other bank…I still have about $30 in the account. Should I even mention that I have this account? Should I just go ahead and close the account after I have the new one set up?

  • anything else that I should know?

Checking accounts usually don’t accrue interest and sometimes charge a fee for the privelage of writing checks. (Most large banks won’t, though.) If you really need to write checks, consider opening a checking and savings account, or ask if your bank has any special combined products for small depositers (better luck with small local banks for this sort of thing.)

You should be able to hand them your paycheck as a first deposit.

Bring your social security card and multiple forms of ID. Also they might want proof of your address; a utility bill with your name on it or a lease agreement is usually sufficient. Best bet is to call them and ask what docs you need to bring to open an account.

There’s no particular reason why you need to tell them about the other account. Once you’re set up with the new one, you can close the old one and deposit it in your new one. (Or just stick it in your wallet, since you’re only talking about 30 bucks.)

Read the terms carefully. Understand the fees. Ask questions. Reiterate things. Make sure you understand everything.

Every bank has different policies, and you need to make sure that you get the features that you want at a price that’s right.

For example, it used to drive me crazy that my old bank wouldn’t cash out a check and then deposit the cash so that it was available immediately. Instead, they would process the check and make it available sometime within 5 days. So I switched, and the new bank will cash a check and deposit cash so it’s available immediately. They will do that with payroll checks only, but they will do it.

Moral of the story–make sure you know what the policy is, and the extent of it–what they will and will not do.

Also IMHO, avoid paying fees for the account–it’s your money and you shouldn’t pay someone to keep it for you, or pay someone to use your money. I really don’t like bank fees.

Savings accounts are only for situations where you wish to accrue money and rarely remove it. Checking accounts are for situations where you want to deposit your funds and have ready access to spend those same funds.

Some banks (most often credit unions) will pay interest on your checking account if your payroll check is sent to them as a direct deposit. Credit unions usually have more benefits for less costs (sometimes no cost at all) and are more likely to give you a loan when you’re not the most creditworthy person in the neighborhood. You aren’t considered to be creditworthy until you’ve established a history of debt and payment of debt.

The amount of time a check can be held is determined by law. Sometimes banks choose to set a lesser standard than they are allowed. In CA a check for under $1500 (can’t remember if it’s $1500 or $2000) can be held for 2 days and a check over $1500 can be held for 5 days. This is time allowed for your bank to actually obtain the funds from the other banking institution. This is true even if the instrument is a certified check or a money order. Yes, the funds may be guaranteed but they’re not available until the funds are actually transferred to your bank.

Some big banks like Washington Mutual have free checking programs as an inducement for you to open your account with them. Washington Mutual also does not charge ATM fees to anyone, no matter who their ATM card is issued by.

Do some research, use your money wisely.

You’re speaking of a check cashing card Many banks use this now instead of an ATM card. Understand the dangers. If you qualify for a credit card or can get a secure credit card, that is best.

  1. Secure or credit card
    a. Liability limited to $50 if card is lost or stolen and used by the thief.
    b. Mistakes in billing do not have to be paid until the charge is settled between you and the merchant. Merchant has to provide proof of purchase.
    c. Charges do not have to be paid for 30 days; interest from billing date depends on card
  2. Check cashing card
    a. No liability limit unless bank has one. If a thief gets your card he can clean out your entire bank account.
    b. Mistakes in billing are paid and you have to show bank why you should be given your money back
    c. Charges are deducted immediately from your account.
  3. Opal card is accepted everywhere you want to be.

Some banks do offer interest bearing checking accounts, if you don’t mind doing much of your banking by mail and or direct depost you might consider checking out someplace like Netbank. No fees if you pick up statements online and around 1.5% interest on basic checking. Some brick and mortar banks have them too but I am not familiar with the details of their programs.

Policy wise they are very quick to slap a fee on you and or to hold funds sometimes. They can be irritating in that way but if you play nice with them, they are pretty good. They also have higher interest limited access accounts with minimum balances. I could see where a business that keep significant amounts of cash on hand could benefit immensely from interest bearing checking accounts.