Setting up a checking account is easy. And it’s a total no-brainer on your path to ditching credit cards for good. Why? Because your checking account is filled with real money, not fake credit card money! Plus, nowadays you don’t even have to walk into an actual, real live bank to open a checking account. You can do it all online.
A checking account is like a wallet, only way safer since you don’t have to carry all your money around with you at once. Having a checking account is a simple way to keep tabs on your money. Here’s everything you need to know about checking accounts.
How to Get a Checking Account
There are really just two ways to open a checking account. You can walk into a traditional bank or credit union and ask to set one up, or you can set up a checking account through an online bank. Let’s take a look at both.
Open a Checking Account at a Bank or Credit Union
There are about a zillion banks out there to choose from. So, while opening a checking account isn’t hard to do, sometimes choosing a bank is. Before choosing a bank, you’ll want to consider things like balance minimums, maintenance and overdraft fees, and availability of ATMs.
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You can go the mom-and-pop route where you’re pretty much guaranteed to get more attention and better customer service. Or you can go the big bank route—you know, the ones that pay ridiculous amounts of money to have their names put on sports arenas. With these guys, count on being treated more like an account number than a human being.
No matter what you choose, there are a couple of pieces of information just about any bank is going to require:
- Personal identification, like a driver’s license or passport
- Proof of address, like a utility or cable bill
- Usually an opening deposit (this might be as little as $25)
Some banks may require two pieces of ID, like a Social Security card or birth certificate, in addition to your driver’s license. Call ahead and double-check before you make a trip to the branch.
Once you have those pieces in place, all you need to do is walk in and speak with a teller. They can direct you to the best person to set up your account.
Open a Checking Account With an Online Bank
More people are making the switch to total online banking. That means no tellers, no drive-thru services, none of the human stuff you encounter at a traditional bank. If you like the idea of keeping everything online, this could be the route for you.
Like a traditional bank, online banks are going to need some proof you are who you say you are before giving you a checking account. They’ll also want information found on a government-issued ID, like a driver’s license or passport, plus your Social Security number.
Online banks can get a little tricky at the beginning. If your online bank requires an initial deposit to set up your checking account, guess where that money needs to come from? A debit card or check tied to an existing bank somewhere else. If you’re making the move from a traditional bank or another online bank to a new online bank, it’s pretty straightforward. But if you’re setting up a checking account for the very first time with a strictly online-only bank, you’ll need to deposit money into your new account through a money order.
How a Checking Account Works
Once you have your checking account set up, using it is easy. Here are some of the basic functions you’ll find with your checking account.
Debit Card and Checkbook
When you open a checking account, you’ll receive a debit card and a set of paper checks. If you’re at a traditional bank, you’ll most likely get your debit card while you’re there, plus a few temporary checks until the ones with your name printed on them arrive, usually in about two weeks. If you’re signing up for a checking account through an online bank, your debit card and paper checks will arrive in the mail, usually in about 7–10 business days. Both debit cards and checks are like cash, so you’ll want to keep them safe.
Just about anywhere you shop will take debit cards for purchases. At checkout, you swipe your debit card, and the money is automatically deducted from your checking account balance. Don’t get swipe happy though! Studies show people spend more when they swipe, even if it’s a debit card and not a credit card.1 Remember, your debit card is connected to real money!
Checks work the same way as a debit card, just a whole lot slower. When you write a check, consider that money gone. This is where people with low checking account balances can get in trouble.
Say you give your nephew Thomas a check for $100 for his high school graduation. You keep waiting for him to cash it, but three months later, still nothing. You never deducted the $100 in your online or paper check register, so eventually you forget that your checking account shows $100 more than you actually have. You end up spending that $100 twice. It’s only when you get hit with a $35 overdraft fee and a $35 returned check fee that you realize Thomas finally cashed your check and those other purchases you made put your account into the negative.
So, if you’re going to use paper checks, don’t forget to deduct the amount from your checking account balance.
Most employers today want to automatically deposit your paycheck into a checking or savings account. Gone are the days of waiting for your paper check to arrive, driving to the bank, waiting in line, and then depositing your check. Instead, boom, there it is right on time, each and every payday!
And most banks nowadays have their own mobile apps where you can snap a picture of the front and back of a check and drop it straight into your checking account.
Plus, with all the digital wallet and money-sharing apps that exist today, like Venmo, CashApp and even PayPal, now your friends can transfer their portion of the dinner bill right into your checking account.
Online Bill Pay
With online bill pay, you can have all your bills come right out of your checking account on the day they’re due. No more lost envelopes or scrambling to find a stamp to mail in your check. Just make sure you know when your bills are due so you don’t overdraw your account.
Opening a checking account is also a great time to open a savings account. When you’re researching banks, check out what kind of interest rates they offer. It’s usually not a lot (less than 1%), but hey, better in your pocket than theirs!
And when you set up a savings account, you can quickly and easily transfer funds online or from your phone from your checking to your savings. Now if you’re trying to get your $1,000 emergency fund in place, saving for Christmas, or have leftover money in your budget at the end of the month, you can slide those extra funds in your checking right on over to your savings.
Or maybe you’re self-employed and have a business and personal checking account. Link the two accounts, and ba-da-bing ba-da-boom, you can pull funds from one account to the other.
One of the easiest ways to watch your hard-earned money disappear before your very eyes is to use ATMs that charge a fee. Don’t do this!
When you open a checking account, find out where your bank’s ATMs are located. If you’re not a huge ATM user, then how many they have and where they’re located isn’t that big of a deal. But if you prefer to use an ATM, see if where you bank has fee-free ATMs in and around where you live, work and play. A lot of smaller banks and credit unions will partner with grocery stores and pharmacies to provide free ATM service. So, don’t forget to ask about that too when you’re setting up your checking account.
Checking Accounts Shouldn’t Be Stressful
A checking account can make life so much easier. But banks, especially the big ones, can be a major headache. That’s why we’re developing Gazelle, a new banking experience from Ramsey Solutions! We’re ready to help you outrun the normal, debt-driven banking experience so you can win with your money, not lose it in stupid bank fees. If you’d like to become one of the first beta users, sign up today!