Opening a bank account | Banking | Financial Literacy | Khan Academy

So let's think about what's involved when you decide to open up a bank account. Well, the first step is where you want to open it and what type of account you want to open.

So your choice of bank might depend on things like the interest that they might give in a checking or savings account. The higher the interest is, usually better for you because you're going to get that interest on your money.

Another consideration is: are there some minimum balance requirements? What happens if you don't meet the minimum balance requirements? Some banks might say, “Hey, you know, you have to keep at least $5,000 in this account,” or “$500 in this account.” Some banks might say you don’t have to have a minimum balance account or minimum balance requirement, but the ones that do have a minimum balance requirement might say, “If you go below that minimum balance requirement, we are going to charge you a fee.”

This is often called a maintenance fee, so look into what those maintenance fees are. Also, look into what type of overdraft penalties are there. What type of fees will they charge you if, let's say, you have $50 in your bank account and you write a check for $60, and so you go negative $10? What are they going to charge you for that?

Those fees can be significant, especially if you think that that might happen to you. You should avoid it, but look into that.

Now, other considerations outside of that are: how convenient is it to use that bank? Can you go to ATMs if you're going to need cash pretty easily? If you need to go to branches, where are those branches? If you don’t need to go to branches and maybe you want to do everything online, how is their online experience? Take a look at all of that.

Decide on a bank, and then you have to decide between a checking or savings account. Even within the same bank, there are going to be different dimensions of a checking versus a savings account. We talk about that in another video. Savings accounts tend to have higher interest rates, but the money isn't always quite as accessible as it is in a checking account.

So definitely look into all of those things I just talked about and how it might differ and how much of your money you might want to put in one or the other. Oftentimes, people will open up both a checking and a savings account with that same bank.

Now, once you've made all of those decisions, now it's time to open up the account. You need to show up; you could either do it in person, but these days almost every bank also allows you to do it online.

The way that it usually happens is you need some form of identification. They might either ask you for, say, a government-issued driver's license number or state ID number, or now there are even apps that might ask you to take a picture of it, a social security number, proof of address in some way.

And of course, you need to start putting money in; there's going to be some opening deposit that many times could be as little as $5, but that goes again to what is that minimum deposit requirement or the minimum balance requirement that the banks actually want.

So find the type of account at the bank you want to do it, get all this material, apply online. You can also apply in person if you need to, and then fund that account. Put the money in it, and you will have a bank account or a few of them.