To open a checking account, the first thing you need are funds. If the funds are in cash, it will typically make the process easier. Then you need to research various financial institutions to learn more about their terms and requirements. If you have a friend or family member that is with a bank you are considering, ask the bank if a referral bonus is offered.

Free Checking

Free checking accounts are typically accounts that do not charge monthly fees to their customers, given they abide by the terms and conditions of the account. For example, some free checking accounts require the account holder to have their paychecks directly deposited into their checking account. Free checking accounts commonly do not require the account holder to sustain a minimum balance.

Other Checking

Other checking accounts have slightly more complex terms, yet if the account holder maintains these terms, they can avoid monthly service fees. These checking accounts are usually low interest-earning, and are linked with savings accounts, CDs, credit cards, mortgages or other accounts. The terms of these checking accounts may include: minimum opening balance, a minimum sustained balance and links to additional accounts. These checking accounts offer more benefits than basic free checking accounts and commonly provide the account holder with benefits, discounts and various incentives.

Opening Account

Financial institutions vary by state requirements and their own terms for potential account holders. Most institutions require a valid Social Security number, proof of current address, current photo ID (passport, state ID, or valid driver's license). Some banks require a credit report (ie., Equifax, Experian, TransUnion) and/or processing the individual's information through a bank reporting system (ie., ChexSystems) before opening the account. Check with your financial institution regarding their terms and requirements for opening a checking account.

Considerations

When considering a financial institution, take note of the bank's hours, locations, customer service telephone hours, ATM deposit terms, hours when a deposit is processed on the same business day and ATM locations. Learn about the bank's fines and fees associated with the following: non-bank ATM charges, overdraft charges, fees for traveling internationally with your debit card, fees for using your debit card as a "debit" vs. a "credit" when you make purchases, fees for sending paper monthly statements vs. online statements and any hidden fees that you might not be aware of. Hidden fees, for example, can be service charges when the account holder makes less than five non-ATM transactions on their account per month, including debit card purchases.

Writing Paper Checks

When you write a paper check, you are validating the funds in your account be payable to the name on the check (the payee). When the payee goes to the bank to deposit or cash the check, the payee will endorse the check by signing their name on the back. The bank validates the payee's identity, and the check may go through the following: 1. If the check is written from the same bank the payee has an account, the funds typically become immediately available to the payee. 2. If the check is written from a different bank than where the payee has an account, either a portion or all of the funds will be held until the check clears. 3. If a check is written from a small or local financial institution in a different state than where the payee has an account, the funds may not be available until they have been honored by the bank. 4. If the payee would like to cash the check for immediate payment, the payee can visit the bank that issued the check for cash. (When the payee does this, some banks charge non-customers a service fee.) If a check is written without sufficient funds in the account, the payee will be notified that the money is not valid, and incur any charges if applicable. The individual who wrote the bad check will also be notified, and incur an insufficient funds fee. If a bad check is written to a business or individual, they may also fine the individual additional fees. Writing bad checks is called "check fraud" and is punishable by law.

Check By Phone

A lot of services and utility companies now offer "check by phone" payments. These companies may also include a service charge for processing them. The "check by phone" process requires either the account holder to "void" a paper check and use the check register number, or permits a fictitious check number. To process the check, the payee requires the bank's routing number, and the account number so the payment can be managed electronically. This is a lot quicker and more convenient to the payees and the account holder--especially when immediate payment is necessary.

Resource:

Digital Federal Credit Union: Using a Checking Account