Bank Account – Full Guide & Sensible Walkthrough
You may need a bank account to transfer money, make investments, pay bills or save. Individual bank account; It is the type of account opened in the name of the person in order to perform various banking transactions. If the person wants to use his savings in interest, he can open a time deposit account or request to open a demand deposit account if he only wants to use it in banking transactions.
The financial sector is home to the most established institutions in the USA. There are dozens of different banks and various financial institutions in the country, which are among the largest in the world. Nowadays, it is tough for ordinary citizens who are not engaged in business to carry on their day-to-day business without opening a bank account.
What are Bank Accounts?
A bank account is a financial account held by banks for their customers. A bank account is basically an arrangement with a bank that allows customers to keep their money in the bank and take some out when they need it. Bank accounts offer their customers the opportunity to carry out all financial transactions through the bank channel in a credit-debit relationship. A bank account is a balance standing to the credit of a depositor at a bank.
Non-commercial bank customers open bank accounts for purposes such as evaluating their savings, current expenditures or transferring money using loans. Commercial bank customers, namely businesses, use it for salary payments, business financing, payments for the business’s trading activities.
Definition of Bank Account
Based on the savings deposits they collect, commercial banks extend short-term loans to individuals, businesses, or government institutions that need liquidity. The difference between the interest rate they pay to the depositors (deposit interest) and the higher interest rate (loan interest) they apply to the loans they open, together with the expenses, creates the banks’ profit.
In order to benefit from banking services, a bank account is required. Different bank accounts serve different needs. Customers choose the account type that best suits their financial expectations and use the opened bank account in accordance with their spending and savings.
Benefits of Creating a Bank Account
Although deposit accounts use bank accounts for different purposes and expectations, the main purpose of banks is to generate income. The money collected in deposit accounts is given to businesses that need loans. The difference between the interest paid to the depositors and the interest received from the borrowers or companies creates the profit of the banks. In other words, banks create resources to maintain trade or meet the money needs of citizens, such as mortgages, car loans, consumer loans.
Banks create benefits for customers such as making their daily expenses via debit card or checking account and postponing their monthly expenses by using a credit card. Depositing funds into deposit accounts is a safe way to secure existing savings and save money.
In Which Transactions Can an Individual Bank Account Be Used?
The number of transactions you can make through a personal bank account is quite high. For this reason, we have listed what they can do for those who want to open a bank account.
- You can safely store your money and take precautions against loss and theft.
- You can use your bank account card like your money wallet and spend more securely in all your shopping.
- You can have your bills automatically deposited in your personal bank account by placing an automatic payment order.
- You can check the balance in your account, add or withdraw money to your account at any time from ATMs.
- You can deposit your remaining money from your monthly expenses to any bank account you want, and you can easily save in this way.
- By using internet banking, you can make various payments through your bank account. E.g., tax debt, credit card, insurance, telephone, water, natural gas, etc. You may not be able to pay your bills in a short time.
Opening An Individual Bank Account
Opening a bank account has become a necessity nowadays. Those who want to open an account in any bank for the first time can make transactions from the branches or online, according to the working policy of the bank. While some banks allow only existing customers to make transactions over the internet and mobile application, it is also possible to open a new account over the internet in some banks.
Having a bank account can be costly, depending on the type of account and the bank. Bank account rates and fees vary from bank to bank. Today, many banks make internet banking transactions attractive by not charging any fees from online transactions. Internet banking and mobile banking give banks the chance to serve with fewer bank offices and fewer employees, thus reducing banking service costs.
How to Open a Bank Account?
The bank account opening process differs in two different situations.
Customers with an existing savings account; can open an account via internet, branch, telephone, or mobile banking.
The second group includes customers who want to open a bank account for the first time. Today, many banks have the option to open accounts via mobile banking for new customers, but some banks only make new accounts at their branches.
Documents Required to Open a Bank Account
You do not need to be an American citizen to open a bank account in the USA. You can also open a bank account if you are a student or need to stay in the United States for a short time. However, there are some documents you need to have with you when opening a bank account.
- A photo ID (For foreigners, a passport is an identity document. However, in some cases, the bank may also require additional documents such as a student certificate or driver’s license.)
- Address of your residence: The bank asks you for a residence address even if you live for a specific time. (Like electricity, water, or natural gas bill, a document from the landlord, university, or employer.)
- Social Security Number: You do not need to have this number, but it may be useful if you have obtained a residence permit or US citizenship.
- Deposit: Although it varies from bank to bank, it is required to be deposited into the account at account opening. Usually, this amount is between 50 and 100 dollars.
Non-US citizens can use passports and visa documents to an American bank as a substitute for identification.
Opening a Company Bank Account in the USA
If you have established or are planning to establish a company in the USA, you should first open a bank account for your company. So what advantages does this bring you?
If we talk about these advantages; You can carry out your banking transactions from anywhere in the country, and since American banks are globally recognized banks, when you open an account in one of these banks, you can access a global market and avoid currency differences.
Let’s talk about what you need to do to open a company bank account in the USA. First of all, you must have the following documents. These documents are usually the most common documents requested by banks, but we would like to remind you that each bank has its own policy.
- Employer Identification Number (EIN)
- business license
- Company articles of association (incorporation certificate or registration certificate)
- Company US address
- Ownership agreements
Opening An Online Bank Account In The USA
Nowadays, bank accounts can be opened online without going to a bank branch. Whether you want to open a bank account for an individual or for your company, you can easily do this without going to America. Opening a bank account in the USA has many advantages, especially if you are starting a company.
US citizens or foreigners can open a bank account while in a country other than the US by making online transactions. Today, no bank does not offer digital banking services. It is possible to open a bank account, transfer money, trade mutual funds and stocks, and close a bank account online through banks’ websites or mobile applications.
a) Content of the Agreement Signed for Bank Accounts: The content of Retail Banking Service Agreements varies from bank to bank. However, the general purpose of the contract; informing the customer about the products and products to be used, notifying the fees related to the expenses to be charged for the services of the bank, presenting the responsibilities of the customer and the bank to the approval of the customer.
The content of the contract signed for opening a bank account includes information such as the operating fee for the account, the prices to be collected in money transfers, the cost of withdrawing money abroad, ATM transaction commissions. A fixed-term loan agreement must be prepared if a term bank account is opened or a credit card is linked to your bank account. All these details are included in the banking contracts.
b) Company Bank Account Card Usage: The bank account belongs to a company established in the USA and offers the opportunity to use your debit card (ATM/Debit) worldwide. In addition, you can check your accounts, accept and send money anywhere in the world with your internet banking branch password, and you can withdraw your money from any ATM point in Turkey with your card and use it for all kinds of shopping in stores. The transactions you will make with an ATM card will be deducted from your bank account balance in the USA. In order to start bank account transactions for your company, you must first specify in which bank you want to have a company account.
Common Types of Bank Accounts
Bank accounts in the United States are basically divided into two. “Checking card” is used for daily expenses, bill payments, shopping payments, and “saving account,” which is used as a deposit account, in which people deposit their material savings with a specific interest rate in medium and long-term periods. The other two account types, “Money Market Deposit Account” and “CD account,” are less common types of bank accounts.
a) Checking account
This type of account is called a demand deposit account. You can deposit, withdraw and perform many other banking transactions to Checking accounts. Checking accounts may include:
- Depositing a check the customers receive.
- Taking out cash with customers’ debit cards.
- Setting up direct deposit for customers’ paychecks.
A checking account is a type of deposit account that you can open at any bank account. Checking accounts allow you to deposit money that you can then draw against to pay bills. Check accounts are also called transactional accounts. When any bank customers use a debit card to pay for goods, those funds will be deducted from the customer’s checking account balance.
Bank customers access their funds. They can write checks, use ATMs or use electronic debit or credit cards connected to the customer’s accounts. Modern checking accounts include debit cards. A debit card is a name given to the cards that allow you to use the money in your bank account. It is often known by the names of the debit card or salary card. Debit cards, salary cards, and debit cards are also referred to as debit cards.
In short, checking accounts are used with a debit card. Banks may deduct an operating fee from their customers due to transactions and card usage. Debit card and checking account usage fees are either charged instantly on a transaction basis or monthly. Some banks do not charge their customers under certain conditions. For example, those who keep a minimum amount of money in their bank account use a salary account or give some automatic payment orders.
b) Savings Account
The Savings account type is the account type known as the deposit account. This account type is mostly used for investment purposes. Money is deposited to the Saving account with a certain maturity. Banks give a low rate of interest at maturity. It is more advantageous to use this account as an investment account rather than routine transactions such as deposits and withdrawals.
Basically, a savings account is an interest-bearing deposit account held at a bank or any type of financial company. Saving account usually pays low interest rates below inflation. The following table lists the annual interest rates in the USA since 2010. Although the general average is between 2-3%, the average deposit interest for saving accounts is 1%. These types of accounts are used to secure savings, not to earn interest on the principal.
c) Money Market Deposit Account
Money market accounts are called as MMAs. This account combine features of checking accounts and savings accounts. MMAs pay more interest compared to savings accounts. However, they do apply initial deposit limits. For example, for many banks’ MMAs to be opened, a minimum of 1000 USD must be kept in the account.
d) Certificate of Deposit (CD)
A CD is a certificate of deposit. CD-type accounts are like saving accounts. CD interest rate is around 1% in many banks across the USA. For long-term deposits with maturities of 12-36 months, the interest rate is about 2%. In fact, the interest rate of CD accounts is even below the inflation level. Today, the average return rate of long-term CDs is about 2%. Considering that annual inflation is over 2%, even CDs with the highest interest rates are not profitable for the investor.
Opening A Business Bank Account
All companies open a business bank account once they have gotten the company federal EIN.
- Employer Identification Number (EIN) (or a Social Security number, if you’re a sole proprietorship)
- Your business’s formation documents.
- Ownership agreements.
- Business license.
Sole proprietorships cant open the same business bank account as corporations. However, the sole proprietor’s owner can open a business account with his SSN. Most business bank accounts offer perks that don’t come with a standard personal bank account.
Sole Proprietorships can open a business account with the following documents.
- Business tax ID.
- Date business was formed.
- Country and state of legal formation (formed in the US to apply online)
- Country and state of primary business operation (must be a U.S.-operating business)
- Legal business name and DBA (“doing business as”) name, if applicable.
The US banks require the following at the time of opening an account:
- Notified body certificate of the company,
- Federal tax number (EIN),
- Presence of one of the founders of the company during the transaction.
While the federal government regulates banks, they are also regulated by state banking law. The documents or procedures required for bank account openings in different states may vary. There are also differences in practice between banks.
Therefore, a business that decides to open an account is advised to contact the bank to learn the required documents before going to the bank. The documents banks can request when opening a business account are:
Benefits To Open A Business Bank Account?
1. Protect your personal funds
2. Avoid tax issues
3. Accept credit cards
4. Give others access to company funds
5. Maintain a professional appearance
Full List of Required Documents To Open A Business Bank Account & Beginning Steps.
1. Employer Identification Number (EIN) or Social Security Number (SSN)
2. Personal identification
3. Business formation documents
4. Ownership agreements
5. Business license
6. Certificate of an assumed name
7. Monthly credit card revenue
How To Open A Business Bank Account?
1. Decide which account type you need
2. Select a bank
3. Gather the required documents
4. Apply for the account
5. Deposit funds and start using your account