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Banking 101: Everything You Need to Know

Are you opening a bank account for the first time and struggling to wrap your head around the basics? You’re not alone. For most people, the process of opening a bank account is full of unexpected obstacles like complicated terms, lengthy sign-up processes, and unanticipated fees.

The good news is: it doesn’t have to be as complicated as it sometimes seems. Below we’ve answered your most-asked questions about getting started with banking.

How much does it cost to open a bank account?

Opening a bank account is usually free, but sometimes banks may require you to:

  • Make a minimum deposit when you open the account.
  • Keep a minimum balance in the account at all times.
  • Pay monthly or annual fees.

Keep an eye out for these requirements as you shop around for a bank account. If you don’t want to constantly keep tabs on how much money you have in your account, look for banks that don’t require a minimum deposit or monthly balance.

How old do you have to be to open a bank account?

To open a bank account on your own, you must be at least 18. If you’re younger than 18, it’s a little more complicated.

If you're a minor, you'll have to open a joint account with an adult. A joint account means each person (you and most likely your parent) have equal access to the account. Once you turn 18, you can ask the bank to remove the adult from your account or open up a new one.

What documents are required to open a bank account?

The time it takes to open an account varies from one bank to another. You can open some accounts from the comfort of your own home. Other accounts may require you to meet face-to-face with someone. No matter which one you choose, there are certain documents and information you’ll need to open a bank account. These include:

  • Valid, government-issued photo ID (such as a driver’s license or passport)
  • Date of birth
  • Social Security number
  • Phone number
  • Home address

What’s the difference between a checking account and a savings account?

Checking accounts are designed for everyday use, while savings accounts are for – you guessed it — saving.

Checking accounts are good for everyday purchases, paying your bills, and having constant access to your money. There’s usually no limit to the number of transactions you can make each month.

Savings accounts are great for building your emergency fund and saving for the long-term. Savings accounts can boast impressive interest rates, but there are typically more usage restrictions than there are with checking accounts.

What are ATMs?

Automated teller machines (ATMs) let you withdraw cash from your account without having to go to a physical bank. At an ATM, you access the money in your account using your debit card and PIN.

What’s a PIN number?

A personal identification number (PIN) is a four-digit code used to keep your account secure. If someone ever steals your debit card, they can’t access your money unless they have your PIN too.

Do ATMs charge fees?

It depends. I know, not what you wanted to hear, but no two ATMs are alike. To make sure you’re not hit with any unexpected fees, research your account’s terms and conditions.

Should I use ATMs when traveling abroad?

The beauty of ATMs is that they were designed for convenience. ATMs are safe to use internationally, and you get a better exchange rate than you would at most currency exchange offices. Before you go, though, check w your bank will charge a fee for using an ATM overseas. Some banks charge a percentage of the amount you withdraw, while others charge a flat fee per transaction.

What’s the difference between a debit card and a credit card?

You use your debit card and credit card the same way, but there are key differences between the two.

Debit cards are about spending money you have right now. They link to your bank account, and when you buy something, the money is automatically taken out of your account. And as we talked about earlier, if you use your debit card at an ATM, you may have to pay an ATM fee.

Credit cards are about spending future funds. They’re lines of credit (kind of like loans). If you miss the monthly payment due date, you risk facing expensive interest and fees, as well as damaging your credit score. If you struggle with overspending – which we all do at times – it may be best to use your debit card for everyday expenses.

What is mobile banking?

Many people are used to visiting a physical bank branch in person to open an account, cash a paycheck, make a deposit, or withdraw money. With the rise of technology came the rise of mobile banking. While mobile banking may be somewhat new, it has many benefits. Mobile banking allows you to deposit checks, transfer money, and make transactions online within the blink of an eye. You have more control over your account and faster access to your money because you don’t have to visit your local bank branch to perform common, everyday banking tasks.

But is mobile banking safe?

Yes. Banks have security policies in place to protect your accounts and transactions. There are also steps you can take to make sure your information stays safe. These include:

  • Only checking your accounts on secure networks
  • Using the bank’s official mobile app
  • Not storing your usernames and passwords
  • Locking your phone screen

And if your account is ever compromised, don’t panic. There are procedures in place to protect you. Just make sure you contact someone as soon as you see any fishy activity.

Make smarter banking choices by keeping these things in mind when opening an account for the first time. You’ll avoid common pitfalls, and your future self will thank you.

Think banking can’t be fast, flexible, and transparent? Think again. Sign up now for early access to the banking app the world loves to use.

The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.

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