Bank Accounts
A bank account is important for managing your money. It helps you access funds, pay bills, and save for future goals. But opening or keeping a bank account can be challenging. You might be confused about the options, fees, or rules.
Types of bank accounts
There are many options to choose from when opening up a bank account. The most common types of bank accounts include:
Checking Accounts: Used for daily transactions like depositing paychecks and paying bills. These accounts usually come with a debit card and access to ATMs (Automated Teller Machines).
Savings Accounts: Designed to hold money for short- and long-term savings goals. These accounts often earn interest but may limit the number of withdrawals each month.
Certificates of Deposit (CDs): A type of savings account where you agree to keep your money in the bank for a set period in exchange for a higher interest rate.
Money Market Accounts: A type of savings account that typically offers higher interest rates, limited transactions, and easy access to funds through checks or debit cards.
How to open a bank account
The steps to open a bank account are simple. However, if you have a poor credit history or issues with past bank accounts, opening a bank account may be more difficult.
Under a federal law called the USA PATRIOT Act, financial institutions like banks and credit unions must get specific information from you to prove your identity when you open a bank account. This helps banks prevent fraud and terrorism financing.
To prove your identity, you must give your bank:
- Your name
- Your address
- Social Security or Taxpayer Identification Number
- Government-issued identification like a driver's license or passport
Many banks use ChexSystems to check your history with past bank accounts. If you had an account closed for negative reasons, like unpaid fees, banks might deny your application.
You have rights under the Fair Credit Reporting Act (FCRA) to access and dispute information in your ChexSystems report. If a bank denies you an account, you can get a free copy of your report once every 12 months.
Are there alternatives if I can’t open up a bank account?
You have options if you struggle to open a traditional bank account:
Prepaid Debit Cards
These allow you to load funds and use them like a debit card but often come with higher fees. The fees may include costs to reload your account or monthly maintenance fees. Look for FDIC-insured cards with clear fee structures. Learn more about prepaid debit cards from the Consumer Financial Protection Bureau (CFPB).
Credit Unions
Credit unions often have more flexible requirements and may offer better rates and lower fees than traditional banks. Many credit unions in Arizona are insured by the National Credit Union Administration (NCUA).
Managing your bank account
After opening a bank account, manage it properly to avoid fees and account closure. To properly manage your account, you may want to:
Use and review your accounts regularly. Read the agreement you signed when opening the bank account and regularly review your accounts and notices your bank sends.
Consider setting up a “low-balance alert” on your account. Your bank may offer you a low-balance alert to help avoid spending more than you have in your bank account.
Link your savings account to your checking account to provide a backup when your account is low on funds.
Protect your bank account information like your account and routing number, PIN, or access code.
An important way to manage your bank account is to avoid unnecessary charges from the bank.
Check the agreement you signed when opening your bank account to understand the fees related to keeping and using your accounts. Banks may charge a variety of fees, including:
An overdraft happens when you spend more than you have in your account. If you try to spend more money than you have in your account, your bank may decline the transaction or cover the difference between the cost of your purchase and the amount available in your account, resulting in an overdraft. Banks charge fees for covering the shortfall. Under the Electronic Fund Transfer Act (Regulation E), your bank must offer you overdraft protection for debit card transactions. If you do not agree to overdraft protection, the bank cannot charge you for covering overdrafts, but they may deny your transaction The Consumer Financial Protection Bureau (CFPB) has more information about overdraft rules with your bank account.
Some banks charge monthly maintenance fees for checking accounts. Fee amounts vary but may range from $5 to $25. These fees are sometimes waived by the bank if you keep a minimum balance or set up a direct deposit. Check with your bank or your account agreement for more information.
There are important federal laws that protect consumers with bank accounts:
Truth in Savings Act (TISA): Requires banks to provide clear information about interest rates, fees, and terms of deposit accounts.
Electronic Fund Transfer Act (EFTA): Protects consumers from unauthorized electronic transactions. EFTA limits your liability for unauthorized charges if you report it promptly.
Using your bank account to make payments and buy things
After you open a bank account, you have options when deciding what form of payment when making transactions. Each payment method has different rules, protections, and processes to use them.
Debit Cards
Debit cards are one of the most widely used ways to pay for purchases. Debit cards give you easy access to your checking account funds and only let you spend what you have, helping you avoid debt. If you use a debit card with your bank account, you’ll want to understand how transactions work and what fees and penalties may be involved when using your card.
Most banks and credit unions issue you a debit card when you open a checking account.
To get a debit card:
- Open a Bank Account: Most banks will give you a debit card when you open a checking account. You can apply for a checking account at a local bank, credit union, or online financial institution.
- Proof of Identity: When you open a bank account, you will need to prove your identity by providing government identification and your social security number.
When you use your debit card to buy something, the bank takes the amount of the purchase from your checking account. This is called a debit. Most debit transactions are processed in real time. This means that your bank deducts the money from your account right away. Most debit transactions work by using:
PIN and Signature Transactions
You authorize a debit card transaction using your Personal Identification Number (PIN) or by signing your name when you make a purchase or payment. Using your PIN to make a transaction is often faster and may have lower fees.
ATM withdrawals
Your debit card can be used to withdraw money from your account using an ATM. Your bank may charge fees if you use an ATM outside of your bank’s network.
Federal laws like the Electronic Fund Transfer Act (EFTA) protect you from unauthorized electronic transactions with your debit card.
For example, if your debit card is stolen and used to make unauthorized purchases, the EFTA says that if you report your card lost or stolen to the bank:
- Within 2 business days of discovering the loss, you could owe up to $50 of the unauthorized purchases.
- After 2 business days but within 60 days (about 2 months), you could owe up to $500 of the unauthorized purchases.
- After 60 days (about two months), you could owe up to $500 for unauthorized purchases up to 60 days and be responsible for the cost of all unauthorized transactions happening after 60 days (until the bank is notified).
Paper Checks
Checks are still important and often used to pay bills, make purchases, or make donations. It is important to know how checks work and how to write them to avoid mistakes and potential legal problems.
Most banks and credit unions offer the option of paper checks or a checkbook when you open a checking account. To get checks:
- Open a Bank Account: Most banks offer a checkbook option when you open a checking account. You may have to buy the physical checks. You can apply for a checking account at a local bank, credit union, or online financial institution.
- Proof of Identity: When you open a bank account, you will need to prove your identity by providing government identification and your social security number.
When you write a check, your bank transfers the money from your checking account to the payee’s account. The person or business you wrote the check to can then deposit or cash the check. The bank will move the funds from your account to theirs.
The Check Clearing for the 21st Century Act (Check 21 Act) allows banks to process paper checks faster by using digital copies. Checks are usually processed (money taken from your account to the person you are paying) within 1 business day.
How to write a check
If you write a check to make a payment or purchase, it is important to write the check out correctly. To write a check, you write specific information about the transaction on the check itself:
Date:
Write the current date in the top right corner. Use a clear format like MM/DD/YYYY.
Payee:
On the line that says, “Pay to the order of,” write the name of the person or company you are paying.
Amount in Numbers:
In the small box, write the amount you’re paying in numbers, like “$50.75.”
Amount in Words:
On the line below the payee’s name, write the amount in words, like “Fifty and 75/100 dollars.” This helps avoid confusion.
Memo:
This is optional, but you can write a note about what the check is for, like “June Rent.”
Signature:
Sign your name on the line in the bottom right corner. Without a signature, the check is invalid and the person or business you wrote the check to will not get payment.
Although using checks as a form of payment is relatively simple, several issues can come up:
Bouncing Checks:
If you write a check for more money than you have, it will “bounce” and be returned unpaid due to insufficient funds (NSF). This can lead to expensive fees from your bank and the bank of the person or business you wrote the check to. In Arizona, if you knowingly write a bad check, it can lead to civil penalties and criminal charges for check fraud.
Postdating Checks:
A postdated check is a check with a future date written on it, indicating that the check should not be cashed before that date. If you want to prevent a check from being cashed before the date on the check, you must give proper notice to your bank about the postdating. Just writing a future date on a check doesn’t stop it from being cashed or deposited right away. The Uniform Commercial Code (UCC), a collection of laws that govern commercial transactions throughout the United States, says that banks do not have to honor the future date written on a check if they were not notified properly.
Lost or Stolen Checks:
If a check is lost or stolen, contact your bank immediately to stop payment. Arizona law says that a bank must honor your valid stop payment request if you make it promptly and give the bank reasonable time to act.
Online Payment Platforms
PayPal, Venmo, and Zelle are online payment tools that help you transfer money and make payments. They are convenient, fast, and often cheaper than using debit cards. However, using online payment tools comes with risks.
Benefits of online payment platforms
- Convenience and Speed: You can send money instantly with just a few clicks. You can use these tools to pay for goods, services, or to transfer money to friends and family.
- Low or No Fees: Many platforms offer free transfers when linked to a bank account. Fees may apply for instant transfers.
- Wide Accessibility: Platforms like PayPal, Venmo, and Zelle are widely accepted. They are popular for peer-to-peer payments, online shopping, and bill payments. You can link them to your bank account, credit card, or debit card.
Risks of online payment platforms
Online payment platforms often have fewer legal protections against unauthorized transactions than bank or credit card payment methods. Make sure you read the protection policy before you decide to use an online payment platform.
Scammers often take advantage of how fast you can make, and how difficult it is to reverse, transactions with online payment platforms. Some common scams using payment platforms include fake sellers requesting payment before you receive the product. Other scammers use these transactions to try and gain access to your accounts.
While most online payment platforms use security measures to protect user information, they can still be hacked. Arizona law requires companies to notify you of data breaches that affect your personal information.
Although many online payment platforms offer free options, they may still charge fees for receiving money for goods and services, currency conversion, and instant transfers to bank accounts.
The Electronic Fund Transfer Act (EFTA) protects unauthorized online payments linked to your debit card or bank account. Check the terms and conditions to understand your protections. You may have trouble getting your money back if you make a mistake like sending money to the wrong person.
This topic can be complicated. You may want to talk to a legal professional for help.
This website shares general legal information. Some content may be simplified or may not reflect recent changes in law. If you need advice for your specific situation, you should talk to a legal professional.
This content was last updated on Oct 1, 2025.