The three main places to open a checking account
Janet has three broad categories to choose from: a traditional bank with physical branches, a credit union, or an online-only bank. Each one works differently, costs different amounts, and offers different conveniences. The right choice depends on what Janet actually does with her money—whether she needs to deposit cash, talk to someone in person, or just wants the lowest fees.
A traditional bank has branches where Janet can walk in, deposit checks and cash, and speak to someone face-to-face. Banks like Wells Fargo, Bank of America, Chase, and regional banks like PNC or US Bank operate this way. A credit union is a member-owned nonprofit that offers checking accounts, usually with lower fees and better interest rates, but only to people who meet membership requirements—often based on where they work, where they live, or a group they belong to. An online-only bank like Ally, Charles Schwab, or Chime has no physical locations; Janet does everything by app or website, but typically pays no monthly fees and earns higher interest on the balance.
Key Takeaways
- Traditional banks offer in-person service and cash deposits but often charge monthly fees unless Janet keeps a minimum balance.
- Credit unions usually have lower fees and better rates than banks, but Janet must meet membership requirements to join.
- Online banks charge no monthly fees and pay higher interest, but Janet cannot deposit cash in person and must mail or mobile-deposit checks.
- The best choice depends on whether Janet needs to handle cash regularly, prefers talking to someone in person, or wants the lowest fees.
- Janet should compare the monthly fee, minimum balance requirement, overdraft fees, and ATM access before opening an account anywhere.
When a traditional bank makes sense for Janet
Janet should open a checking account at a traditional bank if she regularly deposits cash, receives paper checks, or wants to speak to someone in person about her money. Banks have tellers who can handle cash deposits immediately, and most have thousands of ATMs where Janet can withdraw money without a fee. If Janet travels or moves around, a large national bank like Chase or Bank of America means she can walk into a branch almost anywhere and get help.
The trade-off is cost. Most traditional banks charge a monthly maintenance fee—often $10 to $15—unless Janet keeps a minimum balance (usually $500 to $1,500) or sets up direct deposit. Overdraft fees can run $30 to $35 per incident. If Janet keeps a low balance or occasionally overdraws, those fees add up fast. She should read the fee schedule carefully before opening the account, because fees vary widely even between branches of the same bank.
Why a credit union might be cheaper for Janet
A credit union is often the cheapest option if Janet can join one. Credit unions are nonprofits owned by their members, so they return profits to members through lower fees and higher interest rates. Many credit unions charge no monthly fee at all, and overdraft fees are typically $25 to $30 instead of $35. Interest rates on checking balances are often higher than at banks, though still modest.
The catch is membership. Janet can only join a credit union if she meets their membership rules. Some credit unions are open to anyone who lives or works in a certain county. Others require membership in a specific employer, union, or organization—for example, teachers' credit unions, military credit unions, or credit unions for employees of a particular company. Janet should search for credit unions she might join using the CO-OP Network locator or Alliant Credit Union's locator tool online. If she finds one, the savings on fees can be significant over time.
Credit unions also have a smaller ATM network than banks. Many credit unions belong to shared branching networks, which means Janet can use ATMs and services at other credit unions, but not at every corner like she would with a big bank. If Janet rarely needs cash, this is not a problem. If she withdraws cash several times a week, she should check the ATM map before joining.
Online banks for Janet if she wants no fees
An online-only bank charges no monthly fee, no minimum balance, and often pays interest on the checking balance itself—something traditional banks almost never do. Ally Bank, Charles Schwab, and Chime are popular choices. If Janet keeps $1,000 in an online checking account, she might earn $5 to $10 per year in interest, whereas a traditional bank would charge her $120 in annual fees. Over time, the difference is real money.
The limitation is that Janet cannot deposit cash in person. She can deposit checks by taking a photo with the mobile app (called mobile deposit), and she can transfer money electronically from another account, but if she has a stack of $20 bills, she cannot hand them to a teller. Some online banks partner with retail locations like Walmart or CVS to allow cash deposits, but not all. Janet should check whether the specific bank she is considering offers this before opening an account.
Online banks also have no physical branch to visit if something goes wrong. If Janet's card is lost or her account is compromised, she handles it by phone or app, not by walking into a branch. Most people find this fine, but if Janet prefers to solve problems face-to-face, an online bank will frustrate her.
What to compare before Janet decides
Janet should look at four things side by side before opening an account anywhere:
- Monthly fee: Does the bank charge a monthly maintenance fee? If yes, what balance or direct deposit requirement waives it?
- Overdraft fees: What does the bank charge if Janet overdraws the account? Some banks charge $35 per overdraft; others charge $25 or nothing.
- ATM access: Can Janet withdraw money for free at ATMs near her home and work? Does the bank have a large network, or does it partner with other banks?
- Interest rate: Does the account pay any interest on the balance? Online banks often pay 0.01% to 0.05% APY; traditional banks usually pay nothing.
Janet should also check whether the bank offers the features she actually uses—mobile deposit, bill pay, transfers to other accounts, alerts for low balance. Most checking accounts have these now, but it is worth confirming. She can find fee schedules and terms on the bank's website, or call and ask a representative directly.
How to actually open the account
Once Janet has chosen a bank, opening an account takes 15 to 30 minutes. At a traditional bank, she walks in with a photo ID and proof of address (a utility bill or lease works), and a teller opens the account on the spot. She can deposit an initial amount of cash or a check right then. At a credit union, the process is similar, though some credit unions require a small deposit to open a savings account first (usually $5 to $25).
At an online bank, Janet does everything on the website or app. She enters her personal information, verifies her identity (usually by uploading a photo of her ID), and links a bank account to fund the new checking account. The bank then deposits two small amounts into her existing account and asks her to confirm the amounts—this is how they verify she owns the account. The whole process takes 10 to 20 minutes, and the account is usually ready to use within one business day.
Janet should not feel rushed. She can open an account at multiple banks to compare the experience, and she can close an account later if she does not like it. Most banks do not charge a fee to close a checking account.
Special situations that might change Janet's choice
If Janet receives government payments like Social Security or a tax refund, some banks offer early deposit—the money arrives a day or two before the official deposit date. Chime and some other online banks are known for this. If Janet is waiting for a refund and needs the money quickly, early deposit can matter.
If Janet has a history of overdrafts or a low credit score, some banks will not open an account for her. She can check whether a bank uses ChexSystems (a checking account history report) by asking before she applies. Credit unions are sometimes more flexible about this than large banks. If Janet has been denied before, she should ask the bank directly whether she can open an account.
If Janet is under 18, she may need a parent or guardian to co-sign the account. Most banks allow this, but the rules vary. She should call ahead and ask.
Frequently Asked Questions
Can Janet open a checking account without a minimum balance?
Yes. Online banks like Ally and Charles Schwab have no minimum balance requirement. Many credit unions also have no minimum. Traditional banks usually require $100 to $1,500 to open an account, but the money does not have to stay there—Janet can withdraw it immediately after opening. The minimum balance requirement only applies if she wants to avoid the monthly fee.
What if Janet does not have a proof of address?
Most banks require a photo ID and a document showing Janet's current address—a utility bill, lease, or bank statement dated within the last 60 days. If she does not have one, she can ask the bank whether a phone bill, insurance statement, or government letter works. Some banks are flexible. If she has none of these, she may need to open an account online instead, where the requirements are sometimes looser.
Should Janet open accounts at multiple banks?
Yes, if she wants to compare. Opening a checking account does not lock her in. She can open an account at a traditional bank, a credit union, and an online bank, use them for a month, and close the ones she does not like. This is a free way to find out which one actually fits her life. Just watch for any small opening deposits she made—she should withdraw those before closing the account.
What happens if Janet's debit card is lost or stolen?
She should call the bank immediately or report it through the mobile app. The bank will cancel the card and mail a new one, usually within 5 to 10 business days. Most banks also offer a temporary digital card in the app so Janet can make purchases while she waits. If someone used the card fraudulently, the bank will investigate and refund the money, though this can take 10 to 30 days.
Can Janet switch banks later if she changes her mind?
Yes. She can open a new account at a different bank, move her direct deposits and automatic payments over, and close the old account. Most banks do not charge a fee to close an account. The process takes a few weeks because she needs to update her direct deposit information with her employer or the government, but it is straightforward. She should keep the old account open for at least a month after switching to make sure no old payments are still trying to go through.