If you're getting tired of smashing piggy banks every time you want to get your hands on some dough, we're here to help you find more economical ways of stashing your money. You'll save on the cost of replacing your poor smashed piggies, and you can even opt to make money, simply by keeping the money you already have in a bank.

A bank. Duh. It's not the 1930s - where else are you going to keep your money? In a sock under your mattress? But opening a bank account is not as simple as walking up to a bank teller and handing over crumpled wads of cash; there are lots of decisions to make and confusing banking jargon to wade through. We'll teach you everything you need to know about making smart decisions when opening a new bank account. Or, if you prefer, you can just turn your money over to us for safekeeping. You can trust us. We used to be lawyers.

1. EXAMINE YOUR FINANCIAL SITUATION

Let's begin with a practical question: do you have any money? Coins don't count (unless they're valuable collector's coins). You don't have to be loaded to start a bank account, but it's tough to open a bank account with $0.23 in your wallet. Here's why:

  1. Minimum Balances: Certain types of accounts require you to maintain a minimum balance - that means that you must have at least a certain amount of money in the bank at all times. If your account ever dips below that minimum balance, then you'll get charged a fine. The reason why banks like to hold onto at least some of your hard-earned cash is because they need it to lend to other people who want to take out loans for houses, cars, college tuitions - y'know, grown-up stuff.

  2. Service Charges: Some accounts charge you a monthly fee for the privilege of using their services; so if you have no money to give to them, why bother paying that service charge every month? We should add, however, that the service fees at most banks are usually fairly low, so it might be worth it for you to just keep an account open if you know that you'll at least have some money to put away some time. But it's still an expense to plan for.

  3. Self-Esteem: It'll be depressing for you to get your bank statement in the mail every month if it's always going to tell you the same thing: "You have $0.00 in your account. Get a job. Loser."

  4. ATM Services: Your bank will most likely charge you a fee for using automated teller machines (ATMs) that don't belong to them, and some will limit you to a certain number of ATM transactions per month on your bank's ATMs (if you exceed that number, you'll have to pay an additional fee at some banks). So although they're convenient, ATMs can be an expensive service.

2. CHOOSE THE RIGHT BANK

If you're thinking, "That bank right there across the street looks good" or "Citibank, of course," then it's great that you've settled on your ideal bank. But there may be another bank that's only one block further away that is much better suited to your financial needs. Proximity and reputation are excellent factors to help you determine what bank is right for you, but you should really consider all the other advantages of choosing a specific type of bank before forking all of your cash over.

A large chain bank
A small neighborhood bank
An online bank

A large chain bank

Large chain banks offer two main benefits that the others don't: convenience and reputation.

  • Convenience: If you don't know the names Citibank or Chase, we are pleased to welcome you to the planet Earth and inform you that these are monstrously large chain banks. Because there are so many of these banks, they offer the fine advantage of having plenty of ATMs around, in most any country you may travel to.

    The big banks with their deep pockets also try as hard as they can to make it easy for you to access information about your stored money. This means that besides the branches they've got located on every other street of your city, they probably have 24-hour toll free phone service and an online presence. If one Sunday night you are suddenly overwhelmed with the desire to know exactly how much you deposited into your account on a certain day two months ago, just get on the phone and call the bank.

  • Reputation: If you belong to a big-name bank, there is little to absolutely no chance of it folding and leaving you in a bind to find a new bank. So if you're one of those people who don't like change, stick to a bank with a secured place in the banking world.

A small neighborhood bank

Small neighborhood banks have two cozy things going for them: proximity and friendliness.

  • Proximity: Neighborhood banks are by definition located in your neighborhood, making it very easy for you to make a trip to the bank. If you're the sort of person who literally likes to run your errands, this is the bank for you. This is also a great option if you happen to hate Citibank, Chase, or any of those other greedy megabanks.

  • Friendliness: Now we're not going to guarantee that tellers at your local bank will bake you pies, but most people find that employees at their local banks are just plain friendlier than the ones at big, impersonal banks. Small banks don't have the option of blowing off a potential or current customer, so they'll hire tellers who make it their business to smile until their faces hurt. Instead of treating you like an account number, these tellers will treat you like a real person (with an account number).

An online bank

We would get kicked off the web if we didn't mention the growing presence of online banks. Online banks not only allow you to take care of your banking while naked, but they can also offer you special deals.

  • Special Deals: While just about all the large bank chains have revamped their businesses to incorporate an Internet aspect (online applications, online access to your account, etc.), there are some banks that are located purely on the Internet. To woo you, they're offering all sorts of cool deals that involve super-high interest returns on your savings, and 24-hour phone and Internet assistance. If think you're ever going to sign up at an online bank (especially now that the Y2K fiasco - or lack thereof - is behind us), do it soon before they become a dime a dozen and all the special deals disappear.

3. PICK A TYPE OF ACCOUNT

So now that you've assessed your financial status and picked out a bank, you need to decide what type of account you're gonna open. We'll sort out all the different types, and we'll try not to use confusing terms like "overdraft protection" (without translating them, at least).

Savings accounts
Checking accounts
Linking accounts
Joint accounts

Savings accounts

A savings account is all about - surprise! - saving your money in an account. However, the main purpose of having this type of account is not only to store your money safely away, but also to gain interest. "Interest" means that the bank will pay you for letting them hold your money, and how much interest you get depends on the amount of money you have in your savings account. Bottom line: the more money you save, the more you'll gain.

There are several types of savings accounts, and the details and names of each type vary from bank to bank. We can't guarantee that all banks will have each of the following kinds of accounts, but they are covered broadly enough so that you have at least a general idea of what to ask for when you step into the bank:

  • Passbook Savings: This is the simplest type of savings account. You go into the bank, deposit or withdraw your money, and the teller makes a notation on your passbook (which records all the activity that goes on with your account). A passbook savings account is perfect if you're a haphazard saver who randomly makes deposits and/or withdrawals.

  • Regular Savings: This account can be linked to a checking account (more about checking and linking later), and the bank will send you a statement in the mail to let you know what's going on every month. You'll get an ATM card with this account which will permit you to withdraw cash at all of the bank's ATM machines and at other universal ATM machines. A regular savings account is ideal for people who make a steady - but limited - income.

  • High-Interest Savings: This account comes with all the benefits of a regular account, but has a higher minimum balance (that is, you have to always have a lot of cash sitting in the account). On the up side, it gives back a relatively higher interest return (compared to a passbook or regular savings account). So you store more, but you also get more back. If you've got a couple of thousand dollars for your bar mitzvah that you want to put away, this is the account for you.

  • Certificates of Deposit (CDs): The above three accounts are all "liquid" accounts, meaning that you can deposit money into and take money out of your account at any time (while taking care to honor your minimum balance requirements). When you put your money in a CD, you agree to put it away for a certain number of months. That means ABSOLUTELY NO TOUCHING. There's no adding money to the CD, and there's definitely no removing money from it either. Because you're giving your money to the bank for three or more months at a time, the bank will pay you a (relatively) higher interest than they'll pay you for keeping money in any of the other savings accounts.

Checking accounts

The neatest thing about having a checking account is the fact that you get your very own checkbook, with you name on it and everything! (It will not, however, be so neat when you're writing out checks for huge bill payments.) All banks offer checking accounts, but some offer checking accounts that also work as savings accounts. We'll go over both types in detail.

  • Regular Checking: At most banks, you'll pay a low monthly fee for check-writing services. This means that you'll be set up with a checkbook immediately after opening the account, and have the option of writing checks that draw money out of this account. With regular checking, you'll also get the money storage and ATM services. Whenever you need to randomly take money out to buy groceries, clothes, or a feral midget, it should be from your checking account.

  • Interest Checking: This account features everything that a regular checking account has, but it includes an interest rate, so it acts like a regular savings account. Sounds too good to be true? It might be, depending on how much the monthly charge for maintaining such an account is at your bank - it's usually a good deal higher than the monthly fee for a regular checking account. So you have to make sure that you always have enough cash in your account so that the interest outweighs the monthly charge.

Anytime you write a bogus check (like scribbling down $50,000 to buy that pony you've always wanted, when you actually have closer to $5 in your account), the check will "bounce." This is just a cute way of saying that the payment won't go through and you'll be held responsible for messing up - your bank will fine you an amount that will undoubtedly make you wince. So don't write checks without making sure that you can honor them first.

Some banks offer a service called "overdraft protection," which basically means that if the check bounces, the bank will spot you the amount of money for which you've written a check. (You'll still be fined, though.)

Linking Accounts

If what you really need is a checking account, but what you want is to earn interest without paying the high fees for interest checking, you have the option of linking a savings account to your regular checking account.

The line between linked accounts is usually pretty distinct - you can't have $1000 sitting in your savings account, earning interest, and expect to pay your checks through that same account. You must first transfer some of that money into your interest-less checking account first.

When making deposits, you'll have the option of putting the money into one of your accounts. (You can shift the dough between accounts once it's in.) We recommend that you don't try to be slick by keeping all your money in your savings account until you have to pay for a check (and then transferring the exact amount you wrote the check out for into checking). Unless you live next door to, on top of, or inside the bank, and have easy access to it at all times, it's quite possible that your fantastic scheme will end up costing you.

Joint accounts

Joint accounts have nothing to do with marijuana. Sorry 'bout that. When you open any account with another person, it is called a joint account - married couples usually open one of these accounts, but unmarried couples and total strangers can do it as well. You and the co-account opener have equal ownership to all the money in the account, and can take advantage of all the services that come with the account. Either of you can deposit or withdraw as much of the money as you like without having to answer to the other holder. So it's actually not a good idea to open a joint account with a total stranger… unless the total stranger is a great deal richer than you are, in which case a joint account would be very ideal.

We should add that if one of the joint account owners dies, the surviving owner gets all the money in the account. So if your plan in life is to marry a rich old geezer and wait until he/she keels over so that you can collect all of his/her money, make sure that you've signed up for a joint account before your spouse croaks. You sicko.

4. OPEN THE ACCOUNT

The time has come for you to open your account. Break out the champagne!

Ways to open an account

Before you sprint down to the bank of your choice, we'd like to inform you that you might not even need to step out of your house to open your account. Thanks to technology, there are several ways to open an account now.

  • Over the phone: According to the bigger chain banks, people are increasingly picking up the phone to open a bank account. You might want to consider looking up the number to your bank and giving them a call instead of making the trip, especially if you're having a bad hair day. The process will take longer because you'll have to mail in your signature, but it is a fairly simple way to go.

  • On the Internet: Many banks - especially the online banks - offer applications over the Internet. Simply call the bank to ask for their website, or look it up here. When you open an account online, you don't have to deal with a pesky teller trying to talk you into opening a certain type of account. You can also leisurely browse through all your options and take your time in deciding what you really want. There's no pressure, and you can always call the bank if you discover that you need some assistance. Ah, sweet solitude.

  • In person: If the above two options reek of detachment to you, you can always head down to the bank and get some of that human contact you crave so badly. Another advantage of opening a bank account in person is that you can ask the teller all of your questions and get immediate answers (as opposed to waiting two business days to get an e-mail response). Because you can sign all the papers on the spot, the process of opening an account is also speedier in person.

Qualification and identification

Before picking up the phone, switching over to your bank's website, or physically heading over to your bank, make sure you qualify for a bank account by preparing some ID first.

  • Proof of age: Sorry, kiddies, you've got to be at least 18 years of age to open a bank account. Fortunately, banks only care about legal age, not mental age.

  • Proof of address: A phone bill, driver's license, or any other official document with your name and address will do.

  • Proof that you are who you say you are: The bank will ask for your social security number or employer identification number to ensure that you exist, so have those digits handy.

In addition to these requirements, get out an ID with your picture, an ID with your signature, and anything else you've got that tells the bank you're legit (a passport is always nice). Have your mother handy, if necessary.

Questions to ask

The following questions MUST be answered before you give your money away. What if you forget to ask about time deadlines, and suddenly realize that you can't touch your money for three years? So always get the answers to the following:

  1. Is there a monthly fee for maintaining this account? If so, what is it?

  2. Is there a minimum balance that I must keep within this account? If so, what is it? And what sorts of fees apply if I go under that limit?

  3. What is the interest rate of my savings account?

  4. Is the account for which I'm applying FDIC insured? (You definitely want your account to be insured by the Federal Deposit Insurance Corporation. If your bank ever goes bankrupt and loses all your money, the FDIC's will pay you back down to the very last cent.)

  5. Is there a limit to the amount of transactions (deposits/withdrawals, check writing, ATM uses) I have per month? If so, how many do I get of each? What sorts of fees apply if I go over my limit?

  6. Where can I withdraw cash without paying any fees? What is the fee for using an ATM machine that doesn't belong to this bank?

In addition to these questions, don't be shy when it comes to asking for a clarification on anything that confuses you. You are dealing with your (allegedly) hard-earned money, after all, and the last thing you want to do is blow it all over a misunderstanding.

One final tip: find a nice person at the bank, get his/her name, and always ask for that person. It's easier to deal with a friendly face that knows you. Just make sure he/she isn't wearing a mask and holding a gun.