Requirements of Bank Accounts

Account holders must comply with bank requirements before and after they open accounts. Some requirements are non-negotiable, such as providing valid identification; banks enforce others with punitive fees. Customers who do not meet ID requirements risk having accounts frozen temporarily or closed. Bank requirements vary from state to state and between financial institutions. At account opening and later upon request, banks issue deposit-account agreements that detail account requirements

Identification

• Banks require business owners to produce documentation showing they registered the business in the state where they intend to open the account. State documentation types vary but most states issue business licenses and fictitious name certificates. Corporations must provide banks with the articles of incorporation. To open accounts for partnerships, banks need a copy of the general partnership agreement signed by all parties.

  The USA Patriot Act requires business and consumer account holders to produce a government issued form of identification at the time of account opening. The ID must feature their name, date of birth and physical address. Banks also require Social Security numbers from signers and tax identification numbers for businesses.

Types Of Accounts

• Banks offer transactional checking accounts to consumers and business entities. These accounts handle routine expenses such as paying bills. Savings accounts and money market savings accounts allow some transactional capabilities but pay interest.

  Certificates of deposit are normally illiquid products that pay interest for a set period. Some CD accounts allow customers to make one-time additions or withdrawals before the end of the term.

Restrictions

• The Federal Reserve's Regulation D prevents holders of non-transaction accounts from making more than six withdrawals per month. Most banks require customers to maintain balances of $10,000 or more in money market savings accounts and $500 or more in regular savings accounts. Some banks offer benefits such as free checks to checking account holders but require them to maintain balances of $1,500 or more. Banks assess penalty fees ranging from $10 to $15 dollars for low balances.

  People who break CD terms early incur penalties equal to at least six months of interest.

Function

• Banks use account requirements to generate more business. Minimum balances compel people to keep funds in the bank or pay fees. Banks use deposited money to fund loans that generate profits. People who withdraw money pay fees, which also generate profits. Some banks waive minimum balance fees if people set up payroll direct deposit. Banks view direct deposit as "sticky products" because people with automatic debits and credits are less likely to close accounts.

Warning

• Bank account requirements constantly change. Legally, banks can change account terms at any time as long as they notify customers when they send monthly bank statements. Common changes include raising minimum balance requirements, limiting in-bank transactions and discontinuing perks such as automated teller machine rebates.

  In the past, many banks allowed established business owners to add or remove account signers with only verbal authorization. Banks now require all account signers to visit the bank when making changes.