Setting Up a Bank Alt

First of all: what is a bank alt? An alt is a character you create that isn't your first or main character. A bank alt is such an alt that you create only for doing your business at the AH and storing stuff in a bank.

You may be wondering why not use my main for such business and make a character just for it? Suppose you got something from your adventures that you need to auction on the AH for money. You would need to get some transport from where you got the item or where you are currently adventuring, get to the AH, auction the item. Then you would get back to your current place of adventuring and at some point get a notification that your item has been sold. You would then need to move to a mailbox to retrieve your money. If the auction expired (no buyer has been found), you will need to get back to the auction house to re-list it. This all takes time.

Instead, you can create a bank alt and post it next to the AH in your favourite city (Orgrimmar or IF for instance). Then, instead of auctioning the item off your main character, you would mail it to the 'bank alt', auction it from the bank alt and re-list everything from it as well, without having to move all over the world, just logging in and out of your main and bank alt. This saves both money and time.

Some people also like to mail off items to be auctioned to the bank alt and continue adventuring. After a while they log on to the bank alt and auction all of their for-sale items. If they didn't have bank alts they would have to either store all those for-sale items in their bags filling them up, or make several journeys to the capital city to auction them.

Also, some sneaky people like bank alts because it keeps business separate from friends. Say you get a nice staff from a mob and want to sell it. If you auctioned it off your main, a friend may come by and ask if you could 'donate' it to him as a sign of affection, thus no money. If the auction comes from a level 1 alt whom nobody knows such tricky inter-personal problems can never occur and money is made without any 'interference' from friends, guildies etc.