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And unlike just a few years ago, it is no longer mandatory to go into a local branch to open a new bank account.
Can You Open a Bank Account Online?
As long as you are 18 years of age, a U.S. resident, and you have a government I.D., you can open up a bank account online by providing the same information as you would in person.
How to Open a Bank Account Online
The following steps will walk you through what products to look for, how to choose the best bank for you, and the process of opening your bank account online.
Step #1. Decide What Financial Products You Need
- Checking Account or Saving Account? What is the primary reason for opening your account? Is it a checking account for everyday use, such as withdrawing money and paying bills? If so, make sure you pick a bank that has low fees. A savings account usually has withdrawal restrictions, and you want it to earn interest. Pick a bank that is above the earns interest above the national average.
- CD or Money Market Account? Not all banks offer a certificate of deposit (CD) which is a guaranteed return over a set term (normally 6 months to 60 months). A money market account is like a savings account but normally pays higher interest. However, MMA’s require a higher balance and sometimes have penalties for withdrawing money from the account.
- Cash Management Account? A Cash Management Account (CMA) is a hybrid account where companies offer checking, savings, and investments all in one core product. These accounts are held through financial companies, such as brokerages, rather than traditional banks.
- Single or Joint Bank Account? Are you looking for an account just for you, or are you opening a joint account with a family member (this is the type of account individuals under 18 need to open)?
>> More: Explore the Best Checking Accounts
Step #2. Research Online Options
Once you know the type of account and products you want, you will then need to search online for the bank that offers you what you need (e.g., checking, savings, debit card, etc.), with the lowest fees, and that earns the highest interest rates.
Step #3. Apply Online in Minutes
When you know what bank, you want to open the account with, head over to their website to begin the registration process.
Some online banks only allow you to register within their mobile banking application, which means you will need to download the app before registering. Typically, the application process is about five to ten minutes.
You can thank technology for this easy and painless application process.
Step #4. Verify Identity
The way you verify your identity is by submitting a picture of your I.D. with your smartphone or scanner.
Some banks also offer a verification step by allowing them access to your current bank account via a secured third-party provider.
Step #5. Fund Your Online Bank Account
If you have an existing bank account, funding your new bank account can be done via ACH or your debit card. In addition, some banks allow you to fund your account by depositing cash into your account.
You will need to go to either a local branch or a deposit location, such as Green Dot locations, that some online banks partner with to deposit cash into your new bank account.
Step #6. Start Using Your Online Bank Account
Once your account is set up and funded, you will receive a debit card normally issued by Visa or Mastercard.
You can then start using your debit card anywhere Visa or Mastercard is accepted. You will also be able to set up direct deposits, deposit checks, and transfer money just as you would with any bank.
>> Learn More: What Is Online Banking?
What Information Do I Need to Open an Online Bank Account?
- Social Security Number: You will need your SSN if you are a USA citizen or another form of government I.D. such as an ITIN (Individual Taxpayer Identification Number) if you are not. Some banks do not require a social security number.
- Valid Driver’s License: You will need a valid driver’s license or another government I.D. such as a passport to further verify your identity.
- Previous Financial Information to Fund Online Bank Account: You normally need to verify your old bank before you can fund your new bank account, either via an ACH or debit card, unless you are funding it with cash. Have your routing number handy.
- Date of Birth: You will need to provide your date of birth that will be confirmed on your I.D.
- Mailing Address: You will need to use your current mailing address. If it does not match your I.D., you will need to update your I.D. or provide additional documentation.
- Contact Information: Your email and phone number will need to be provided. Normally, the bank will send you an email and/or text message to confirm the correct information.
- Employment Proof: Sometimes, you will need to provide proof of employment which can be done by showing your latest check stub or getting a letter from your current employer.
What Are the Benefits of Opening a Bank Account Online?
Opening a bank account online can be done in just a few minutes. You also do not have to wait in line, schedule an appointment, and have fewer fees. Additionally, the customer and user experience are far superior to brick-and-mortar banking.
These are just a few of the reasons why millions of Americans are making the move to banking entirely online.
Challenges With Opening a Bank Account Online
Even though opening an account online is quick and easy, it can present some challenges.
- No Credit History: Most banks will do a soft inquiry on your credit report. This does not hurt your credit score but allows the bank to see your credit history. If you lack sufficient credit history, the bank may require additional information before approval.
- Chexsystems Report “Checking Account History”: If you have had bounced checks or overdrafts, the bank you are applying for will catch this during the ChexSystems review and may have additional questions for you.
- Under 18 (A Minor): If you are under 18 years of age, you will need to open a joint bank account with someone over 18. You will want to talk with the bank to see if anything changes once you turn 18 years old, as some fees that were previously waived may no longer be waived.
- Citizenship: As you can imagine, it is more difficult to get approval at a bank if you are a nonresident. Although this does not mean an automatic disqualification, many times, there is additional information requested.
What Is the Easiest Bank Account to Open Online?
When you are looking to open a bank account online, you want to find one that meets all your banking needs, has low fees and minimum requirements, and offers above-average interest rates on money stored in your account.
Chime is that bank. Chime is a financial technology company (neobank) that provides banking services provided by The Bancorp Bank and Stride Bank, N.A., which are Members FDIC, so your funds are insured up to $250,000.
Is It Safe to Open a Bank Account Online?
Yes, opening an online bank account is safe if you do it through a reputable bank that already has an established online presence and a secure website.
How Can You Fund an Online Bank Account?
You can fund your online account by an ACH, direct deposit, debit card, wire, or cash deposits (if the bank accepts cash deposits).
6 Things to Consider When Opening an Online Bank Account
Here is what you should look for when opening an online bank account.
You want to make sure the bank has a good reputation. Normally, doing simple Google searches and reading reviews will let you know how happy others are with the bank and its services.
Since your banking will be online or via a mobile app, you will want to make sure that both use the latest security features, such as SSL (on the website), touch and face I.D. to access the app, and customized alerts to notify you when your account has been accessed as well as when transactions take place on your account.
Being able to freeze and unfreeze your debit card is another good security measure to look for.
When you find a reputable and secure bank, you want to look at its fees. Most online banks do not have a minimum deposit requirement or monthly fees on your checking or savings account.
You also want to be aware of any ATM and debit card fees that exist. The best thing you can do is read the fine print. Financial institutions are notorious for hidden fees.
#4. Financial Product Offerings
Ideally, you will choose a bank that offers a wide variety of products such as checking, savings, allows direct deposits, mobile check deposits, and a standard debit card.
Anything more than that would be a bonus. Of course, if you are looking for a specific product such as a CD, you will want to make sure the bank offers that product.
#5. User-Friendly Mobile App
Most banks have a mobile app nowadays. However, not all are user-friendly or available on all devices. You can look at reviews to make sure they are user-friendly. For example, Chime’s mobile app has a rating of 4.8 out of 5.0 with hundreds of thousands of reviews.
#6. FDIC Insured
Being FDIC insured means your money is insured up to $250,000.
You will want to make sure the bank you choose is either FDIC insured or their services are provided by an FDIC Member.
Bottom Line: How to Open a Bank Account Online
Opening a bank account online is the same process as you would do in person, which requires filling out a form and confirming your identity.
However, opening a bank account online takes the human element out of the process.
Combining this with not having to schedule an appointment, opening an online account is much faster.
In about 10 minutes, you will have your account activated and waiting for your first deposit, able to set up direct deposit, and have your debit card on its way to you!