Having a bank account — or more than one — helps you manage your money, pay your bills and save for your future financial goals. A recent GOBankingRates survey found that 58% of Americans have less than $1,000 in savings, so many people could benefit from using a savings account.
Having to go to the bank and wait for a customer service representative to open an account for you in person can be a hassle. Fortunately, most banks will now let you open an account online. Here’s everything you need to know about how to open a bank account online.
This guide to opening a bank account online will cover:
- What You Need To Open a Bank Account Online
- How To Open a Bank Account Online
- Pros and Cons of Opening a Bank Account Online
- Which Banks Allow You To Open an Account Online?
- Finding the Best Bank Account
To open a bank account online, you’ll need to gather some information:
- Your name
- Phone number
- Social Security number
- Email address
- Date of birth
- Government-issued ID, such as a driver’s license or passport
If you are applying for a joint bank account with your spouse or a business partner, both of you will need to supply this information.
You’ll also need to fund your new account. If you’re funding the account by transferring money from another bank account, you’ll need the account number, bank name and routing number of the account the money is coming from. If you will be funding the account by direct deposit, check with your employer or payroll company to see what information you need. They might provide a form, or the bank might ask you to use its form.
You can open a bank account online in four easy steps.
1. Choose the Type of Account
Several kinds of online bank accounts are generally available; you can choose the one that best meets your needs:
- Checking accounts let you deposit your paycheck and pay your monthly bills. Everyone who has a job or bills should have a checking account. You can easily set up automatic payments, so you don’t have to worry about paying bills on time.
- Savings accounts are a good place to put money into every month as you save for a future goal or a large purchase. A recent GOBankingRates survey found that 6% of people don’t save money simply because they don’t have a savings account.
- Money market accounts usually offer a higher interest rate than checking accounts but limit the number of checks you can write.
- Certificates of deposit are a safe place to deposit money that you won’t need for a while. You can only make one deposit into a CD account, so use this for money you’ve already saved up.
2. Choose Your Bank
Look for a bank that offers all the features you need. Some online banks have branches or will let you use the ATMs of other banks for free. Others are strictly online, so you’ll need to do all your banking using a computer or mobile device. Next, look for the bank that pays the highest interest rate for the type of account you want. Make sure the bank offers FDIC insurance for your deposits.
3. Complete the Online Application
You’ll need the information that was listed earlier to completely fill in the form. Many online banks offer a live chat feature or a phone number you can call if you have questions.
4. Fund Your Account
The online application will provide directions for funding your account. You can transfer money from another account, or mail in a check or money order to fund your account.
Also Learn: How To Deposit Cash to an Online Bank Account
Opening a bank account online can be faster and easier than opening one in person — and you don’t have to wait for the bank to be open. Still, some people prefer to open an account in person. Here are the advantages and disadvantages of opening a bank account online.
Pros of Opening a Bank Account Online
- It’s fast and easy.
- You can do it any time of the day or night.
- An online bank usually offers a higher interest rate on savings.
Cons of Opening a Bank Account Online
- There’s no face-to-face interaction.
- Some online banks don’t have branches, so you can’t walk in and talk to a teller.
- There might be a delay in funding your account as you transfer funds.
- If you choose a bank with no branches, you might not be able to easily deposit cash.
Most banks and credit unions will let you open an account online, but some are online-only, meaning they don’t have brick and mortar branches. If you like the idea of being able to go into the bank and talk to a human if you need to, choose a bank that has brick-and-mortar branches. If that’s not important to you, you can choose an online-only bank.
Consider the type and purpose of your account when choosing which way to go. If you’re opening a savings account so that you can save for a big goal, such as buying a home or paying for a child’s education, it could be beneficial to have an account at an online-only bank because it can be a little more difficult to take money out.
If your savings account is at a different bank from your checking account, you might be able to be more diligent about saving. A GOBankingRates survey found that 29% of Americans say they don’t know how much money they’re putting into their savings account each month. Automating the savings process can help here. By setting up a monthly automatic transfer from your checking account into your savings account, you’ll know exactly how much you’re squirreling away each month, and you’ll also know how much progress you’re making toward your savings goals.
Understand the different types of accounts and choose the best one for your goals. According to a GOBankingRates survey on banking basics, 33% of Americans said they didn’t know which type of bank account pays the highest interest rate. And another 27% said they thought that checking accounts paid the most interest. CDs and high-yield savings accounts typically pay higher interest rates than checking accounts, many of which pay no interest at all. Only 31% of respondents knew that online banks typically pay higher interest rates than brick-and-mortar banks.
Here’s a look at the current interest rates on basic savings accounts at top online and top brick-and-mortar banks:
|Savings Account Rates at Top Online and Brick-and-Mortar Banks|
|Bank||Bank Type||Account Name||Savings APY|
|Ally Bank||Online||Ally Online Savings Account||1.90%|
|American Express National Bank||Online||American Express Personal Savings High Yield Savings Account||1.90%|
|Synchrony Bank||Online||Synchrony Bank High Yield Savings||2.25%|
|CIT Bank||Online||Savings Builder||2.20%|
|E-Trade||Online||Premium Savings Account||2.10%|
|Chase Bank||Brick-and-Mortar||Chase Savings||0.01%|
|Bank of America||Brick-and-Mortar||Rewards Savings||0.03%|
|Wells Fargo||Brick-and-Mortar||Platinum Savings||0.05%|
When choosing the best account for your needs, ask these questions:
- Is there a minimum amount of money I need to put in to open the account? (i.e., a minimum deposit)
- Is there a minimum amount of money I need to keep in the account at all times? (i.e., a minimum balance)
- Are there any fees? Some banks charge fees if your balance falls below a certain amount or if you make more than a certain number of transactions each month.
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Opening a bank account online can be quick and easy and may help you manage your money better. Compare rates and features to find the best account for your needs, and you can apply any time of the day or night. You can even apply for a credit card or loan, and some online banks offer financial advice, as well.
Karen Doyle is a personal finance writer and former financial advisor.
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