A lot of banks and credit unions now offer the option to open an account online, and there’s a growing number of online-only financial institutions that provide higher interest rates and lower fees.
Setting up a new bank account online is simple, as long as you’re prepared. Here’s how to do it.
1. Figure out what kind of account you need
Not all bank accounts are the same. You’ll need to decide what makes the most sense for your situation and your financial goals.
Some common accounts available online include:
These accounts are used to make routine payments — typically with a check or debit card — and receive deposits, like your paychecks. They’re convenient if you’re planning to use the money in your account for day-to-day spending, but they also earn very little interest. If you’re hoping to use your new account to stash some (or all) your savings, a checking account isn’t the best option.
These accounts are used to set aside funds for longer periods of time. A high-yield savings account is a solid option if you want your deposits to accumulate serious interest and grow over the years. However, savings accounts can sometimes come with high fees, and you might not have quick, consequence-free access to your money if you need it fast.
Cash management accounts
They tend to have lower monthly fees, and some cash management accounts even provide cash back on select purchases. The downside is that you may not be able to receive face-to-face customer service if you need help with your account.
2. Choose an institution
Once you’ve chosen a type of account, it’s time to decide where to open it. As always, it’s a good idea to shop around and compare your options before you commit to anything.
Some institutions will offer multiple options for each of the account types mentioned above. Generally, the accounts with the most features and best bonuses are also the ones with the highest fees and biggest restrictions. You might be asked to keep thousands of dollars in your account to avoid a service fee, for instance. Basic accounts may have no fees at all.
You’ll want to look for an institution that balances the features you need with fees that are within your budget and restrictions that won’t cramp your lifestyle.
These are the three main places that will allow you to open an account online:
You likely already have an account with a bank, so your first instinct might be to open your new account at the same place. However, you’re under no obligation to stick with a single financial institution, and in most cases you can easily link a new account to your existing one regardless of who the new account is with. There’s no reason to restrict your options.
Credit unions are customer-owned organizations that provide many of the same services that banks offer. Because they are not-for-profit, credit unions sometimes have lower fees and better interest rates than larger financial institutions. Not all of them can offer the same advantages, though, so it’s still important to read up on the fee structure and usage restrictions of any credit union you’re thinking about using.
Online financial institutions
These are institutions that conduct all of their operations online. There are no physical locations to visit, and you won’t have the option of face-to-face consultations. However, if you’re comfortable handling your banking from home, online financial institutions offer some of the lowest fees and highest interest rates available. Plus, many online financial institutions provide the same FDIC insurance as traditional banks and credit unions — sometimes even better.
3. Set up your account
After you’ve chosen the account you want at the institution you want, the next step is to begin the signup process. Setting up your account shouldn’t take more than a few minutes, but you’ll need a few things ready before you start.
These are the basics you’ll need on hand:
- A piece of government-issued ID, like a passport or driver’s license.
- Your Social Security number.
- Your mailing address, email and phone number.
You’ll likely be asked to verify your email address or phone number during the signup process.
Some institutions might ask for additional paperwork to verify your citizenship or your history with bank accounts, but that’s far from universal.
Depending on what type of account you’re opening, you might be required to deposit a small chunk of change right off the bat.
If so, you may be asked to provide the routing and account numbers for a bank account you already have. You should be able to find this information on one of your checks or through your existing account’s web portal.
Once you’ve entered these numbers, select the amount you want to transfer over to your new account. You can go with the minimum amount required or dump in more, if you’d like.
Since you’re setting up your account online, it may be tempting to just mash the “I agree” button like you’re signing up for a game or social network. However, this is one time you should make an effort to read through the paperwork in its entirety.
After all, this is your money we’re talking about, and you wouldn’t want to be surprised by an unexpected fee or usage restriction down the road.
If you’re comfortable with the terms and conditions of your new account, sign the agreement.
Some financial institutions will allow you to sign digitally, though not all of them. You may be required to print off your agreement and sign it in ink, then send it in the mail or email them a scanned copy as a PDF file.
5. Start using your account
Once your agreement has been signed and sent off, you’ll have access to your new account within minutes — or a few days, if you were required to submit a paper copy.
You might also receive a debit card or a checkbook in the mail. Some places will even email you a digital copy of your debit card so that you can start making purchases right away. You will also want to read up on how to read a check and receive money from others.
And that’s all there is to it. Enjoy your new account and all the perks that come with it.