How to open an online bank account in the United States?
As with any financial matter, before making any money movement just for the sake of fashion, you should make sure you meet certain requirements to open an online bank account.
With technology at our fingertips on our smartphones, tablets and other mobile devices, opening a bank account online can be much easier and faster than going to a traditional branch. However, as with everything that has to do with our finances, it is important to take into account all possible considerations to make an excellent choice and not make a mistake in any of the processes, since it is your money that could be at risk.
Currently, online banks have positioned themselves strongly in the United States because many of them offer higher rates of return than traditional banks, largely due to the fact that they do not have to maintain physical branches, so they charge low or no fees.
A big fear among consumers is whether online bank accounts are safe. The answer: yes, they are. In addition, any reliable online company is insured by the Federal Deposit Insurance Corporation (FDIC), as are the vast majority of reputable banking institutions. If you want to make sure that your money will be safe, it is essential that before opening any bank account you confirm that the company is part of the FDIC.
For credit union accounts, there is also equivalent protection from a separate government agency, the National Credit Union Administration (NCUA).
Accounts insured by the FDIC and NCUA are covered up to $250,000, a crucial protection in the event the bank fails.
Also, the bank must employ best security practices to protect your account, including encryption and two-factor authentication. See the full breakdown of security measures in place to ensure your money is protected.
With these government and institution protections in place, now it’s time to decide what type of bank account you want to open at the online bank of your choice. Checking and savings accounts are the most common pair to open at a bank, but it is not necessary to have them in the same place, since not only do you magnify their protection, you can also get different benefits depending on your financial needs.
As mentioned, online bank accounts are highly competitive in today’s market due to the fact that it has regularly low fees compared to traditional banks. Make sure of this by reviewing the bank’s fee schedule before opening an account. This includes any monthly maintenance fees, overdraft fees and ATM fees. It is important to look for an account that offers low or no fees and/or reimburses them.
Checking accounts provide access to multiple payment and withdrawal options, such as debit cards, bill pay and ATMs, while savings accounts focus on storing funds and earning interest. Look for checking accounts with no monthly fees or easy ways to avoid them, and consider savings accounts with high rates.
It’s also important to be clear about what you need. Do you want to open a single or joint account? With a single account, you are the sole owner. A joint account is one that you co-own with another person, usually a family member or significant other.
Since you’ll be doing your banking online, the mobile banking user experience on the website and mobile app are particularly important. You’ll want an intuitive interface and robust features, such as mobile check deposits, bill pay and real-time text message alerts. You’ll also want to make sure the app works with Android (through Google Play) and Apple (through the App Store) mobile devices.
One thing you should ask and answer with online banking is how do I access my cash? Many online banks anticipate that cash is still king, so you should confirm with the company of your choice that it offers free access to a wide network of ATMs. Alternatively, some online banks will allow you to use out-of-network ATMs and then reimburse you for the fees incurred.
It is true that most of your interactions with an online bank will be digital, however, you should make sure that it has a wide range of customer service, as there may be times when you want to talk to a person for help.
After you are clear about these previous considerations, we will now tell you how to open an account in an online bank.
How to open an online bank account in the United States?
Although the requirements may vary from one bank to another or from one bank account to another, most online banks will ask you for some requirements and documentation such as:
- Social Security number (for non-citizens, tax ID number).
- Valid driver’s license or other government-issued identification.
- Cover the initial deposit amount (for some online banks this is part of the requirement).
Important consideration, because an online bank does not have physical branches, it is practically necessary to have another account into which you can add the funds. If your new account requires an initial deposit, you will often need debit card information or the routing and account numbers of another bank account you own. You can find these numbers on a check or by logging into your existing account’s online control panel.
While most online banks will request that you upload the documents within the same application or website, in some cases they may ask you to fax or email a copy. They may even ask for additional documents, such as a copy of your driver’s license to verify your identity more easily.
Afterwards, you will need to submit an application form where you will fill in your personal information with:
- Full name.
- Date of birth.
- Your address.
- Contact information (phone and email).
- Social Security Number (or ITIN).
- Folio of your personal identification
- Debit card or bank account number.
In some cases, you may be asked to sign this form to match it with one of your official documents. Depending on the bank, you may be able to sign the application virtually, with a tool that allows you to write your handwriting on the screen, or you may be asked to print the form, sign it with a pen, scan it and send it back.
Banks require you to be at least 18 years old to open an account. Minors wishing to open a teen or student checking account will need a parent or guardian to act as co-owner.
To conclude, many banks will ask for an initial deposit to validate the opening of the account. This is where you will have the option of transferring funds from another bank account or you may be given the option of making a cash deposit at a bank branch or at certain convenience stores with which they have a business alliance. In most cases for the latter option, you may be charged a fee for the service.
After completing the online form and making your initial deposit, verify that all the information on your application is correct. Errors may cause a delay in approval.
Once you are sure everything is ready, you can submit your application. The bank will review your application and, if everything is in order, you should receive confirmation of your new account. This usually takes one or two business days.
At this point, you will have finished opening your online bank account, so you will be able to perform any transaction, such as transferring money, making purchases or depositing money.