Opening a checking account online is easy, quick, and painless for most people, but there are several things to consider before you begin the process. For starters, do you want to open a regular checking account using the online platform of a traditional brick-and-mortar bank or credit union or are you more interested in an electronic checking account at an online-only bank? The application process is similar but the accounts differ, especially when it comes to features.
Regulation and FDIC Insurance
Regulation is one area where both types of checking accounts are alike. Oversight of traditional and online-only banks and credit unions rests with the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), Federal Reserve System (FRS), National Credit Union Administration, and state regulators in all 50 states. Traditional and online-only bank accounts are also FDIC insured though it’s up to you to verify the bank’s FDIC status.
- You can open an account online at a traditional bank/credit union or online-only entity.
- Accounts opened online are under the same regulation as accounts at regular banks and are FDIC insured.
- Account features vary by bank and by type of account. Research carefully.
- There is a process to dispute denial of your application.
- Once approved use your new checking account just like one at a traditional bank.
Features by Bank and Account Type
Checking accounts at traditional and online-only banks are deposit accounts that let you withdraw funds for any purpose. Most also allow direct deposit, offer debit cards, feature online billpay, electronic funds transfer (EFT), mobile banking, and overdraft protection.
The table below lists popular checking account features and the type of bank where that feature is most often found. When choosing the bank where you want to open your checking account, make sure it has the features you want and need
|Free in-network ATMs||X|
|Free out-of-network ATMs||X|
|Online bill pay||X||X|
|Electronic funds transfer (EFT)||X||X|
|Ability to deposit cash||X|
|Face-to-face customer service||X|
|High account maintenance fees||X|
|Low or no fees||X|
Sources: Stack Exchange, Investopedia, and Clark.com
Once you know the features you want, search online for banks that offer them. Be aware of the limitations of one type of account compared to another. If you can’t live without paper checks, for example, your best option will likely be a traditional bank. If you want high-yield checking, your best bet is an online-only bank.
Gather Up Information
Once you’ve chosen a bank, go to the bank’s website and make a list of information and documentation you will need.
This will likely include:
- Full name
- Date of birth
- Citizenship status
- Current address
- Previous address if you’ve been at your current address less than two years
- Phone number
- Email address
- Social Security number
- Government issued ID such as a driver’s license or passport
Finally, be prepared to provide information on how you plan to fund your account such as routing and account numbers from your previous bank, a credit or debit card, or check issued from your previous bank.
If you plan to open a joint account, you’ll need the same information and documentation for both account owners.
Complete the Application.
Fill out the online application using the information you have assembled. You may be required to scan or upload a photo of some items such as your driver’s license.
When you are finished, click “submit.” You will probably receive an email or text message verifying receipt of your application and advising you about next steps within a few minutes. One of those next steps may be the need for a signature card, a document banks retain and use to verify your signature on checks and other transactions. If so, the bank will likely mail you a card, which you (and the account co-owner if applicable) sign and return. Most online banks don’t have this requirement and instead accept an electronic (digital) signature. If opening an account quickly is a priority, make sure the bank you choose doesn't have this requirement.
As part of the application process the bank verifies your credit history and generates a consumer banking report. If you have a “thin” credit history due to not having much in your credit report, the bank may require additional information.
The consumer banking report will likely be conducted by one of two companies, ChexSystems or Early Warning System. These agencies investigate whether you have a history of bouncing checks, refusing to pay late fees, or have had accounts closed due to mismanagement on your part. According to the Fair Credit Reporting Act (FCRA), information about accounts closed for “cause” can remain on your consumer banking report for up to seven years.
How to Handle a Denied Application
If your application is denied due to the consumer banking report, the bank must tell you who generated the report and how to contact them. Use this information to obtain a copy of your report. Under the FCRA, you are entitled to a free copy of your report any time you are denied an account based on your consumer banking report.
If denied here are three things you can do:
- Ask the bank to reconsider. Give your reasons and make your case. The bank is not bound by the report and may grant you an exception.
- File a formal dispute. If information in the report is not accurate and the bank won’t reconsider, you have a right to file a dispute with the reporting agency.
- Look into a “second chance” account. This type of account, offered by some banks, typically has higher fees and more restrictions but provides a pathway to rebuild your checking account reputation.
Fund Your Account.
Assuming all goes well, and you are approved, the next step is to put money in your new account. Most banks have a required minimum deposit which can range from a dollar to a hundred dollars or more. There are a variety of ways to do this, including writing a check, wiring money, using your debit card or transferring money electronically from another account. If you transfer money from a separate account, you’ll need the account and routing numbers from that account. Cash is not an option when opening an account online. That requires a visit to a bank branch.
Debit Card/Checks Arrive
If the account you signed up for includes a debit/ATM card and/or checks, they will arrive in the mail after your application has been approved. The confirmation email should tell you how that will happen and how long it will take. For security reasons, the debit card, PIN, and checks will probably all arrive separately. When your card arrives, sign it and activate it by phone or online. Your checks should be usable immediately.
Start Using Your Account
If your account is with a traditional bank you will have the option to conduct most or all of your business online or at a local bank branch. If it’s with an online-only bank, unless you are granted access to an ATM network, everything you do will be done online.
Follow any instructions you receive about setting up the internet side of your new checking account. This may include downloading an app for your phone or tablet as well as bookmarking a website on your computer.
Move your direct deposits, EFTs, and automatic withdrawals to your new account. From there on it's a matter of getting used to the new system. Whether traditional or online, all banks and credit unions have a robust customer service system. Most let you contact them by phone, live online session, email, or text. If there are problems, make use of the system that works best for you.
FDIC. "Questions About Deposit Insurance and Online Banking." Accessed Feb. 28, 2020.
OCC. "Who Regulates my Bank?" Accessed Feb. 28, 2020.
OCC. "About Us." Accessed Feb. 28, 2020.
OCC. "Depository Services." Accessed Feb. 28, 2020.
Stack Exchange. "Disadvantages of Online Checking Accounts." Accessed Feb. 28, 2020.
Investopedia. "Internet Banks Pros and Cons." Accessed Feb. 28, 2020.
Clark.com. "Automatic Bill Pay: How It Works." Accessed Feb. 28, 2020.
Finder.com. "How to Open a Bank Account Online." Accessed Feb. 28, 2020.
FDIC. "Consumer News Fall 2019." Accessed Feb. 28, 2020.
CFPB. "How do I get a copy of the report banks use to decide whether to let me open a checking account?" Accessed Feb. 28, 2020.
Credit Karma. "How to Open a Bank Account Online." Accessed Feb. 28, 2020.