What happens when you open an online bank account

Opening an online bank account takes 10 to 20 minutes and happens entirely on your phone or computer. You give the bank your name, address, Social Security number, and initial deposit amount. The bank verifies your identity using information from credit bureaus or by asking you security questions about your past. Once approved—usually within minutes to a few hours—you get an account number and routing number, and you can start moving money immediately.

Online banks have no physical branches, so everything happens through their website or app. You cannot walk in to deposit cash or speak to someone in person, but you also do not pay monthly fees the way many traditional banks do. Most online banks are insured by the FDIC (Federal Deposit Insurance Corporation), which means your money is protected up to $250,000 per account type.

Key Takeaways

  • You will need a government ID, your Social Security number, and proof of your current address to open an account.
  • The bank will verify your identity by checking credit bureau records or asking security questions you should know the answer to.
  • Most online banks approve you within minutes to a few hours and let you start using the account the same day.
  • You can deposit checks by photographing them with your phone, but you cannot deposit cash at an online bank.
  • Online banks typically charge no monthly fees and pay higher interest on savings accounts than traditional banks do.

Gather your documents before you start

Have these items ready before you begin: a valid government-issued ID (driver's license, passport, or state ID), your Social Security number, and a recent utility bill or lease showing your current address. Some banks also ask for your phone number and email address. If you are opening a joint account, both account holders need to provide their own ID and Social Security number.

If you do not have a government ID, you cannot open an online account—banks are required by federal law to verify your identity this way. If you do not have a Social Security number, some online banks will not work with you, though a few accept an Individual Taxpayer Identification Number (ITIN) instead. Check the bank's requirements before you start the application.

Choose a bank and start the application

Go to the online bank's website or download their app. Look for a button that says "Open an account" or "Sign up"—it is usually on the home page. You will be asked to choose the type of account: checking, savings, or both. Most people opening their first online account choose a checking account for everyday spending and a savings account for money they want to keep separate.

The bank will ask you to create a username and password for logging in later. Use a password you have not used anywhere else, and write it down in a safe place. Some banks also let you set up a PIN (personal identification number) as an extra security step. Do not share your password or PIN with anyone, including bank employees.

Provide your personal information and verify your identity

Type in your full name, date of birth, Social Security number, and current address exactly as they appear on your ID. The bank uses this information to check credit bureaus and verify you are who you say you are. This process usually takes a few minutes and happens automatically.

If the bank cannot verify you through credit bureau records, it will ask you security questions instead. These questions are based on your financial history and might sound like: "In what year did you open a car loan with Lender X?" or "Which of these addresses have you lived at?" Answer honestly—the bank is checking that you know details only you would know. If you answer incorrectly, the bank may deny your account or ask you to verify your identity in person at a branch or by mailing in documents.

Fund your account and set up access

Most online banks require an initial deposit before your account is active. The minimum is usually between $0 and $25, though some banks have no minimum. You can fund your account by linking a bank account you already have and transferring money, or by providing your new account number and routing number to your employer or another bank so they can deposit money directly.

Once your account is funded and approved, you will receive a debit card in the mail within 5 to 10 business days. Until it arrives, you can still move money in and out of your account online. You can also set up direct deposit of your paycheck, transfer money to other people, and pay bills through the bank's website or app.

Deposit checks and manage your account

Online banks do not have ATMs or tellers, so you cannot deposit cash. You can deposit checks by taking a photo of the front and back with your phone and uploading it through the bank's app—this is called mobile check deposit. The bank usually credits the money within one or two business days. Some online banks also let you transfer money to other banks' ATMs or reimburse you for ATM fees at other networks.

Once your account is open, log in to your app or website to check your balance, review transactions, set up bill pay, and transfer money. Most online banks send you alerts by text or email when money moves in or out of your account. If you notice a transaction you did not make, contact the bank immediately—they have procedures to investigate fraud and reverse unauthorized charges.

What to do if your account is denied

If the bank denies your account, it will tell you why. Common reasons include a mismatch between the information you provided and what is on file with credit bureaus, a history of unpaid bank fees or fraud, or a problem with ChexSystems (a system banks use to check your banking history). You can request a copy of your ChexSystems report and dispute any errors on it.

If one bank denies you, try another. Different banks use different verification methods and have different policies about who they will accept. Some banks specialize in people with banking problems and may be willing to open an account for you. You can also open an account in person at a traditional bank or credit union if online banks will not work with you.

Frequently Asked Questions

How long does it take to open an online bank account?

The application itself takes 10 to 20 minutes. Identity verification usually happens within minutes to a few hours. Your debit card arrives by mail in 5 to 10 business days, but you can use your account online before the card arrives.

Can I open an online bank account without a Social Security number?

Most online banks require a Social Security number. Some will accept an Individual Taxpayer Identification Number (ITIN) instead. Call the bank before you start the application to confirm they will work with you.

What if I cannot deposit cash at an online bank?

You can transfer cash from another bank account, have someone send you money through a peer transfer app, or deposit a check by photographing it. If you regularly need to deposit cash, a traditional bank or credit union with branches may work better for you.

Is my money safe at an online bank?

Yes, if the bank is FDIC-insured. Your deposits are protected up to $250,000 per account type. Check the bank's website for its FDIC insurance certificate. Online banks use encryption and security measures to protect your account from fraud.

Can I open a joint account online?

Yes. Both account holders need to provide their own ID, Social Security number, and address. The bank will verify both people's identities before opening the account.