Thursday, 29 July 2021

Can I Open a Bank Account Online?

Can I Open a Bank Account Online?
29 Mar

Opening a bank account shouldn’t be a chore. Thankfully, internet banks make it pretty easy to open an account online, plus online banks offer some of the most competitive rates available.

Think of a bank account as a deal between you and a financial institution: You deposit money into the account, and the bank keeps the money safe and lets you withdraw it in a variety of convenient ways.

Entering this sort of deal over the internet may seem risky, but if you take precautions and understand what you’re doing it can be a smart way to manage your money. Here’s what you need to know to open an account online.

What you need to open an account online

Online banks ask for varying kinds of information, but there are a few items you’ll almost always need. Here’s what you should have on-hand:

  • Your full address, plus other basic personal and contact information.
  • Your Social Security number or Taxpayer Identification Number, either of which will help verify your identity.
  • Your government-issued I.D., since many banks will ask for another form of identification besides your Social Security number. A passport, driver’s license or birth certificate will usually do.
  • Key financial details, like routing and account numbers for the source of funds you plan on depositing in your new account.

Open an account online: Perks and potential risks

There are plenty of advantages to ditching traditional brick-and-mortar banks to open an account online. Here are some perks:

  • Higher interest rates: Traditional banks typically offer annual interest rates of around 0.01%, meaning every year you’ll make $1 for every $10,000 in your account. Meanwhile, many online checking accounts earn as much as 2.00% each year, while some savings accounts offer up to 2.53% (as of the date of publishing).
  • No overdraft fees: Overdraft fees are the penalty you’re charged when you spend more money than you have available. Thankfully, you can find plenty of online banks that have checking accounts with no overdraft fees. Overdraft fees can be as high as $39 for some of the big banks, many of which can charge you multiple times per day until you replenish your funds.
  • Easy account setup: Convenience is another major benefit here. Online banks let you set up your account quickly and from the comfort of your own home.

That being said, there are also some downsides worth considering before you open an account online:

  • No in-person help: A personal touch can be helpful when managing your money. If you have a problem or question regarding your account, most online banks don’t have any brick-and-mortar locations.
  • Website malfunctions: This may seem like a rare occurrence, but if your bank’s site does happen to go down, you may be unable to access your funds for limited periods.
  • ATM access: Many online banks are part of free ATM networks — such as Allpoint — with locations across the country. However, if you find yourself without one of those nearby, you might face steep withdrawal fees when using another bank’s machine.

Here’s how to stay safe if you open an account online

The best online banks can be just as safe as a traditional account, as long as you take the proper steps to secure your info. Here are some tips to keep in mind when accessing your account:

  • Avoid public Wi-Fi: Public networks can be hotbeds for hackers, so it’s best to do your banking at home — or use your cellular data connection when you’re on the go.
  • Turn on text alerts: Almost every online bank offers text notifications that alert you when your funds run low or if a large purchase is made from your account — make use of them! If you’re hacked, they’ll also help you figure it out a lot quicker.
  • Update your software: You should regularly check that your computer is running the latest antivirus software, and that your mobile banking app is updated.
  • Make sure your money’s insured: It’s worth confirming that your online bank is Federal Deposit Insurance Corporation-insured, meaning the federal government will protect your money if the bank fails (generally up to $250,000). You can do that by checking the FDIC’s search tool.

Great online banks to start with

So what bank should you choose? Each online bank has its own advantages, but some stand out above the rest. Here are a few of the top options from our rankings:

High-yield online savings account

Online Savings Account from Ally BankOnline Savings Account from Ally Bank

Online Savings Account from Ally Bank

Minimum Balance to Earn APY


We'll receive a referral fee if you click here. This does not impact our rankings or recommendations.

High-yield CD

High Yield 12-Month CD from Ally BankHigh Yield 12-Month CD from Ally Bank

High Yield 12-Month CD from Ally Bank

Minimum Balance to Earn APY


We'll receive a referral fee if you click here. This does not impact our rankings or recommendations.

High-yield money market account

Money Market Account from earn.bankMoney Market Account from

Money Market Account from

Minimum Balance to Earn APY


We'll receive a referral fee if you click here. This does not impact our rankings or recommendations

High-yield checking account

Minimum Balance to Earn APY

Aspiration Account from Aspiration

Online banking can be risky, but not if you do your homework. A little bit of research goes a long way, and ultimately finding the right online account can mean more savings, easier access and — most importantly — a lot less stress.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dillon Thompson


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