With everything moving online, no one wants to be left behind. And, the good news is, you don’t have to because you’re less than 10 minutes away from opening your new digital bank account.
Keep reading to find out how to find the right digital bank for you, how to apply, what documents you’ll need, and ultimately, how to fund the account and activate the card once you get it.
Find the right digital bank
The online banking space has exploded in recent years, and everyone – from traditional banks to fintech companies are battling for a piece of the pie. The pandemic only made the digital banks grow even more, for better or for worse.
Finding the right digital bank can be tricky if you don’t know where to look and what to expect. Here are the characteristics of a good digital bank:
- Easy to apply
- Low to no fees
- Solid savings interest rates
- Budgeting and analytics
- Free ATM withdrawals
- No overdraft fees
With so many online banks on the market, we are finally in the driving seat again. No more dinosaur banks that offer the same old features and just have a different sign on the building.
As you could see above, digital banks offer some unimaginable benefits to their customers. Most of the things on the list are unheard of in the traditional banking space.
Although we recommend a couple of digital banks at the bottom of this article, you can find an overview of more than 20 digital banks in the US on our website. We also have overviews and detailed reviews for the EU, the UK, Australia, Canada, Asia, Brazil and Argentina, and even South Africa.
Established banks only use mobile apps as a continuation of their physical branches. They often don’t bring any more value or unique propositions to customers and users of their apps.
Digital-only banks are much more beneficial in this regard and offer more power to users with feature-packed mobile apps. And what they lack in financial services or physical branches, they more than make up in ease of use, analytics, and speed.
What documents do you need?
You can easily open a digital bank account in a couple of minutes if you have the following information ready:
- Social Security Number
- Valid driver’s license, passport, or a State ID
As you can see, there’s not much that you need to open a digital bank account. Opening a personal account is easy if you’re over 18 years old, have an SSN, a valid photo ID, and a US address.
Although some US digital banks might require you to be a US citizen, there are many that don’t have this requirement and that will even allow you to open an account without SSN if you have ITIN – Individual Taxpayer Identification Number.
Still, the process of opening a digital bank account is much less painful than going to a local branch and submitting documents and proofs of all kinds. Plus, most digital banks nowadays don’t even perform a credit score check.
How to apply for an online account?
Once you’ve found a digital bank account that you want to open, it’s time to sign up. There are two ways to do this – either through the website or by downloading the mobile app from Apple App Store or Google Play Store.
Either way, you just need to click or tap ‘Get started’ or ‘Join now’ and follow the prompts on the screen. These usually include entering your mobile phone number first or your email and password.
You’ll then need to fill in your full name, date of birth, home address, and Social Security Number.
After that, you’ll need to verify your identity. Some digital banks, that require an initial deposit, will ask you for bank account details or debit card information so you can make the deposit. This is done as seamlessly as possible and simply includes choosing from a list of banks and entering the required information.
You can find your existing bank account details by logging into your account.
How to verify your identity?
Digital banks use various ways to verify your identity. Some banks, like Ally or Axos, will ask you to provide your address history if you have moved in the last five years. They’ll also ask you to answer a few precise security questions provided by a third party and that are specific to you only.
Most other banks will ask you to upload a form of ID such as passport, driver’s license, permanent resident card, etc. An ID has to be valid, ie. state or government-issued and unexpired.
Then there are banks that require your photo or even video. Some of them need you to hold the ID in your hand while they take a picture.
Any of these requirements are quite standard and banks assure us that they keep this info on secure servers.
Additionally, you’ll be sent a security code to the mobile phone number that you entered that you’ll have to type in on the website or in the app.
Why do you need to verify your identity?
Federal law dictates that all financial institutions collect this information so that they can verify your identity and help fight fraud.
All financial institutions are obliged to collect, verify and record information that identifies each person who opens an account in accordance with the USA PATRIOT Act.
They say that providing your personal information helps the government fight the funding of terrorism and money laundering activities.
How to fund the account?
Now that we have successfully opened a digital bank account, naturally, we’ll want to deposit some cash into it. You can usually do this in a number of ways:
- Cash deposit
- Check deposit
- Linking an external bank account
- Direct deposit
- Instant transfer from other apps
Some banks allow you to deposit cash into your online bank account while others don’t have this functionality anymore. If depositing cash is important to you, find a digital bank that allows for cheap cash deposits.
But you need to be aware that in long term, this will be a costly feature and that there might be transaction and daily limits.
Shops such as CVS and Walmart are usually supported and they can do the cash deposit at the register for you. All you need to do is let them know you’d like to deposit cash to your account and present the app or card. The deposit appears instantly and might be free or it can cost you $3.50, $4.95, or more.
If check deposits are supported, they are usually super convenient and can be deposited directly by taking a photo of the front and the back of the check directly from your mobile app.
Linking an external bank account
Some digital banks require this step to be done when signing up. With others, you can do it when you need it, usually when you decide to transfer money in or out of your account.
Simply choose your bank from the list or type in the name. Some might require the routing and account numbers, while others require you to log into the account. You can also connect a debit or credit card for the same purpose.
You can use your new digital bank account to get your paycheck or benefits deposited directly. This can be done in the app by setting up the direct deposit or by sharing your account information with your employer, for example.
Instant transfer from other apps
Apps such as Cash App, Venmo, and others are effectively digital banks as well, and let you ‘cash out’ to a bank account instantly. You can add your account to one of these apps and make an instant or standard transfer, depending on how fast you need the money.
How to activate your card?
Digital banks provide you with an app that already has a virtual card connected and that can be used for transactions online or in-store, just like a regular debit card. Some ATMs even allow you to withdraw money without a physical card. You can add them to Apple Pay or Google Pay, or use them online anywhere Visa is accepted.
Sometimes, the physical card arrives at your home address by default in a couple of days (up to two weeks), and other times, you’ll have to manually order it yourself.
Either way, you’ll have to activate the cards. This is easily done from the app and requires you to go into card settings and tap the activate button next to the card you want to activate.
Although there are different processes used for this, it all boils down to entering the card information like the expiration date and CVV into the app and choosing a four-digit PIN. There might be an option to call the bank as well and do it that way.
The Bottom Line
As you may have noticed, opening a digital account is straightforward and only takes a couple of minutes. The banks are also fast at verifying the account and normally, you can start using it right away, or at least the same or the next day.
There’s no need for excessive paperwork and submitting utility bills and whatnot as online banks use different kinds of verification processes.
If you’re undocumented or immigrant, it shouldn’t be hard to find a bank that will accept ITIN and your country’s passport instead of SSN and a US government ID.
They also typically don’t perform background or credit checks which makes it easy to sign up but can lead to an increased number of account closures.