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.
Wise – best for multicurrency and international money transfers
- Founded: 2011
- Founders: Kristo Käärmann (CEO) and Taavet Hinrikus (CEO)
- Partner bank: Community Federal Savings Bank
- Personal and business accounts, money transfer
Seems like Wise has been around forever but in reality, it’s only been 10 years since its founding. The Wise account is available in most of the world and you can use its debit card in 200 countries, spend with Apple and Google Pay, and withdraw anywhere.
Wise already has more than 10 million customers and moves more than $6 billion each month. The company offers a range of accounts for personal users, companies, and freelancers. They are all are free to set up, with no monthly subscription payments, and come with a Wise MasterCard.
Wise has many advantages going for it, but the company is the most well-known for its cheap international transfers to more than 80 countries, always with a low and transparent fee.
With Wise, you’ll always get the best possible exchange rate and people use it to get paid like a local, avoid sneaky bank exchange rate markups and high foreign transaction fees, and hold up to 54 currencies in one place.
Axos Bank – best for checking accounts
- Founded: 2000
- Founders: Jerry Englert, Gary Lewis Evans
- CEO: Gregory Garrabrants
- Personal accounts (checking, saving, joint, mortgages), business accounts
For those that want all the bells and whistles of traditional big banks but don’t want to pay all the fees that they charge, Axos Bank is an awesome choice. It’s a fully-fledged bank without branches and exorbitant fees.
Axos Bank offers rivaling interest rates, low to no fees, and handy access to their personal, small business, and even commercial banking accounts as well as commercial lending.
Axos award-winning checking accounts are:
- First checking – aged 13 – 17
- Essential checking – for direct deposit
- Cashback checking – for frequent debit card users
- Golden checking – aged 55 and older
- Rewards checking – for high account balances
The Rewards Checking account is arguably the best one. It comes with no monthly fees, no monthly minimum balance, no overdraft and NSF fees, ATM fee reimbursements, and up to 1% APY.
Varo – best for savings accounts
- Founded: 2015
- Founders: Assaf Guery, Colin Walsh, Mykola Klymenko, Roger Van Duinen
- CEO: Colin Walsh
- Personal accounts (checking, saving)
Varo was the first challenger bank to get a banking license. In addition to their excellent checking account, Varo also offers a high APY savings account, that’s ideal for those who prefer to have their checking and savings accounts in the bank.
The APY of 3% is only available for folks with savings amounts below $50,000. There are notably a few additional requirements clients have to meet to receive it. The savings account allows customers up to six withdrawals for every statement cycle to maintain the APY earnings.
There is no minimum balance required for a Varo Savings Account. You need only $0.01 to start earning interest.
Varo’s APY is one of the highest of its kind, making this an excellent option for savers who meet the criteria.
SoFi – best for credit cards
- Founded: 2011
- Founders: Mike Cagney, Ian Brady, James Finnigan, Dan Macklin
- CEO: Anthony Noto
- Partner bank: The Bancorp Bank
- Personal accounts (loans, crypto, ETFs, credit card, mortgage)
There’s no shortage of credit cards but SoFi’s credit card is an exciting one. It does not have an annual fee and you also earn 2% unlimited cashback that you can redeem into crypto, pay down a SoFi loan, or even invest in stocks.
If you make 12 monthly on-time payments of at least the minimum payment due, you’ll even lower your APR by 1%.
SoFi’s app and card also offer no foreign transaction fees for care-free traveling, Mastercard ID theft protection, budgeting and analytics tools, and even cell phone insurance of up to $1,000.
While SoFi isn’t a bank, it’s registered with the SEC through the name SoFi Wealth, LLC. It’s also an equal housing lender. However, it doesn’t have FDIC protection like a traditional bank. Once your money gets to a SoFi partner bank, it will have FDIC insurance.
OnJuno – best for cashback rewards
- Founded: 2019
- Founders: Ratnesh Ray, Siddharth Verma, Varun Deshpande (CEO)
- Partner bank: Evolve Bank and Trust
- Checking with interest rate
OnJuno is a digital bank account that offers an outstanding APY, no minimum deposit, no monthly maintenance fee, and an instant virtual card or even a slick black metal card.
It also offers cashback from some of the top retailers in the country and the list of brands or merchants on which you get a 5% cashback is long. Here are all the retailers:
- Shopping: Home Depot, Best Buy, Amazon, Target, and Walmart
- Subscriptions: Peloton, Spotify, Prime Video, Netflix, HBO Go, Disney Plus, and also Headspace and Calm
- Health and Groceries: Trader Joe’s, Walgreens, Patel Brothers, Whole Foods, and CVS,
- Food and Drink: Uber Eats, Doordash, Postmates, Dunkin, Starbucks, Blue Bottle, Grubhub, Wendy’s, Taco Bell, Chick-fil-A, and In-n-out
- Transportation: Uber, Lyft, and Shell
- Travel: Airbnb
You can pick any five from the table and get the 5% cashback. It’s a hard choice to choose only five as there are many that we use almost daily.
Adrian Volenik is a fintech enthusiast who loves testing and reviewing digital banking apps and financial products in general. How many digital banking accounts can one man have? Not enough, if you ask Adrian. As his wallet will soon explode if he doesn’t cut back on the number of cards.