When people say they have an “online bank account” that could mean any number of things.
One could be that their checking and/or savings account is being managed in a brick-and-mortar bank. Those are known as “traditional banks.” Another could mean that those accounts are handled in the online division of that brick-and-mortar bank. Traditional banks are finding it profitable to expand into that line of services. A third could indicate that they maintain their accounts in a banking entity which only exists online, with no physical presence. How they apply for an “online bank account” has different options for each.
Online access at traditional bank
Traditional banks encourage those with accounts to use online access. That is cost-efficient because it reduces direct contacts to the bank and to customer service. With online access you can check your accounts on the Internet anytime from anywhere through a personal computer, smartphone, tablet, or other gadgets which have yet to be invented. For those without any of those connectors, the public library provides free Internet service. You apply for that online access in any of three ways.
You can go into the bank and have it set up. You can call customer service. Or you can go on the web and retrieve the bank’s website. It will have instructions how to register for online access. Those include providing your first and last name, the account numbers, your Social Security number, and answers to security questions. For the next step in the process, the bank will send to your email address a password and, depending on the bank, possibly other security information. Therefore, you have to have an email address. Those are available free from email services ranging from Google to AOL. To find out more about those, just key in “free email services” on the Internet. From the first time you use your password and provide the security information, you will be reviewing your accounts online.
Applying for actual online banking is more complex. But before you do that, it’s in your financial self-interest to comparison shop for the terms and conditions that are the best fit for you. They vary greatly. This information is available on the web. You will encounter it in a variety of formats. There are the third-party objective sources such as NerdWallet.com, which present overviews as well as detailed analysis of specific online banks. In addition, the media such as The Wall Street Journal publish articles on trends as well as individual online banks. There are also promotions from the banks themselves which outline the benefits of their accounts, along with their rules and regulations.
Once you choose an online bank, there are two ways to apply for accounts. If the online bank also has a brick-and-mortar presence, then you can transact the whole process there, in person. If not, then you make your application on the Internet. The information you have to supply includes:
- Full name
- Date of birth
- Social Security number
- Email address
- Form of identification, such as a driver’s license
In addition, you must make a deposit. How much depends on the bank’s policies. Since this is being done online you can transfer the funds from an existing savings or checking account or snail-mail a check or money order.
If your application is for a savings account, as long as you comply with the rules such as any minimum deposit, then the process will go through. However, it’s different with a checking account. The financial institution must approve the application. The reason it might reject your application is if ChexSystem notifies the bank that you have a record of financial carelessness, such as overdrafts. ChexSystem monitors checking accounts, recording in its database everything from simple bounced checks to outright fraud.
Some online banks offer what’s known as second-chance checking accounts to those flagged by ChexSystem. Because of the risk involved, they usually have higher fees and more requirements than a regular checking account. However, there are banks, both online and traditional, which allow an upgrade to a regular checking account after a year or two if you demonstrate financial responsibility in your use of a second chance account.
If you haven’t already applied to conduct your banking partly or completely online, you are in a minority. An American Bankers Association survey found that 62 percent preferred managing their transactions through the Internet.