Banks, credit unions, and online institutions are your three main paths

You can open a bank account at a traditional bank branch, a credit union, or an online-only bank. Each path has different requirements, different fees, and different reasons to choose it. A traditional bank gives you a physical location to visit and usually the widest range of services. A credit union is a member-owned nonprofit that often charges lower fees and may have looser requirements if you don't have much credit history. An online bank has no branches but typically charges no monthly fees and pays higher interest on savings accounts.

The choice depends on what matters most to you: whether you need to deposit cash in person, how much you want to pay in monthly fees, whether you want a human being to talk to, and what your current financial situation looks like. Someone with no credit history and no ID might find a credit union easier. Someone who travels constantly might prefer an online bank. Someone who needs to deposit checks and cash regularly might need a traditional bank with branches near home or work.

Key Takeaways

  • Traditional banks have physical branches where you can deposit cash and speak to staff, but often charge monthly maintenance fees unless you meet balance or deposit requirements.
  • Credit unions are nonprofit institutions that typically charge lower fees and may accept members with limited credit history, but have fewer locations and may require membership in a specific group or community.
  • Online banks charge no monthly fees and pay higher interest on savings, but you cannot deposit cash in person and customer service is phone or chat only.
  • You will need a government-issued ID, proof of address, and usually a Social Security number or ITIN to open an account at any institution.
  • Some banks and credit unions offer second-chance accounts designed for people with past banking problems, though these may have higher fees or lower spending limits.

Traditional banks: branches, fees, and full services

A traditional bank has physical locations where you can walk in, deposit cash, withdraw money, and speak to a banker. Major national banks include Chase, Bank of America, Wells Fargo, and Citibank. Regional banks exist in most states and often have better customer service and lower fees than national chains. Community banks are smaller and locally owned, and they frequently work with people who have had banking problems in the past.

The trade-off is fees. Most traditional banks charge a monthly maintenance fee—typically $10 to $15—unless you keep a minimum balance (often $500 to $1,500), set up direct deposit, or meet other conditions. Some waive the fee if you maintain a certain balance in savings. Read the fee schedule before you open the account; it is usually available on the bank's website under "Pricing" or "Account Terms."

To find a traditional bank near you, search "[Your City] banks" or use the bank's website locator tool. Call the branch before you go to confirm they have the account type you want and what documents to bring. Some branches have limited hours or may not offer all services.

Credit unions: lower fees and community focus

A credit union is a nonprofit financial institution owned by its members. Credit unions typically charge lower fees than traditional banks, pay higher interest on savings accounts, and may be more willing to work with people who have limited credit history or past banking issues. They also often have lower minimum balances to open an account.

The catch is membership. You can only join a credit union if you meet their membership criteria. Some credit unions serve people who work for a specific employer, live in a specific county or city, belong to a specific organization, or have a family member who is already a member. A few credit unions have opened membership to anyone, but most have restrictions.

To find a credit union you can join, use the CO-OP Network locator or the Credit Union Locator tool on the National Credit Union Administration website. Enter your location or search by employer, organization, or group. Call the credit union to confirm you meet their membership requirements before you visit. Bring the same documents you would bring to a bank: ID, proof of address, and Social Security number or ITIN.

Online banks: no fees, no branches, higher savings rates

An online bank exists only on the internet. You open an account through their website, deposit checks by taking a photo with your phone, and withdraw money at ATMs or by transferring to another bank. Online banks charge no monthly fees because they have no physical locations to maintain. They also pay significantly higher interest on savings accounts—sometimes 4% to 5% annually, compared to 0.01% at many traditional banks.

The downside is that you cannot deposit cash in person. If you receive cash regularly and need to deposit it, an online bank is not practical unless you have another way to convert that cash to a check or transfer. Customer service is available by phone or chat, not in person.

Popular online banks include Ally, Charles Schwab, Discover, Marcus, and Wealthfront. Compare their current interest rates and fee structures on their websites before you open an account. The process takes 10 to 15 minutes and requires your ID, proof of address, and Social Security number or ITIN. You can fund the account by transferring money from another bank account.

Second-chance accounts for people with banking history issues

If you have been denied a bank account, had an account closed due to overdrafts or fraud, or appear on ChexSystems (a banking history report), some banks and credit unions offer second-chance accounts. These accounts are designed for people rebuilding their banking relationship.

Second-chance accounts often come with higher fees, lower spending limits, or a probationary period before you can access the full account. Some require you to attend financial literacy classes. The fees can range from $5 to $15 per month, plus overdraft fees if you spend more than your balance. After 6 to 12 months of responsible use, you may be able to move to a standard account with lower fees.

Ask the bank or credit union directly whether they offer second-chance accounts. Not all institutions do. If you were denied because of ChexSystems, you have the right to request a copy of your report and dispute any errors. You can request your ChexSystems report for free at www.chexsystems.com.

Documents you will need to bring

Every bank and credit union requires proof of identity and proof of address. Bring a government-issued photo ID such as a driver's license, passport, or state ID card. For proof of address, bring a recent utility bill, lease, mortgage statement, or bank statement with your name and current address. The document must be dated within the last 60 days.

You will also need your Social Security number or Individual Taxpayer Identification Number (ITIN). If you do not have either, some banks and credit unions will still open an account, but you will need to provide it later. Ask the institution what their policy is before you visit.

If you are opening an account online, you will upload photos of your ID and proof of address through the bank's website. The process is usually when ready or takes a few hours.

What happens after you open the account

Once your account is open, the bank will issue you a debit card, usually within 7 to 10 business days. You will receive a temporary card number by email or text if you need to make purchases before the physical card arrives. Your account number and routing number will be available when ready in your online banking portal or by calling the bank.

Set up online banking and mobile banking right away so you can check your balance, transfer money, and deposit checks by phone. Most banks and credit unions offer these services for free. If you set up direct deposit through your employer, it usually takes one to two pay periods to begin.

Review your account agreement and fee schedule so you understand what charges explore and what you need to do to avoid them. If your account has a monthly maintenance fee, confirm whether you have met the conditions to waive it—such as maintaining a minimum balance or setting up direct deposit.

Frequently Asked Questions

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

Some banks and credit unions will open an account with an ITIN (Individual Taxpayer Identification Number) instead of a Social Security number. Others require a Social Security number and will not open an account without one. Call ahead to ask whether the institution accepts ITINs before you visit.

What if I do not have a government-issued ID?

Most banks require a government-issued photo ID. If you do not have one, contact your state's DMV about obtaining a state ID card, which does not require a driver's license. Some credit unions may accept alternative documents; call and ask what they will accept.

How long does it take to open an account?

At a bank or credit union branch, opening an account takes 15 to 30 minutes. Online, it takes 10 to 15 minutes. Your account is usually active when ready, though your debit card may take 7 to 10 business days to arrive by mail.

Can I open more than one account at the same bank?

Yes. You can open a checking account and a savings account at the same bank, or multiple accounts of the same type. Each account has its own number and can serve a different purpose, such as one for bills and one for savings.

What is the difference between a checking and savings account?

A checking account is for frequent deposits and withdrawals—paying bills, getting paid, buying things. A savings account earns interest and is meant for money you are not spending right away. Most people open both at the same institution.