Start with what matters to your daily life

The best place to open a bank account depends on where you live, how you plan to use it, and what you need from a bank. There is no single right answer — a bank that works well for someone in a city with many branches may not work for someone in a rural area, and a bank that suits someone who visits in person is different from one that suits someone who banks only on their phone.

The main choice is between a traditional bank (a physical building with tellers and a manager), a credit union (a member-owned cooperative, usually smaller), and an online bank (no physical location, all transactions by phone, computer, or app). Each has real trade-offs. Understanding what you actually need — not what sounds impressive — makes the decision straightforward.

Key Takeaways

  • Traditional banks offer in-person service and many branches, but often charge monthly fees unless you keep a minimum balance.
  • Credit unions typically charge lower fees and offer better rates on savings, but have fewer locations and may require membership in a specific group.
  • Online banks have no monthly fees and higher interest rates on savings accounts, but you cannot deposit cash or speak to someone in person.
  • The location of branches, whether you need to deposit cash, and how much money you plan to keep in the account should guide your choice.
  • You can open an account at more than one institution — many people keep a checking account at one place and a savings account at another.

Traditional banks: when you need a physical location

A traditional bank is a good fit if you need to deposit cash regularly, prefer speaking to someone in person, or want a branch near your home or workplace. Banks like Wells Fargo, Bank of America, and Chase have hundreds or thousands of branches, so you can usually find one nearby.

The trade-off is cost. Most traditional banks charge a monthly fee (often $10 to $15) unless you keep a minimum balance in the account — sometimes $500, sometimes $1,500 or more. Some waive the fee if you set up direct deposit of your paycheck. Ask about this before you open the account, because the fee can add up quickly if you are not aware of it.

If you live in a smaller town, a traditional bank may be your only option for in-person service. In that case, ask the bank what the monthly fee is, what balance avoids it, and whether they offer direct deposit fee waivers.

Credit unions: lower fees and better rates, with membership limits

A credit union is a bank owned by its members rather than by shareholders. Because they are not trying to make a profit for investors, they typically charge lower fees and pay higher interest on savings accounts. Many credit unions have no monthly fee at all, or waive it easily.

The catch is membership. You cannot walk into any credit union — you have to be part of the group it serves. Some credit unions are open to anyone who lives or works in a certain area. Others are only for employees of a specific company, members of a specific profession, or people who belong to a specific organization. For example, some credit unions are only for teachers, or only for military members, or only for people who work at a particular hospital.

To find a credit union you can join, use the CO-OP Network locator or the Alliant Credit Union locator online. Search for your city or your employer. If you find one you are may be able to access for, call and ask about their checking and savings accounts, their fees, and the interest rates they pay. Credit unions also tend to be more flexible about approving accounts for people new to banking.

Online banks: no fees, high interest rates, no cash deposits

An online bank exists only on your phone, computer, or through the mail. You cannot walk in, and you cannot deposit cash at a teller. But because they have no physical branches, they have almost no monthly fees and they pay much higher interest on savings accounts — sometimes 4% or 5% per year, compared to less than 1% at a traditional bank.

Online banks work well if you receive your paycheck by direct deposit, pay most bills online or by card, and rarely need to deposit cash. Banks like Ally, Charles Schwab, and Discover have no monthly fees and no minimum balance requirements. Some online banks are part of a network that lets you deposit cash at ATMs or partner locations, though this is less convenient than a branch.

If you do need to deposit cash occasionally, some online banks partner with stores like CVS or Walgreens where you can deposit at the register. Ask about this before you open the account.

How to compare: the questions to ask

Before you open an account anywhere, call or visit the website and find the answers to these questions:

  • Monthly fee: Is there one? How much? What balance or action (like direct deposit) waives it?
  • Minimum balance: Do you have to keep a certain amount in the account to avoid fees or to earn interest?
  • Interest rate: What does the bank pay on savings accounts? (Online banks usually pay more.)
  • ATM access: Can you withdraw cash for free? Are there ATMs near you?
  • Deposit methods: Can you deposit checks by phone or app? Can you deposit cash? Where?
  • Customer service: Can you reach someone by phone if you have a problem? What are the hours?

Write down the answers for two or three banks or credit unions. The one with the lowest fees and the easiest deposit method for you is usually the right choice.

Special situations: new to banking, no credit history, or no ID

If you are new to formal banking or have had trouble with banks in the past, credit unions are often more willing to work with you than large traditional banks. They are also more likely to offer accounts without requiring a credit check or a Social Security number.

Some banks and credit unions offer second-chance checking accounts specifically for people who have been denied elsewhere. These may have higher fees or lower limits on how much you can spend, but they let you build a banking history. Ask directly: "Do you offer accounts for people new to banking?" or "Do you have second-chance checking?"

If you do not have a government ID, some credit unions and online banks will open an account with a passport, a state ID card, or even a letter from a social service agency. Call ahead and ask what documents they accept.

You can have more than one account

Many people open accounts at more than one institution. For example, you might keep your checking account at a traditional bank near your workplace (so you can deposit cash easily) and your savings account at an online bank (so you earn higher interest). Or you might have a credit union account for everyday spending and a separate savings account somewhere else.

There is no rule against this. Having accounts in multiple places can actually be useful — it keeps your money organized and lets you take advantage of the strengths of each institution. Just make sure you can keep track of all your accounts and remember which one you use for what.

Frequently Asked Questions

Do I need a Social Security number to open a bank account?

Most banks require one, but not all. Some credit unions and online banks will open an account with an Individual Taxpayer Identification Number (ITIN) instead. Call ahead and ask what identification the bank accepts before you visit or explore.

What if I have been denied a bank account before?

Credit unions are often more flexible than large banks. You can also look for a second-chance checking account, which is designed for people who have had banking problems in the past. These accounts may have fees or limits, but they let you rebuild your banking history.

Can I open an account online if I do not have a computer?

Some online banks let you open an account by phone. Others require you to start online but will mail you a debit card and other materials. Call the bank and ask about their process before you try to open an account.

How long does it take to open a bank account?

At a traditional bank or credit union, you can usually open an account in 15 to 30 minutes if you have your ID and proof of address. Online banks typically take a few minutes to a few hours, depending on how they verify your identity.

What should I do if I cannot decide between two banks?

Open an account at the one that solves your biggest problem first — usually the one with the lowest fees or the easiest way to deposit cash. You can always open a second account later or switch banks if the first one does not work out.