What happens when you open an online savings account
Opening an online savings account means creating a savings account with a bank or credit union that operates primarily through the internet, rather than through physical branches. You will complete the setup on a website or mobile app, provide personal information and identification, fund the account, and then you can deposit and withdraw money online.
The process typically takes 10 to 20 minutes, and your account is usually ready to use within one to three business days. You will not need to visit a physical location, though you will need a valid government ID, a Social Security number or tax ID, and a way to verify your identity — usually a phone number or email address you control.
Online savings accounts often pay higher interest rates than accounts at banks with physical branches, because the bank has lower costs to run. The tradeoff is that you cannot walk into a location to deposit cash or speak to someone in person — though many online banks partner with ATM networks or other banks to let you deposit checks and withdraw cash.
Key Takeaways
- You will need a government-issued ID, your Social Security number, and a way to verify your identity before you start the account setup.
- Most online banks let you fund your new account by transferring money from another bank account, rather than requiring you to mail in a check or deposit cash in person.
- Your account is usually ready to use within one to three business days, though the bank may place a temporary hold on transferred funds while they verify the transfer.
- Online banks typically offer higher interest rates on savings than traditional banks, but you cannot deposit cash directly at a branch or speak to a teller in person.
Gather your documents before you begin
Before you open an account, collect the documents and information you will need. Have your government-issued ID ready — a driver's license, passport, or state ID card. You will also need your Social Security number or Individual Taxpayer Identification Number (ITIN).
The bank will ask for your full legal name, date of birth, current address, and phone number. If you have moved recently, have your previous address available as well — some banks ask for it to verify your identity. You will also need the routing number and account number from another bank account, because most online banks require you to fund your new savings account by transferring money from an existing account rather than depositing cash.
If you do not have another bank account yet, some online banks will let you fund your account by mailing a check, though this takes longer. A few will let you link a debit card instead. Check the specific bank's website to see what funding methods they accept before you start.
Choose an online bank and start the process
Visit the website or read the mobile app of the online bank you have chosen. Look for a button that says "Open an Account," "get your free guide," or "Sign Up" — the exact wording varies by bank. Click it to begin.
The bank will ask you to create a username and password for your online login. Choose a password that is at least 12 characters long and includes uppercase letters, lowercase letters, numbers, and symbols — this makes your account harder to break into. Write down your username and password in a safe place, or use a password manager to store them securely.
Next, the bank will ask for your personal information: full legal name, date of birth, Social Security number or ITIN, current address, and phone number. Enter this information exactly as it appears on your government ID. If the information does not match, the bank may reject your process or ask you to verify it.
Verify your identity
After you submit your personal information, the bank will verify that you are who you say you are. The most common method is a text message or email to the phone number or email address you provided. You will receive a code — usually four to six digits — and you will enter it back into the app or website to prove you control that phone number or email.
Some banks use a more detailed verification process. They may ask you questions about your financial history — for example, "Which of these addresses have you lived at?" or "Which of these credit card companies have you used?" — based on information in credit reports. Answer these questions accurately. If you get too many wrong, the bank may ask you to verify your identity in a different way, such as uploading a photo of your ID.
A few banks use video verification, where you take a photo or video of your government ID and a photo of yourself. Follow the bank's instructions carefully — poor lighting or a blurry photo can cause the verification to fail, and you will have to try again.
Fund your account and set it up for use
Once your identity is verified, the bank will ask you to fund your account. If you are transferring money from another bank account, enter the routing number and account number from that account. The bank will process the transfer, which usually takes one to three business days.
Some banks place a temporary hold on transferred funds while they verify the transfer is legitimate. This is normal and does not mean anything is wrong. The hold usually lasts 24 to 48 hours, after which you can withdraw the money.
After you fund your account, set up any additional features you want. Most online banks let you set up automatic transfers — for example, you can arrange to transfer a fixed amount from your checking account to your savings account every payday. You can also set up alerts that notify you when your balance drops below a certain amount, or when a withdrawal is made.
Understand what you can and cannot do online
Once your account is open, you can deposit money by transferring it from another bank account, and you can withdraw money the same way. You can also set up direct deposit, so your paycheck goes straight into your savings account if you want it to.
You cannot deposit cash directly into an online savings account through the bank's website or app. However, many online banks partner with ATM networks or other banks, so you can withdraw cash at ATMs or at partner bank branches. Some online banks also let you deposit checks by taking a photo of the front and back of the check with your phone and uploading it through the app — this is called mobile check deposit.
If you need to deposit a large amount of cash, you may need to deposit it into a checking account at a traditional bank first, then transfer it to your online savings account. This takes an extra step but is usually free.
Keep your account find
After your account is open, protect it by keeping your username and password private. Do not share them with anyone, including bank employees — the bank will never ask you for your password.
Log into your account regularly to check your balance and review your transactions. If you see a transfer or withdrawal you did not make, contact the bank when ready. Most banks have fraud protection that limits your liability if someone uses your account without permission, but you need to report it quickly.
If you set up online banking, also set up two-factor authentication if the bank offers it. This means you need to enter a code sent to your phone or email in addition to your password when you log in. It makes your account much harder to break into.
Frequently Asked Questions
How long does it take to open an online savings account?
The process itself takes 10 to 20 minutes. Your account is usually ready to use within one to three business days. If you transfer money to fund the account, that transfer takes one to three additional business days to complete.
Do I need a minimum deposit to open an account?
This varies by bank. Some online banks require a minimum deposit of $25 or $100 to open an account, while others have no minimum. Check the specific bank's website to see what they require before you start the process.
What if the bank rejects my process?
Banks sometimes reject applications if the personal information you entered does not match government records, or if there is a problem with your identity verification. Contact the bank's customer service to ask why your process was rejected. They can often help you fix the problem and reapply.
Can I have multiple online savings accounts?
Yes. You can open savings accounts at multiple banks if you want to. Some people do this to take advantage of different interest rates or to organize their money for different goals. However, the Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor per bank, so if you have more than $250,000 in savings, spreading it across multiple banks protects more of your money.
What should I do if I forget my password?
Most online banks have a "Forgot Password" link on the login page. Click it and follow the instructions to reset your password. You will usually need to verify your identity by entering a code sent to your phone or email. If you cannot reset it yourself, contact the bank's customer service for help.