Millions of Americans rely on savings accounts and checking accounts from banks and credit unions to help manage their money. Although it’s possible to function in society today with no bank account, it’s not recommended. That’s because, without a bank account, the cash and funds you keep are less safe and it’s more difficult to use, transfer, and manage your money.

It is possible to get by with prepaid debit cards, check-cashing services, and digital wallets like Venmo, PayPal, Zelle, or Apple Pay. However, opening and keeping a savings or checking account with a physical or online bank or credit union can replace or complement these strategies, making monetary matters a lot easier and safer.

Why it’s smart to open and keep a bank account

Living without a bank account is possible, but there a lots of good reasons for having a bank account.

Having an account with a bank or credit union is an essential financial tool for most people. It enables consumers to conveniently partake in everyday transactions, such as paying bills, receiving direct deposits of payroll checks and other income, transferring funds, and maintaining emergency savings.

“All of these activities are easier and more secure when you have at least one bank account,” says Amy Maliga, a financial educator with Phoenix-based nonprofit financial counseling agency Take Charge America. “If you are managing accounts responsibly, there are few downsides to having a bank account, other than possibly paying fees or having to maintain a minimum balance.”

Even though your credit report and credit score aren’t directly affected by your banking habits, maintaining bank accounts in good standing is crucial for achieving your credit goals.

“Potential lenders may review your checking and savings accounts to determine if you have the assets to pay back a loan,” Maliga notes. “Additionally, without no bank account, it’s harder to pay bills on time – which is the most important factor in building and maintaining a positive credit history.”

Shawn Plummer, CEO of The Annuity Expert, agrees.

“Your banking history is your evidence of responsible financial management. Making payments on time builds credit, showing proof of your financial health,” says Plummer.

With a bank account, you should be able to easily make or schedule electronic payments, which is a lot faster and easier than getting money orders and delivering them via mail or in person. Additionally, while it isn’t much, many savings accounts earn a small amount of interest each month based on the amount of your balance and the bank’s paid rate of interest.

Good candidates for having a bank account

You usually don’t have to meet any specific criteria to qualify for a bank account or credit union account. Virtually any physical or online bank should be able to easily open an account for you, many with no fees attached, although you may be required to maintain a minimum balance.

“Literally anyone with income and bills can open a bank account. There is no good reason not to have a bank account unless you have an under-the-table business and don’t want the IRS to find out the income you are earning – in which case, you are committing tax evasion, which is not a good idea,” Blaine Thiederman, founder and principal advisor for Progress Wealth Management in Arvada, Colorado, explains.

“Anyone over the age of 18 should probably have a bank account,” suggests Carter Seuthe, CEO of Credit Summit. “While it makes sense to wait until age 18 in most cases, it can actually be valuable for younger people who already have formal jobs to get a bank account to at least deposit their checks in.”

The consequences of living without a bank account

Having no bank account makes many aspects of life needlessly challenging and, in some cases, more costly.

“Consider that those who are unbanked must rely on check-cashing services to receive cash and use money orders or cashier’s checks to pay bills, all of which come with fees,” cautions Maliga.

What’s more, storing large amounts of cash in your home is a risky practice that can attract thieves. Keep in mind that if the money you have stashed under the mattress is lost or stolen, there’s no way to get it back.

“Without a bank account, any extra savings you have could be lost in a fire or burglary. Or, if you die, your family may have trouble finding it,” says Thiederman. “Having a bank keeps things organized and protected at no extra cost to you. What’s more, every bank account has FDIC insurance, so if the bank goes out of business you don’t have liability for the loss unless you have more in the account than $250,000.”

Another major disadvantage of living without a bank account is that there is no paper or electronic trail in place.

“You’ll have a hard time proving a money trail, so purchasing things like a home or investing for retirement will be more difficult,” Thiederman cautions.

Ponder, as well, that although it can be possible to apply and get approved for a credit card or loan without a bank account, “every single application you fill out for a credit card or other form of debt is probably going to ask if you have a bank account,” Seuthe continues. “Certain credit rating agencies and other financial services will also offer special consideration to individuals who use direct deposit for their paychecks or debt payments – all of which requires a bank account.”

Best practices when you have a bank account

Even if you don’t plan to use your bank or credit union account much, take the time to review your statements from the financial institution every month to ensure that all transactions are accurate and no fraud has occurred, Seuthe recommends.

“Also, keep your personal identifying information up-to-date, take steps to avoid overdrafts on your ac

count, such as by applying for overdraft protection, and change your banking passwords regularly to safeguard your accounts,” advises Maliga.Lastly, if you are unhappy with your bank account, avoid the impulse to drain and abandon it. If you decide you really prefer living without a bank account, make sure it doesn’t sit unused for ever more.

“Take the steps to work with your bank or credit union to formally close the account,” Maliga adds. “Opening and abandoning multiple accounts is a red flag to other financial institutions that can make it harder to continue having productive banking relationships.”

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

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Most banks now offer online applications so that you can quickly take care of business on your laptop, tablet, or smartphone. Whether you’re looking for a new checking account, savings account, or both, you don’t have to dread this item on your to-do list. Instead, take a look at the four steps and find out how simple it is to open a bank account online.

Opening a bank account in 4 steps

• Identify the type of bank account you are interested in
• Collect all your important personal information
• Complete an online banking application with your personal documents
• Fund your new bank account

Challenges you may experience when opening a bank account online

Open a bank account online for free with Sesame Cash

Opening a Bank Account in 4 Simple Steps

Opening a bank account is easier than ever, especially with online platforms for a smooth process. It takes just four steps to get started, from picking the best option for your banking needs to actually being ready to spend from your new account. Here’s what to expect.

1. Identify the type of bank account you are interested in

Most people choose from two of the most common types of bank accounts: a checking or savings account. There are several differences between the two, which are important to understand before you choose.

Checking accounts: A checking account is used for everyday transactions, like making purchases and depositing paychecks. You can get a debit card and checkbook attached to the account for spending. Many banks also allow you to connect your account to a digital wallet so you can pay for things with the tap of your smartphone.

Savings accounts: A savings account’s primary purpose is to set aside cash to use at a later time. Oftentimes, you’ll earn interest on your account balance. There’s a monthly limit of six withdrawals and no debit card attached to the account. Instead, you typically access your cash by transferring funds to another bank account or by withdrawing cash from an ATM.

You can open both a checking and savings account, either with the same bank or two different banks. If you use the same bank, you can link accounts to use as overdraft protection and enjoy faster transfers.

What to watch for: Compare accounts by looking at monthly fees, a minimum balance that must be maintained, and a minimum opening deposit. Also make sure you choose a bank account that is FDIC-insured.

2. Collect all your important personal information

Learning how to open a bank online is easiest when you gather all of the necessary information in advance. That way you don’t have to worry about your online session timing out and having to log in multiple times.

Opening a bank account is much less complicated than other financial applications, such as a credit card or auto loan. You’ll start with your basic personal information, including your full name, date of birth, address, phone number, and email address.

Next, you’ll likely be asked to provide your social security number. If you don’t have it memorized, go find your social security card or a previous tax return to grab that information. Most banks also require a copy of your driver’s license to confirm your identity. When applying online, many banks allow you to snap and upload photos rather than bringing it into a local branch. But this requirement can vary depending on where you apply.

If you are applying for a joint bank account with a spouse or partner, you’ll need all of the same information for that person as well.

3. Complete an online banking application with your personal documents

Once your information is gathered, you’re ready to complete your application and open a bank account online. This can be done through a web browser on your preferred device. And some banks also allow applications to be completed directly through their mobile app. Just check ahead of time, since some financial institutions (especially smaller ones) may have limited features in their apps.

Online applications are typically an easy, guided process where you input all of that personal information you’ve gathered. Most checking and savings accounts are not subject to a credit check. But the bank will review your banking history in ChexSystems. This is a reporting agency that tracks consumers’ history of things like excessive bounced checks, overdrawn accounts, and unpaid fees. An applicant with too many negative ChexSystems entries could be denied a bank account — more on that shortly.

But assuming you sail through the approval process, a decision for your online application should take no more than 15 minutes. If you’re not approved online, you may be able to visit your local branch to complete an in-person application with better approval odds.

4. Fund your new bank account

After getting your bank account approved, it’s time to fund your account. The bank may have a requirement for your opening deposit, such as $25, $50, or $100. Or you may be able to pick any amount you’d like.

For a fully online process, you can fund the account with a transfer from another bank account, a check, or a money order. Electronic transfers may take a few days to process. If you prefer to deposit cash, you can do so at the nearest bank branch.

Once your account is approved and funded, you’ll receive a debit card in the mail. This may take several business days. Some banks also provide a free book of checks, or you may need to pay extra for this option.

When opening a checking account that you plan to use as your primary account, you may also wish to set up direct deposit from your employer. Contact your manager or HR department for the paperwork, which should just ask for your bank account number and routing number.

Challenges You May Experience When You Open a Bank Account Online

Having a negative history in ChexSystems can hurt your chances of getting approved. ChexSystems tracks the following in your banking history:

• Overdrafts
• Outstanding bank fees
• Negative balances
• Banking fraud
• Identity theft

If your online bank account application is denied, start by asking for the reason for denial, as well as a copy of your ChexSystems report. Make sure the information is accurate; otherwise, you can initiate a dispute.

Even if the negative entries are accurate, you have options. Find a bank that offers a second chance bank account. It’s designed to help rebuild a positive history in ChexSystems with some extra requirements and restrictions in place. You may have a higher deposit minimum, monthly maintenance fees, and a limited number of transactions you can make, but over time you can rebuild your banking history and upgrade to a standard account.

Another solution is to opt for a prepaid debit card. Just look for monthly fees you’ll have to pay and what options are available to load the card with funds.

Open a Bank Account Online for Free with Sesame Cash

Looking for a free bank account you can open online? Check out Sesame Cash, a no-fee debit account that simultaneously builds your credit score. It’s an easy way to manage your money, plus you’ll earn rewards on your favorite brands, like Apple, Uber, and Nike. Your Sesame Cash account also gives you access to your paycheck two days early when you enroll in direct deposit.

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