Some banks will allow you to open an account even if you’re not a resident of that state, but many will not.
Online banks that have no physical branches are often the easiest places to open an account, and larger banks with branches all over the country are equally accepting of out-of-state customers.
Opening an account with a small local bank with branches in only one or two states will be the most difficult, and bank employees may question why you’re opening an account so far from home.
Regardless of where you live or wish to open an account, banks are required to know their customers and will ask for identification and proof of residence in order to avoid identity theft.
What’s the difference a national and a state bank?
Banks come in basically two flavors, nationally and state-chartered. From the outside, they’ll appear nearly identical, but their legal frameworks can vary significantly and impact how they interact with their customers.
Nationally chartered banks include big names like Chase, Wells Fargo, and U.S. Bank along with online banks. They often have hundreds of branches spread across dozens of states.
Conversely, state banks are much smaller and have no branches outside of their home state.
States have varying compliance laws for banks. Certain financial products, advertisements, interest rates, and disclosures may be legal in one state, but not in others.
State-chartered banks are required to follow the laws of the state in which they operate, whereas online and national banks can make use of federal laws that preempt those of the state.
The larger national banks can ignore certain laws regarding loan terms, state licensing, and advertisement of financial products, while still adhering to state laws regarding taxes and contract law.
Should I open an account with a national or state bank?
Opening an account with an out-of-state bank is much easier with a nationally chartered or online bank.
They’re more comfortable working with customers across state lines and are familiar with the federal regulations that govern such a relationship.
They also come with a larger ATM network, online check deposits, and other services that make it easy to do your banking from anywhere.
Some banks even offer ATM fee reimbursement, to encourage customers living far away from their branches to open an account.
On the other hand, small business owners often prefer local, state-chartered banks for the closer relationship they provide. While they might not offer as many financial services, account fees are also usually lower at local banks.
Is it easy to open a business account in another state?
Things get trickier when opening a business account with a bank, regardless of whether it’s nationally or state-chartered.
Business accounts are subjected to greater scrutiny as out-of-state clients might try to shelter their money in a state with lower taxes or lax disclosure rules.
As such, business accounts are usually opened in the state where the business is registered, even if this isn’t where you reside.
In this case, the business is the client rather than the individual opening the account.
Businesses typically register with the secretary of state’s office, which defines where the business is located regardless of where its employees live and work.
If your business operates in multiple states, choose a national bank or online bank to avoid any problems.
They’ll be well-versed in the tax laws of every state where your business operates, while also providing multiple branches and ATMs for easy access to cash.
What do you need to open an out-of-state bank account?
Opening an out-of-state account is nearly identical to opening one in your home state.
The process is the same whether you’re opening an account at a small local bank, a large national chain, or an online-only institution.
Every bank follows similar Know Your Customer (KYC) regulations requiring three types of documentation:
- ID
- signature, and
- proof of address
A driver’s license is the most commonly accepted form of ID for opening a bank account, and it doesn’t need to be issued by the state where you’re opening the account.
The bank is simply matching a name to a face, and many Americans open bank accounts with a passport, which doesn’t include an address to be associated with any state.
The process diverges from the normal account opening procedure when you’re asked to provide proof of address.
Banks want to see a utility bill or bank statement with your current address on it, which means P.O. box addresses are usually not accepted.
If the bank has no branches or affiliation with the state in which it is located, this could prevent you from opening an account in that state.
Larger national banks however will typically not have this limitation, making it a lot easier to open a personal account in your place of residence.
Sometimes smaller banks will not permit customers with out-of-state addresses or IDs to open an account in person but will otherwise allow the customer to open one online.
In this case, the branch may not have the means to verify your identity and trustworthiness as a client but can do so at a larger branch or at the bank’s headquarters.