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The main difference between retail vs. corporate banking lies in what type of services they provide and to whom. Retail banking is consumer-focused while corporate banking, also referred to as business banking, is designed to meet the needs of businesses.

Banks can offer both retail and business banking services to attract both types of clients. Understanding how each one works makes it easier to distinguish between retail vs. corporate banking.

What Is Retail Banking?

Retail banking refers to banking services and products offered to retail customers, meaning individuals. Retail banking can also be referred to as consumer banking or personal banking. The kinds of products and services offered by retail banks are designed for personal money management — such as checking and savings accounts, certificates of deposit (CDs), debit cards, and more.

In the U.S., the Office of the Comptroller of the Currency (OCC) is responsible for overseeing banks at the national level. Banks with assets in excess of $10 billion are also regulated by the Consumer Financial Protection Bureau (CFPB). In addition to federal regulation, retail banks can also be subject to regulation and oversight at the state level. These organizations help ensure that services are being provided in keeping with the law and that charges are not excessive.

Recommended: How Do Retail Banks Make Money?

Services Offered Under Retail Banking

Retail banks typically offer products and services that are designed to help everyday people manage their finances. This is the key distinguishing factor between retail vs. business banking. For example, some of the services retail banks may offer include:

•   Deposit account services: Retail banks can allow consumers to open checking accounts, savings accounts, money market accounts, and other deposit accounts to hold their money safely and securely.

•   Mortgage lending: Homeowners often require a loan to purchase a home, and many retail banks provide mortgages to qualified borrowers.

•   Secured and unsecured loans: In addition to home loans, retail banks can issue other types of loans, including auto loans, personal loans, home equity loans, and lines of credit.

•   Credit cards: Credit cards offer convenience for making purchases; many of them also offer rewards to consumers for using them. Retail banks may issue credit cards to creditworthy customers.

•   Certificates of deposit: Certificates of deposit (or CD accounts) are special types of deposit accounts that allow you to earn interest on your money for a set term.

Banks may also offer insurance to their retail clients. Private banking may also be available for higher net-worth customers.

Retail banks usually make money by accruing interest on the money they lend via loans and other vehicles. They may also charge various fees for banking services, including overdraft fees, loan origination fees, and checking account fees. Some retail banks have physical branches, while others operate exclusively online.

What Is Corporate Banking?

Corporate banking is the branch of banking that offers its services and products to business entities. That includes large corporations as well as small and medium-sized business operations. Corporate banks may also serve government agencies and entities. While services may include deposit accounts, these banks also may offer credit and asset management, lines of credit, payment processing, and tools that facilitate international trade.

Like retail banks, corporate banks can charge fees for the various services they provide. Banking services can be directed toward a corporate audience in general or be tailored to target the needs of specific industries, such as healthcare or companies that operate in the tech space.

Recommended: When Would I Need a Business Bank Account?

Services Offered Under Corporate Banking

The services offered by corporate banks are designed to suit the needs of businesses large and small. The kinds of services a corporate bank can offer include:

•   Deposit account: Business banking can include many of the same deposit options as retail banking, such as checking accounts, savings accounts, and money market accounts.

•   Debt financing: Corporate banks can offer debt financing options to startups and established businesses that need capital to fund expansion projects and growth.

•   Trade lines of credit: Trade financing can make it easier for businesses to cover day-to-day operating expenses. Examples of trade financing that corporate banks may offer include merchant cash advances, purchase order financing, and accounts receivable processing.

•   Payments processing: Corporate banks can act as payment processors to help businesses complete financial transactions when providing products or services to their customers.

•   Treasury management: Treasury management services can help businesses keep cash flowing steadily and smoothly.

•   Global banking: Businesses that are interested in expanding into foreign markets may rely on business banking services to reach their goal.

Key Differences Between Retail and Corporate Banking

Retail and corporate banking both have the same goal: serving the needs of their customers. But the way they achieve this goal differs. Here are some of the most noteworthy differences between retail banking vs. business banking.

Business Model

Retail banking’s business model is built around meeting the needs of retail banking clients. Banks that operate in the retail space are primarily concerned with three things: deposits, money management, and consumer credit.

Corporate banks, on the other hand, base their business models around products and services that are utilized by business entities. That includes offering business bank accounts, providing avenues for securing capital, and offering financial advice.

Customer Base

Retail banks are geared toward consumers who rely on financial products like personal checking accounts, savings accounts, or unsecured loans. A retail bank can offer accounts to different types of consumers, including specialized accounts for kids, teens, students, or seniors. But generally, they’re consumer-facing and work with everyday people to help them manage their money.

That’s a difference between retail vs. corporate banking: The latter is business-centric. For example, a corporate bank may offer services to companies with a valuation in the millions. Or it may cater to smaller businesses that need help with things like payment processing or cash flow management. Some business banks may serve companies both large and small.

Processing Costs

As mentioned, both retail and corporate banks can charge fees for the services they provide. These fees are designed to make up for the bank’s own handling costs for processing transactions. Both types of banks can also charge interest on loans, lines of credit, and credit cards. These are some of the ways that banks earn money.

In general, retail banks tend to have lower handling costs which means lower fees for consumers. Corporate banks, on the other hand, typically have higher processing costs which means their clients pay more for their products and services.

Value of Transactions

Since retail banks serve everyday consumers, the average value of transactions processed tends to be lower compared to that of corporate banks. A corporate bank, for example, might process a transaction valued at several million dollars for a single customer. Someone who’s adding money to their personal checking account vs. a business checking account, meanwhile, may be depositing a few hundred or few thousand dollars.

Profitability

Here’s another key difference between business banking vs. retail banking: Business banking tends to generate more profits. That’s because corporate banks typically deal in higher value transactions than retail banks.

The Takeaway

The difference between retail vs. business banking is quite straightforward: Retail banking serves individual customers’ needs, while corporate banking serves the needs of companies of all sizes, as well as other organizations.

For most people, retail banking is a good choice to manage and optimize their financial lives. For instance, you can use a retail bank account to pay bills, deposit your paychecks, transfer money to savings, and make purchases or withdrawals using your debit card.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Is corporate banking better than retail?

Corporate banking is not necessarily better than retail banking; they’re designed to serve different audiences. Corporate banking is usually a wise choice for a business entity, while retail banking is designed to serve individuals with their personal banking needs.

Is a current account retail or corporate?

Current accounts can be offered by retail and corporate banks. Generally speaking, a current account is a bank account that allows you to make deposits and withdrawals. A checking account, either personal or business, is an example of a current account.

Why do banks focus on retail banking?

Banks focus on retail banking because there’s a need for it among consumers; many adults might be interested in a checking account, a debit card, and a credit card, for example. The demand for retail banking also allows banks to generate revenue by charging fees for deposit accounts and interest on loans and lines of credit. That said, corporate banking also serves an important need and generates income for banks as well.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

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3.30% APY
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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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“In trust for” (ITF) and “payable on death” (POD) are two designations that you can use to pass on bank accounts or other financial accounts after you’re gone. The main difference between in trust for vs. payable on death is that the former has a trustee while the latter does not.

Which one you opt for can depend on your personal wishes for passing on those assets. Understanding how each one works can make it easier to choose between a POD vs. trust account when crafting an estate plan.

This guide will help you learn the pros and cons of each type of financial account and compare them.

What Is Payable on Death (POD)?

A payable on death account allows the owner to pass the assets in that account to a named beneficiary once they die. For example, you might open an online savings account and name your adult child as the beneficiary.

During your lifetime, you’d be able to use the account however you wish. You could make deposits or withdrawals, and the beneficiary would have no rights to the account. Once you pass away, the beneficiary would inherit the account from you. You can use POD designations with multiple bank accounts to name different beneficiaries.

How Payable on Death Works

Payable on death works by allowing the owner of a financial account to choose one or more beneficiaries to inherit the account. The account owner would fill out a POD form or beneficiary designation form with their bank or the financial institution that holds the account.

When the POD account owner passes away, the bank would be required to release any assets in the account to the individual or individuals named as beneficiaries. The beneficiary will typically need to present a death certificate first to prove that the account owner has passed away.

In a sense, payable on death is similar to designating a beneficiary for a 401(k) plan or Individual Retirement Account (IRA). For example, 401(k) beneficiary rules do not allow access to the account while the owner is alive. Once the owner passes away, however, the beneficiary would be entitled to receive all the funds.

Payable on Death Rules

The main rule to know about payable on death is that the beneficiary has no access to the money in the account until the account owner dies. So again, say that you name your adult child as the beneficiary to your savings account. Even though they’re listed as the beneficiary, they would not be able to go to the bank and withdraw money from the account as long as you’re still living.

Additional rules apply when there are multiple beneficiaries. All beneficiaries would be entitled to an equal share of the assets in the account. For example, assume that you have four children instead of just one. If you name all of them beneficiaries on a savings account, they’d each be entitled to 25% of the account’s assets when you pass away.

What Is In Trust For?

An in trust for, or ITF, account allows a grantor to designate a trustee who will manage financial assets on behalf of one or more named beneficiaries. The grantor is the person who owns the account; they can also be the trustee during their lifetime. The beneficiary is the person who will inherit the account assets when the grantor passes away.

After the grantor dies, the trustee can continue to manage the assets in the account on behalf of the trustee. An in trust for arrangement offers a greater degree of control than payable on death in this way: The trustee is obligated to carry out the wishes of the trust grantor.

Recommended: Putting Your House in a Trust

How In Trust For Works

An in trust for arrangement works by allowing the owner of a financial account or asset to establish a trust to hold those assets. In trust for can apply to savings accounts, checking accounts, or other bank accounts, as well as investment accounts.

The grantor sets the terms of the trust, and the trustee is responsible for ensuring those terms are carried out. For example, the grantor may specify that the beneficiary cannot receive assets from the account until they turn 30 or get married. The trustee would manage the assets in the account until either one of those events comes to pass.

In Trust For Rules

In trust for rules allow for flexibility, since the grantor can decide:

•   Who should serve as trustee

•   Who will be named as beneficiaries

•   How assets in the trust should be managed

•   When and how beneficiaries will have access to those assets.

An in trust for arrangement could allow the beneficiaries access to trust assets while the grantor is still alive, if that’s the wish of the grantor. Meanwhile, trustees are required to follow a fiduciary duty when managing trust assets. In simpler terms, they must act in the best interests of the beneficiaries.

If the trust is revocable, the grantor has the power to change its terms or revoke it while they’re living. Once they pass away, the trust becomes irrevocable and cannot be altered.

In Trust For vs. Payable on Death

When choosing between in trust for vs. payable on death, it might seem a little confusing since they both allow you to designate a beneficiary for financial accounts. Comparing them side-by-side can make it easier to see how they overlap and where they differ.

Similarities

First, consider the similarities:

•   Whether you designate a financial account as a POD vs. trust, the end goal is the same: to pass on assets in the account to one or more named beneficiaries. As the owner of the account, you have the power to decide who to name as a beneficiary to your accounts. If you’re creating an in trust for account, you can also choose who should act as trustee.

•   Whether you choose payable on death vs. in trust for, the assets in the account avoid probate. Probate is a legal process in which a deceased person’s assets are inventoried, any outstanding debts owed by their estate are paid, and remaining assets are distributed to their heirs.

Going through probate can be costly and time-consuming for heirs. Naming a beneficiary, whether it’s through an in trust for or POD arrangement, allows those assets to bypass the probate process.

Differences

Next, look at how these two kinds of accounts vary

•   The main difference between a beneficiary in trust vs. payable on death account is that one has a trustee and the other doesn’t. When you name a trustee, you’re essentially choosing someone to manage assets on behalf of your beneficiary rather than handing them over directly.

The upside is an in trust for arrangement allows you to have greater control over what happens to the assets that you’re passing on. Setting up an in trust for arrangement usually requires a little more paperwork than establishing a POD account.

Depending on the value of the assets in question, you might need an estate planning attorney’s help to set up an in trust for account.

Pros and Cons of POD

Payable on death accounts have advantages and disadvantages. Here are the main benefits to know:

•   Account owners can decide who gets their assets, without needing to include them in a will.

•   Beneficiaries can bypass the probate process.

•   Naming beneficiaries means that heirs don’t have to go looking for lost bank accounts when you pass away.

Are there some cons? It depends.

•   If you’re the account owner, you may appreciate the fact that you can leave assets to heirs and still have the use of them during your lifetime.

•   Beneficiaries, on the other hand, may be unhappy about having to wait to gain control of those assets until you pass away.

Pros and Cons of In Trust For

In trust for arrangements have similar pros and cons. On the plus side:

•   You’ll be able to pass money on to named heirs. If you’ve ever been in a situation where you’re trying to track down unclaimed money from deceased relatives, then you might appreciate an in trust for situation which would eliminate any questions about who gets what.

•   This kind of arrangement could also be helpful in situations where it’s likely that heirs may dispute the division of assets. By creating an in trust for agreement, you can decide who will get the assets, who will manage them as trustee, and when beneficiaries can receive the assets.

•   Again, both POD and in trust for accounts can be excluded from probate.

Also be aware of the potential cons:

•   Trusts can be costly to establish if you’re working with an attorney.

•   The trustee is also entitled to collect a fee for overseeing the trust, which can add to the total cost.

Recommended: What Is the Difference Between Will and Estate Planning?

The Takeaway

In trust for and payable on death are designed to make the process of passing on bank accounts and other financial accounts easier. You might consider setting up either one if you’d like to ensure that your assets go to the right people when you pass away. Your bank accounts typically have value, and you probably want to make sure that those assets you tended to during your lifetime get into the hands of the right people with a minimum of effort and expense.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Is In Trust For or Payable on Death better?

Whether it’s better to choose in trust for vs. payable on death can depend on the specifics of your situation. In trust for is usually better when you want to maintain a greater degree of control over the financial assets that you’re passing on. Payable on death may be preferable when you simply want to ensure that a specific beneficiary inherits a financial account.

Is ITF the same as POD?

ITF stands for in trust for, which is an arrangement in which a grantor establishes a trust to hold assets on behalf of one or more beneficiaries. POD stands for payable on death, which means that assets in a financial account are payable to one or more named beneficiaries when the account owner passes away.

What is the difference between In Trust For and a beneficiary?

In trust for means that a financial account or asset is being held in trust on behalf of one or more beneficiaries. A trustee is responsible for managing the assets for the beneficiaries, according to the terms set by the person who created the trust. A beneficiary is someone who stands to benefit financially from the death of another person, either by inheriting assets or receiving proceeds from a life insurance policy.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

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You may wonder if it’s possible to open a bank account for someone who is in prison. The answer is, yes, it may be possible to start a bank account for a prisoner, provided it’s allowed by the Department of Corrections in the state where the individual is incarcerated. (Worth noting: It may also be a challenge to find a bank that offers this kind of account.)

Opening an account can be a positive step. Being imprisoned can limit someone’s ability to pay bills, grow savings, and generally manage their finances. Opening accounts for inmates at external banks can help them to earn interest on savings while saving money on fees. And it can potentially make their reentry into society easier upon release.

While inmates may have access to prison accounts, those can come with high fees, and they typically don’t pay interest. A prison account is a special type of account that allows an inmate to store funds which can be used to pay for hygiene items and other necessities while they’re incarcerated. It doesn’t impact their lives when released.

So, let’s take a closer look at this topic:

•   Whether it’s legal to open a bank account while in prison

•   How to apply for a bank account while in prison

•   What documentation is required to start an account

•   What kinds of accounts are available, including whether joint accounts are a possibility

Let’s start learning about accounts for inmates.

Is It Legal to Open a Bank Account While in Prison?

It’s legal to open a bank account while in prison, unless state law or correctional facility policy specifically prohibits it. The best way to find out whether opening accounts for inmates is allowed is to check with the Department of Corrections in the state where the person is incarcerated.

In Texas, for example, the Department of Criminal Justice encourages inmates to open accounts at an external bank of their choice. They can then link this bank account to their prison account. This can be used to replenish their account for items bought while in prison. Excess funds in their prison account can also be transferred to their external bank account.

The state of New York, on the other hand, prohibits inmates from opening outside bank accounts. Specifically, prisoners are not allowed to open:

•   Checking accounts

•   Savings accounts

•   Stock accounts

•   Mutual fund accounts

•   Money market accounts

•   Certificate of deposit (CD) accounts

•   “In trust for” accounts

Inmates in New York are also barred from receiving distributions from any U.S. savings bonds they might own. Prisoners who enter the system with existing checking accounts or other bank accounts are required to close them.

So, if you are thinking of opening a savings account for an inmate, whether or not you can will depend on where they’re imprisoned. If you’re able to open some kind of savings account for an inmate, the next challenge may be finding a bank that will allow you to do so. Let’s look at that issue in a bit more detail next.

Why Banks Might Refuse to Help Prisoners

Not all banks are willing to open accounts for prisoners. Financial institutions can establish their own policies for when opening accounts for inmates is or isn’t allowed. If you’re trying to figure out how to open a bank account for an inmate and you’re hitting a brick wall with banks, it could be due to one of the following:

•   The bank requires a valid ID for the inmate, which you don’t have.

•   You have not been granted power of attorney (POA) for the inmate.

•   The inmate has a negative ChexSystems report (which is a reporting system for the banking industry) or previous issues with managing a bank account.

•   The bank is concerned that funds deposited to the account might be seized by a government entity.

•   The bank is concerned that the account may be used to conduct illegal activity.

It’s also possible that banks may be worried about running afoul of any rules or regulations established by their state’s Department of Corrections or Criminal Justice. In that scenario, it may be easier for the bank to simply not offer accounts for inmates to avoid any issues.

Applying for a Basic Bank Account for an Inmate

Let’s say that it is legal in the inmate’s state for them to hold a bank account, and you have found a financial institution that is willing to open an account. The next step would be to begin the account.

Keep in mind that opening accounts for inmates isn’t exactly the same as opening a checking account or savings account for yourself. In terms of how to open a savings account for an inmate, there may be one of three possibilities you can pursue. Again, the options you’re able to choose from could depend on what’s allowed by the inmate’s correctional facility and/or state.

Option 1: Specific Prison/Bank Arrangement

Correctional facilities may allow inmates to have outside bank accounts if they open them at an approved financial institution. For example, in Wisconsin inmates are allowed to open interest-bearing accounts at a bank that’s approved by the Department of Corrections.

If you’re trying to open a bank account for an inmate, you could check with the Department of Corrections or Criminal Justice to find out which banks are approved. The Department of Corrections should also be able to tell you what restrictions or requirements apply when opening accounts for inmates.

Recommended: How Much Money Do You Need to Open a Bank Account?

Option 2: Applying to Bank of Choice

While some correctional facilities require inmates to open external accounts at approved banks, others give you some leeway in deciding where to bank. As noted, Texas encourages prisoners to open accounts at the bank of their choice if they like.

If you’re trying to open a savings account for an inmate, the hard part may be finding a bank that will allow you to do so. You can start by checking at your current bank to see if it’s an option. If not, you can then try contacting other banks in the area to see which ones offer inmate accounts.

Recommended: How Many Bank Accounts Should You Have?

Option 3: Wait Until Release

Though not ideal, an inmate could simply wait until they’re released to open a savings account. This may be easier said than done, however, if the inmate isn’t able to meet the bank’s requirements for account opening.

What kind of requirements exactly? That could mean providing a valid ID and proof of address. And again, something like a negative ChexSystems report could lead the inmate to be denied a bank account. Unpaid balances or suspected fraud are other red flags that may result in an application for a new bank account being rejected.

Can Prisoners Be a Part of a Joint Bank Account?

You might be wondering how to open a joint bank account with an inmate or if it’s even possible. Whether a prisoner can open a joint bank account with someone else can depend on the bank’s policies. If you’re opening a joint bank account and the bank requires you to do so in person, for example, you may need to provide documentation showing why the joint account owner cannot be present.

Required documentation can include having power of attorney granting you legal authority to act on behalf of the inmate. The rules for establishing power of attorney and the scope of powers granted can vary from state to state.

If the bank allows you to open joint accounts online, then you may not be asked for this document. You will, however, likely need to provide the following for a joint account:

•   The inmate’s name

•   Their date of birth and Social Security number

•   A current address, phone number, and email address

If you’re missing any of those pieces of information, you may not be able to proceed with opening a joint account online. You could call the bank to ask how you can finish the account setup if you run into issues.

Keep in mind that managing a joint bank account — one shared with an inmate before they’re incarcerated — may be handled differently. As mentioned, New York requires inmates to close existing accounts before entering prison. But other correctional systems may allow those accounts to remain open.

If you have a joint account with an inmate, it’s important to note whether any court orders exist or are likely to be filed that would allow for seizure of account assets for repayment of a nondischargeable debt, such as back child support, past due tax bills, and federal student loans. Keep in mind that co-borrowers for joint loans are equally responsible for shared debts, even if one person is incarcerated.

Required Documents to Open a Bank Account

Banks typically have a standard list of documents they require to open a bank account. The list can include:

•   Valid government-issued ID

•   Proof of address

•   Social Security number

•   Birth certificate when other forms of ID are unavailable

Opening bank accounts for inmates can require additional documentation if the bank needs a power of attorney form. An attorney can help you complete a power of attorney for an inmate, which may require a visit to the correctional facility if state law prohibits digital signatures. State law can also dictate whether a power of attorney for an inmate needs to be notarized in order to be legally valid.

Types of Bank Accounts for a Prisoner

The types of bank accounts you can open for a prisoner will generally be governed by Department of Corrections policy. But if you’re able to open a bank account for an inmate, you might be able to choose from these options:

•   Checking accounts

•   Savings accounts

•   Money market accounts

•   Certificate of deposit accounts

These options may also be available once an inmate is released. If a former inmate is having trouble getting a regular checking account after release, they might consider second chance checking or a prepaid debit card instead. These can be easier to access and provide support for day-to-day banking in a way that can be very helpful.

•   Second chance checking is designed for people who have been denied a checking account in the past. Usually offered at online or smaller, local banks, these accounts can help people to develop good banking habits so they can upgrade to regular checking later. They may not offer the full array of bells and whistles, and they may involve higher fees.

•   Prepaid debit cards, meanwhile, allow you to load funds onto the card, which you can then use to pay bills, make purchases, or withdraw cash at ATMs. A prepaid debit card is not a bank account but it can provide a formerly incarcerated person with a way to manage their money until they can get an account at a bank.

The Takeaway

Having a bank account can be a positive experience for inmates, but opening a bank account for a prisoner can be quite challenging. Not all states allow inmates to start accounts, and not all banks are willing to have prisoners as customers.

Whether you’re opening accounts for inmates while they’re incarcerated or after they’re released, choosing the right place to bank matters. Specifically, it’s important to find a bank that offers the best combination of features and benefits for inmates and former inmates and makes it possible for you to open that account before the prisoner is released.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Can an incarcerated person open a bank account?

Whether an incarcerated person can open a bank account will depend on the policies set by the Department of Corrections in their state. Some correctional facilities allow inmates to have external bank accounts, while others limit inmates to having prison accounts only.

Can ex-prisoners have a bank account?

Yes, ex-prisoners can open bank accounts. However, their banking options may be limited if they have a negative ChexSystems report. Former inmates may consider second chance checking accounts if they’re unable to meet the requirements for a regular checking account.

How much money can a federal inmate have in their account?

The Bureau of Prisons (BOP) does not specify an upper limit on how much money a federal inmate can have in their prison account. Inmates can receive funds at a BOP-managed facility, which are deposited into their commissary accounts, by MoneyGram, Western Union, or U.S. Postal Service.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Photo credit: iStock/alfexe
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A debit card offers an easy way to make purchases, pay bills, and withdraw cash at automatic teller machines (ATMs). These cards are issued by banks and credit unions and offer a direct link to your checking account. While they look like credit cards, and offer some of the same benefits, they don’t involve accumulating any debt. If you don’t yet have a debit card, here’s information on what they do and how to get one.

What Do Debit Cards Do?

A debit card, also known as a bank card, is a physical card that replaces the need to carry cash. You can use a debit card to make purchases both in person or online using the funds in your bank account. Debit cards are typically associated with checking accounts, though some types of savings accounts (such as money market accounts) offer debit cards. You can also use a debit card to withdraw or deposit cash at ATMs.

When you make a transaction using a debit card, the money is immediately deducted (or debited) from your bank account balance. This makes a debit card different from a credit card, which involves borrowing funds from your card issuer to make purchases. With a debit card, you generally can’t spend more than you have in your bank account, and won’t get a bill at the end of the month.

Every debit card has a unique (typically) 16-digit number and expiration date, which are usually on the front of the card. Your card should also have a three-digit debit card security code, or CSC (also sometimes called a CVV or CVC), which you typically need to enter when making debit card purchases online. Your CSC code is different from your personal identification number (PIN), which you usually need to use to complete purchases at the checkout or withdraw cash at ATMs.

What Do You Need Before You Get a Debit Card?

To get a debit card, you generally need to open a checking account. The application process varies by institution, but you will likely need to provide:

•   Your name, date of birth, and Social Security number

•   Proof of address (such as a lease, mortgage statement, or utility bill)

•   A government-issued photo ID (such as a driver’s license or passport)

•   An initial deposit is required by some, but not all, banks

If you’re applying for a new bank account with a joint owner, they’ll need to provide their personal information and identification as well.

How to Get a New Debit Card

Once your account is open, here are the steps on how to apply for a debit card.

1. Request a Debit Card

If the bank doesn’t automatically issue you a new debit card when you open your account, you may need to request one. The bank will typically mail you your card, which can take anywhere from a few days to two weeks. If you need a card sooner you can request expedited delivery (but there may be a fee).

2. Activate Your Card

Once you receive your debit card, you’ll need to follow the instructions provided to activate it. This usually involves calling a phone number, going online, or visiting an ATM. Whatever method you choose, you will likely need to verify the card number, expiration date, and three-digit security code.

3. Set Your PIN

Either during the activation process or at a later date, you’ll need to set up a PIN, which is a (typically) four-digit numeric code used to verify your identity when making transactions. It acts as a password, ensuring that only you can access your funds. You’ll want to choose a PIN that you’ll remember but others can’t easily guess. If you ever forget your PIN, many banks allow customers to change or reset their debit card PIN via their website or mobile app’s debit help center.

The Benefits of Getting a Debit Card

There are several advantages to having a debit card. If you’re not using a debit card yet, here are some of the benefits you might be missing out on.

•   Convenience: Debit cards allow easy access to funds for everyday transactions and online purchases. You can also link debit cards to mobile wallet apps for quick contactless payments when shopping in stores.

•   No debt: With a debit card, you can generally only spend what you have in your account, avoiding credit card debt and interest.

•   Quick access to cash: When you do need cash for payments, debit cards can be used at ATMs to withdraw money. In addition, some retailers allow you to get cash back at the checkout counter when making a purchase.

•   Safe transactions: Debit card technology mirrors that of traditional credit cards and comes with features like chips, PINs, and other safety measures.

•   Manage spending: Using a debit card for purchases and paying bills makes it easy to track your spending. By logging into your bank’s website or app, you can get an overview of what purchases were made, which can help with budgeting and money management.

•   Rewards programs: Some debit cards offer rewards or cashback on purchases.

•   Bill payments: You can often store your debit card information inside payment accounts for recurring monthly bill payments, which can simplify paying bills.

Debit Card Fees

While a debit card may be furnished by your bank at no charge to you, there are some potential fees to be aware of.

•   ATM fees: ATM fees may apply when you use a machine that’s outside of your bank’s approved network. Your bank may charge you an out-of-network ATM fee and the owner of the ATM may also hit you with a fee.

•   Monthly maintenance fees: Some banks charge a monthly fee for maintaining a checking account. This can often be waived with a minimum balance or direct deposit.

•   Foreign transaction fees: If you use your debit card at an ATM or store outside of the U.S., you may need to pay a foreign transaction fee.

•   Overdraft fees: If you have overdraft coverage and use your debit card to spend more than your account balance, your bank may cover the overage and charge you an overdraft fee.

•   Replacement card fees: Losing your card or needing a replacement might result in a fee.

•   Inactivity fees: Some banks charge a fee if your account remains inactive for a certain period.

Can You Get Denied for a Debit Card?

It’s possible to be denied a checking account and, subsequently, a debit card, if you have a negative banking history. While banks don’t typically report your checking and saving account activity to the consumer credit bureaus, any history of bounced checks, unpaid fees, and involuntary account closures may be accessible through ChexSystems, which is a reporting agency for the banking industry.

If you have negative information in your ChexSystems report, such as involuntary bank account closures, frequent overdrafts, or unpaid negative balances, you may get denied for a new bank account.

You may, however, be able to get a debit card with a second chance checking account. Second chance bank accounts are designed for people who may have had trouble with banking in the past and are trying to get back on track. These accounts may have limited features and benefits compared to traditional checking accounts, but they can be a good stepping stone for rebuilding banking history.

The Takeaway

Debit cards provide a convenient and secure way to manage your finances, offering benefits like eliminating the need to carry cash, secure transactions, and budgeting assistance.

Getting a debit card is a relatively simple process that begins with opening a checking account. You can improve your chances of getting approved for a debit card by maintaining a positive banking history, clearing any outstanding issues with previous banks, and ensuring your identification documents are in order.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What things can’t you do with a debit card?

While debit cards are versatile, they come with some limitations. You generally can’t use a debit card for activities that require a hold larger than your available balance, such as renting a car or booking a hotel room. In addition, some online subscriptions and services may only accept credit cards. Also keep in mind that credit cards usually offer greater consumer protections on purchases related to fraud than debit cards.

What things can’t you do without a debit card?

Without a debit card, you may face difficulties accessing cash quickly. In addition, you won’t be able to make cashless in-store purchases using the funds in your checking account. Your only option for digital payment will be a credit card, which entails borrowing funds and, if you don’t pay your balance in full, paying interest.

Is the process of getting a debit card hard?

No, the process of getting a debit card is relatively simple. It involves opening a checking account with a bank or credit union. Depending on the institution, you may be able to open an account online or may need to visit a branch. Once your checking account is open, the bank or credit union will typically issue and mail your debit card to your address, which you then need to activate.

If you have a credit card, do you need a debit card?

While a credit card can cover many of your financial needs, it’s still a good idea to have a debit card. Debit cards provide direct access to your funds without incurring debt, which helps with budgeting and avoiding interest charges. You can use a debit card to withdraw cash from ATMs, make everyday purchases in person and online, and manage your expenses in real time. In addition, some merchants and service providers may prefer or require a debit card.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Opening a checking and savings account, whether at an online bank, a brick-and-mortar one, or a credit union, can be a major step towards good money management. With an account set up, you’ll likely be able to receive your paycheck as a direct deposit, swipe a debit card to pay for purchases, and access tools to help you save towards some short-term goals.

But you may worry that you need a chunk of change to open an account. The truth is, though, that you may be able to start an account with zero cash deposited.

While each bank can set its own minimum deposits, some will let you open an account with a single dollar or even no money at all. Or you might encounter certain financial institutions or account types that require $100, $500, or more. You might even find that the account with the higher deposit minimum is the better fit for you.

To better understand minimum deposit and minimum balance requirements, read on.

How Much Do You Need to Open a Bank Account?

Let’s get down to the dollars and cents of this topic: How much money do you need to open a bank account?

Minimum Opening Deposit for Online Banks

When opening an online bank account, it’s typical to have low or $0 minimum initial deposits for a checking account. Because online banks don’t have to pay for physical locations, they typically are able to pass the savings along to their clients with lower or no minimum deposit requirements.

They may also offer other perks like an annual percentage yield (or APY) on a checking account or a higher APY than elsewhere on savings accounts.

Minimum Opening Deposit for Brick-and-Mortar Banks

If you were to open a bank account at a traditional bank (also known as a brick-and-mortar bank), on the other hand, you might need $25 or more for the initial deposit. And if you have two checking accounts at the same bank, it’s possible you might have to meet different initial deposits for each one.

Jumbo or premium accounts, which may be interest-bearing checking accounts and offer rewards, can also set the bar higher for how much money is required to get started. For example, a jumbo checking account might pay interest on balances of $1,000, $10,000, or more so you would need at least that much to open one.

Minimum Opening Deposit for Credit Unions

How much money do you need to open a checking account at a credit union? If you prefer to open a checking account at a credit union vs. a bank, you will likely find minimum opening deposits that range from zero to $25.

Can You Open a Bank Account With No Money?

You can probably open a bank account with no money. As mentioned above, you are most likely to find this kind of checking account offered at an online bank vs. a traditional bank.

Before you open this kind of account, though, it can be wise to make sure you understand the terms of the account, including the fine print. Factors to consider include what, if any, fees will be assessed, what balance you may need to maintain, and how and when you need to fund the account.

Recommended: What to Know If You’ve Been Denied a Checking Account

What Is a Minimum Initial Deposit?

A minimum initial deposit is the amount of money that a financial institution requires you to deposit in order to open an account. In some cases, this can be as little as $1 or even nothing at all; in other cases, it could be $100 or considerably higher.

What’s the Difference Between Minimum Initial Deposit vs. Minimum Balance Requirement?

When thinking about how much money you need to start a bank account, it’s important to understand the difference between your initial deposit and your ongoing balance requirement. If a deposit requirement is in place, that is separate from the minimum balance requirement that you may also need to meet to avoid a monthly service fee.

For example, you might need to deposit $100 to open your account. However, in order to avoid a $10 monthly maintenance fee, you may need to keep an average daily balance of $500 there.

A free checking account that doesn’t charge a monthly fee may not have a minimum balance requirement. Check with the bank up front so you are familiar with the terms and aren’t surprised by any fees being deducted.

The Takeaway

Checking and savings accounts can make your financial life easier, and you may be able to open an account with very little in terms of an initial deposit, even no money at all. When choosing a banking option, it’s important to consider the fees you might pay, the interest you could earn, and any minimum deposit or minimum balance requirements. Whenever possible, you want your bank to pay for the privilege of holding your money, not vice versa.

SoFi: Making Banking Better

If you’re interested in hassle-free online banking, consider opening a SoFi Checking and Savings account. You’ll earn a competitive APY, pay no account fees, receive a debit card with cashback rewards, and have access to a suite of financial tools that can help your savings grow.

FAQ

How much is needed to open a checking account?

The amount of money needed to open a checking account can vary by bank. At some banks, it may be as low as $1 or even $0; at others, you might need to deposit $25, $50, or more to get started.

Can I open a checking account with no money?

It’s possible to open a checking account with no money if your bank allows you to fund your account later. For example, you may be able to open a bank account online with no money, connect an external bank account, then fund your new account with an initial deposit later.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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