How to Begin If You’ve Never had a Bank Account
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How to Start If You’ve Never Known About an Account with a Bank
By Spencer Tierney Senior Writer | Certificates of Deposit and ethical banking, as well as banking deposits Spencer Tierney is a consumer bank writer for NerdWallet. He has covered personal finance since 2013 with a particular emphasis on certificates of deposit and other banking-related topics. He has had his work highlighted on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is located in Berkeley, California.
Aug 11, 2020
Edited by Carolyn Kimball Assigning Editor – Banks Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms around the nation as a reporter and editor. Her interests encompass personal finance, Sci-Fi fiction novels and ridiculous Broadway musicals.
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Controlling your finances without having a bank account is possible. However, it isn’t without challenges – and the COVID-19 epidemic has only increased the risk.
Your economic impact check may’ve arrived weeks or months after other ones, in the form of a check or prepaid debit card due to the fact that you didn’t have the faster transfer option of direct deposit into a bank account. If you’ve visited the store lately you might be asked to pay by credit or debit card, or with exact cash due to the widespread shortage of coins and worries about the transmission of germs.
A bank account will make life easier when faced with these kinds of situations, as well as others. To avoid future issues you should consider opening a bank accountor try it again when you’ve had a rejection in the past. Here’s a guide to getting going.
Check your needs for money
If you’re among the 14 million people with no bank account in the U.S., you might have a solution that works for you. Perhaps that means making use of alternative products like pre-paid debit cards or checking cashing service. Financial counselor Brandy Baxter has assisted clients who used check cashing services to meet practical reasons.
“They preferred to walk in, walk out with cash in hand,” says Baxter, an accredited financial advisor and financial coach, who runs the firm Living Abundantly in the Dallas-Fort Worth area.
Check cashing establishments like Check ‘n Go and ACE Cash Express may operate more hours that banks, and offer easy approval procedures for cash in a short time. But they do charge high fees, which can range between 1% and 6 percent or more than the amount of your check.
Bank accounts can fulfill the needs of money beyond what prepaid cards and check cashing services are able to. For instance, their anti-fraud protections may limit the amount you pay if you’re victimized. Many accounts allow you to lock debit cards remotely if they are stolen.
And once you’ve begun working with a bank, there are other options are available: Credit cards, auto or small business loans and more affordable alternative in payday loans may eventually be at hand.
Checking accounts “don’t only help you save costs; they’re the stepping stones to use various financial instruments,” says David Rothstein, principal at Cities for Financial Empowerment Fund who oversees BankOn an online platform in the United States which helps to increase financial inclusion.
Look for a financial institution that fits your needs.
If you find banks to be intimidating or you’ve had difficulty obtaining an account before the community banks or credit unions tend to be more accommodating than national banks and are usually mission-driven — for example, they are focused on the financial health of their surrounding communities.
“We’re very lenient at giving someone a second possibility,” says Pedro Murillo the area branch manager for the San Francisco Bay Area for Self-Help Federal Credit Union. “If an employee comes in to request a loan but doesn’t have pay stubs to show, what else (can they) bring to us? Perhaps a letter sent by (their) boss? We’re not willing to give up.”
Similar to other credit unions, Self-Help requires a person to create a savings account in order to be a member. The minimum amount required to open an account is usually just a few dollars. Members are then able to apply for other products, like a credit builder loan.
It is possible to search the internet for the word “CDFI” — that stands for Community Development Financial Institution – to . Some require that those who join to be in the same area or state where the credit union or bank has branches.
What should you learn about applying
To create an account, you’ll typically require your Social Security number, one or two forms of identification and money for the first deposit.
It is common to open two bank accounts at the same time: a checking and a savings account. The checking account gives access to a debit card and bill payment system as well as other features, while the savings account lets you set money aside and, ideally increase its value by earning interest.
Banks typically screen applicants based on ChexSystems, a national reporting agency that maintains records of closed accounts against the will of an individual. If you’ve been denied access to your bank account previously it is possible that you will be refused by other banks until you have settled your ChexSystems record. This can mean paying off debt to banks or disputing the errors on the record.
Once you’re cleared, consider what banks typically refer to as an approved BankOn checking account. Most of them do not charge overdraft fees that kick in when you try paying for something that would put your balance in the negative.
Finding and opening the right bank account requires some effort. However, once you’re approved finding a safe location for your money as well as a greater chances of getting low-cost loans could be worth it.
“To have an account with a bank… is the cornerstone to any money-empowering effort,” Rothstein says.
This piece is written by NerdWallet and first published through The Associated Press.
Author bio Spencer Tierney is an expert on certificates of deposit at NerdWallet. His work has been featured by USA Today and the Los Angeles Times.
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