How to Begin If You’ve Never Known About a Bank Account
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How to Begin If You’ve Never had an Account with a Bank
By Spencer Tierney Senior Writer | Certificates of deposit, ethical banking, banking deposits Spencer Tierney is a consumer banking writer at NerdWallet. He has been writing about finances for individuals since the year 2013 with a particular emphasis on deposits and certificates as well as other banking-related topics. The work he has written for him was featured in The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. The location of his work is Berkeley, California.
Aug 11, 2020
Edited by Carolyn Kimball Assisting Editor Los Angeles Times, San Jose Mercury News Carolyn has been employed in newsrooms across the country as a reporter and editor. Her interests are personal finances, science-fiction novels and groovy 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 pandemic has only increased the risk.
Your economic impact check may’ve been received weeks or even months after others’ did and was in the form of a check or a prepaid debit card since you weren’t able to choose the faster payment option of direct payment into an account at a bank. And if you’ve gone to the shop recently you might be required to pay by credit or debit card or with exact change due to the widespread shortage of cash and fears over germ transmission.
A bank account can be a boon when faced with these kinds of situations, as well as other things. To avoid future issues Consider opening one- or try again after being rejected previously. Here’s a step-by-step guide for getting going.
Assess your money needs
If you’re one of the 14 million Americans with no financial institution in the U.S., you might have a method that can work for you. Maybe that includes using alternative products such as prepaid debit cards and Check cashing companies. Financial advisor Brandy Baxter has assisted clients who used check cashing services to meet practical reasons.
“They prefer to walk in, walk out with cash in hand” says Baxter who is a certified financial counselor and financial coach who runs the company Living Abundantly in the Dallas-Fort Worth area.
Check cashing establishments like Check ‘n Go or ACE Cash Express may operate for extended hours than bank and have easy approval processes to get cash quickly. But this comes with high fees, which can range from 1% to 6%, or more on top of the amount you pay for your check.
Bank accounts can fulfill money needs beyond what prepaid cards and check cashing services are able to. For instance, their fraud security can restrict the amount you’ll be charged in the event of being targeted, and a lot of accounts allow you to lock your debit cards remotely in the event of theft.
After you’ve formed a relationship with a bank, other possibilities are open: Credit cards and small business loans and more affordable alternatives for payday loans may eventually be within reach.
Checking accounts “don’t just aid in saving costs, they’re also the foundation for using various financial instruments,” says David Rothstein the principal of Cities for Financial Empowerment Fund who oversees BankOn the national platform that helps to increase financial inclusion.
Choose a lender that is right for your needs.
If you find banks intimidating or have had issues getting an account previously you can open a bank account, community banks and credit unions tend to be more accommodating than national banks and are often mission-driven — for example, focusing on the financial health of their surrounding communities.
“We’re very lenient at giving people a second chance,” 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 an loan and does not have pay stubs, is there anything they (can they) show us? An email from (their) employer? We’re not willing to give up.”
As with other credit unions Self-Help requires a person to create a savings account in order to become a member; the minimum required to start an account is typically just a few dollars. Members can then apply for additional products, like a credit builder loan.
It is possible to search the internet for the term “CDFI” which stands for Community Development Financial Institution to . A lot of them require members to be in the same area or state in which the credit union, or bank has branches.
What should you know about applying
To create an account, you’ll generally need the Social Security number, one or two identification documents and money for the first deposit.
It’s typical to apply for two accounts with a bank simultaneously one checking and the other a savings account. The checking account allows access to a debit card, bill payment system and other services, while the savings account lets you put funds aside and, in the ideal case, grow by earning interest.
Banks usually screen applicants on ChexSystems, a national reporting agency that keeps records of closed accounts against a person’s will. If you have lost access to a bank account in the past it is possible that you will be refused by different banks until you have settled your ChexSystems file. This can mean paying off debts to the bank or disputing mistakes in the records.
When you’ve been cleared, you can think of what banks typically refer to as a or a BankOn-approved checking account. A lot of them don’t charge overdraft fees, which kick in if you attempt to pay for something that could put your account in 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 likelihood of getting affordable loans could be worth it.
“To have an account in a checking… can be the foundation to any money-empowering initiative,” Rothstein says.
The article is written by NerdWallet and was first published by The Associated Press.
Author bio Spencer Tierney is an expert in the field of deposits and certificates of deposit with NerdWallet. His work has been featured on USA Today and the Los Angeles Times.
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