How to Begin If You’ve Never Known About an Account with a Bank
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How to Get Started 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 written about the personal financial sector since, with a particular emphasis on deposits and certificates as well as other topics related to banking. The work he has written for him was featured by 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 Aug 11, 2020
Written by Carolyn Kimball Assisting Editor – Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms all over the country as a reporter and editor. Her passions are personal finances, science-fiction books and ridiculous Broadway musicals.
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The management of your money without a bank account is doable. But it can pose challenges — and the COVID-19 pandemic has made it worse.
Your economic impact check may’ve been received weeks or even months after others’ did, in the form of the form of a check or prepaid debit card since you weren’t able to choose the speedier payment option of direct payment into an account at a bank. And if you’ve gone to the market recently you may be asked to pay by credit or debit card or in exact change due to a nationwide shortage of coins and concerns over germ transmission.
A bank account will make life easier in these scenarios, and other situations. To avoid problems in the future you should consider opening a bank accountor revisiting if you’ve been rejected previously. Here’s how to get to the point of starting.
Assess your money needs
If you’re one of the 14 million adults without a financial institution in the U.S., you might have a system that is working for you. Maybe that includes making use of alternative products like pre-paid debit cards or check cashing services. Financial counselor Brandy Baxter has worked with clients who have used check cashing services for practical reasons.
“They prefer to walk in, walk out with cash in hand” says Baxter who is a certified financial advisor and financial coach, who runs the company Living Abundantly in the Dallas-Fort Worth region.
Check cashing shops such as Check ‘n’ Go as well as ACE Cash Express may operate for longer hours than banks and offer easy approval procedures to get cash quickly. However, they charge high fees, which could range from 1% to 6 percent, or even more, of the check amount.
Bank accounts can meet money needs beyond what checks and prepaid cards services can. For example, their fraud security can restrict the amount you pay if you’re targeted, and a lot of accounts allow you to lock debit cards remotely in the event of theft.
After you’ve formed an association with a financial institution, you’ll have other doors open such as credit cards and small business loans and more affordable alternative to payday loans may eventually be in your reach.
Checking accounts “don’t just help you save costs; they’re the foundation for using other financial products,” says David Rothstein, principal at Cities for Financial Empowerment Fund who oversees BankOn the national platform which encourages financial inclusion.
Find a bank that fits you
If you find banks to be intimidating or have had issues getting an account in the past the community banks or credit unions tend to be more accommodating than national banks and tend to be mission-driven, for example, they are focused on the financial wellbeing of their communities.
“We’re extremely accommodating when it comes to giving people a second opportunity,” says Pedro Murillo the area branch manager for the San Francisco Bay Area for Self-Help Federal Credit Union. “If someone comes in to apply for a loan but doesn’t have pay stubs, what else (can they) provide us? Perhaps a letter sent by (their) company? We don’t want to surrender.”
Similar to other credit unions, Self-Help requires a person to open a savings account to become a member; the minimum to open an account is usually 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 word “CDFI” — which stands for community development financial institution- to . Many require those who join to be part of the same state where the credit union or bank has branches.
What to know about applying
To create an account, you’ll usually need the Social Security number, one or two identification documents and money for the first deposit.
It is common to open two accounts with a bank at once one checking and the other a savings account. The checking account gives access to a debit card as well as a bill payment system, among other services. The savings account allows you to set money aside and, ideally it will grow through accruing interest.
Banks typically screen applicants based on ChexSystems which is a nationwide reporting agency that records the details of accounts that were closed against a person’s will. If you have lost access to your bank account in the past it is possible that you will be refused by different banks until you pay off the ChexSystems account. This could include paying off debt to the bank or disputing mistakes in the records.
Once you’re cleared, consider what banks call it a or a BankOn-approved checking account. A lot of them don’t charge overdraft charges that kick in when you attempt to make a payment that could put your account in the negative.
The process of opening a bank account takes some effort. But once you’re approved, finding a safe location for your money as well as a greater chance to get affordable loans can make it worthwhile.
“To have an account in a checking… is the core for any empowerment financial effort,” Rothstein says.
The post was written by NerdWallet and first released by The Associated Press.
Author bio Spencer Tierney is an expert in the field of deposits in certificates at NerdWallet. He has had his work highlighted by USA Today and the Los Angeles Times.
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