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How to Start If You've Never had an Account with a Bank
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How to Start If You've Never had A Bank Account
By Spencer Tierney Senior Writer | Certificates of deposit ethics, ethical banking, bank deposits Spencer Tierney is a consumer banker at NerdWallet. He has written about personal finance since 2013, with a focus on certificate of deposit, as well as other banking subjects. The work he has written for him was covered by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is located in Berkeley, California.
Updated Aug 11, 2020 6:46AM PDT
Written by Carolyn Kimball Assigning Editor - Banking Los Angeles Times, San Jose Mercury News Carolyn has been employed in newsrooms across the country as a reporter and editor. Her interests include personal finance, sci-fi novels and groovy Broadway musicals.
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Controlling your finances without having a bank account is doable. But it can pose challenges - and the COVID-19 epidemic has only made it worse.
Your economic impact payment might've come in a few weeks or months later than others' did and was in the form of a check or prepaid debit cards, because you couldn't choose the faster payment option of direct deposit into a bank account. If you've visited the market recently you might have been requested to pay using a credit or debit card, or in exact change because of the widespread shortage of coins and worries about the transmission of germs.
An bank account can make life more convenient in these circumstances in many ways. To avoid any future problems Consider opening oneor revisiting when you've had a rejection previously. Here's a guide to getting going.
Review your financial needs
If you're one of the 14 million people without a bank account in the U.S. You may have a solution that works for you. Perhaps that means using alternative products such as pre-paid debit cards or checking cashing service. Financial advisor Brandy Baxter has worked with clients who have used check cashing services for practical reasons.
"They preferred to walk in, walk out with cash in hand," says Baxter the accredited financial counselor and financial coach who runs the company Living Abundantly in the Dallas-Fort Worth region.
Check cashing stores like Check 'n Go and ACE Cash Express may operate extended hours than bank and have simple approval processes for cash in a short time. But this comes with an expensive fee that could be anywhere from 1% to 6%, or more, of the check amount.
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 victimized, and many accounts allow you to lock your debit cards remotely in the event of theft.
>> Tips on spotting fraud and scams How to spot scams and frauds:
And once you've begun a relationship with a bank, there are other options are available: Credit cards as well as small or auto loans and cheaper alternatives to payday loans might be in your reach.
Checking accounts "don't only help you save costs; they're the first step to using various financial instruments," says David Rothstein, principal at Cities for Financial Empowerment Fund which manages BankOn, a national platform which encourages financial inclusion.
Choose a lender that fits you
If you find banks intimidating or you've had difficulty obtaining an account in the past you can open a bank account, community banks and credit unions are generally more friendly than national banks. They tend to be mission-driven, for instance, they are focused on the financial wellbeing of their communities.
"We're extremely lenient when it comes to offering people a second chance to try again," 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 an loan and doesn't have pay stubs to show, do they have anything else (can they) provide us? Perhaps a letter sent by (their) company? We're not going to surrender."
Like other credit unions, Self-Help will require a person to open a savings account to be a member. The minimum to open an account is usually only a few dollars. Members can then apply for other services including a credit-building loan.
You can look up the word "CDFI" -- which 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 to 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's typical to apply for two bank accounts at once: a checking and a savings account. The checking account gives access to debit cards and bill payment system as well as other services, while the savings account lets you set money aside and, ideally, grow by accruing interest.
Banks generally screen potential applicants using ChexSystems, a federal reporting agency that keeps records of accounts closed against a person's will. If you've lost access to an bank account in the past, you might be rejected by other banks until you settle the ChexSystems account. This could include paying off debts to the bank or disputing mistakes in the records.
Once you're cleared, consider what banks typically refer to as a or a BankOn-approved checking account. A lot of them don't charge fees for overdrafts. These occur if you attempt paying for something that will make your account negative.
Opening the correct bank account involves some effort. Once you've been approved, having a safe place for your money as well as a greater likelihood of getting low-cost loans could be worth it.
"To have an account in a checking... can be the foundation of any financial empowerment program," Rothstein says.
The article was written by NerdWallet and was first printed by The Associated Press.
The author's bio: Spencer Tierney is a writer, and NerdWallet's expert for certificates of deposit. He has had his work featured by USA Today and the Los Angeles Times.
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