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How to Begin If You've Never had an Account with a Bank
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By Spencer Tierney Senior Writer | Certificates of deposit ethics, ethical banking, bank deposits Spencer Tierney is a consumer banker at NerdWallet. He has been writing about personal finance since 2013 with a focus on certificate of deposit and other banking-related topics. His work has been covered in The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is located in Berkeley, California.
Updated Aug 11, 2020 6:46AM PDT
Editor: Carolyn Kimball Assigning Editor - Banking Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms around the country as a reporter and editor. Her interests are personal finances, science-fiction novels and absurd Broadway musicals.
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Controlling your finances without a bank account is doable. However, it could be a challenge - and the COVID-19 pandemic has only increased the risk.
Your economic impact check may've come in a few weeks or months later than others' did with an e-check or prepaid debit card, since you weren't able to choose the speedier delivery option of direct transfer into the bank account. If you've visited the market recently you might have been required to pay by credit or debit card, or with exact change because of a nationwide shortage of coins and worries over germ transmission.
An bank account can make life more convenient in these circumstances and many other situations. To avoid problems in the future, consider opening one -or try it again when you've had a rejection previously. Here's how to get to the point of starting.
Assess your money needs
If you're among the 14 million people without a bank account in the U.S. There's a chance you have a system that works for you. It could be that you are making use of alternative products like pre-paid debit cards or Check cashing companies. Financial advisor Brandy Baxter has assisted clients who used check cashing services to meet practical reasons.
"They prefer to walk in and leave with cash in hand" says Baxter the accredited financial counselor and financial coach who manages the company Living Abundantly in the Dallas-Fort Worth region.
Check cashing shops like Check 'n Go as well as ACE Cash Express may operate extended hours than bank, and have easy approval processes for cash in a short time. However, they charge high fees, which can range between 1% and 6 percent or more on top of the amount you pay for your check.
Bank accounts are able to meet your requirements for money that are not met by 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, and many accounts let you lock debit cards remotely when stolen.
>> Tips on being able to recognize scams and fraud: Learn
Once you've established an association with a bank, other options are available such as credit cards, auto or small business loans and cheaper alternatives to payday loans could be within your reach.
Checking accounts "don't only aid in saving costs; they're the foundation for using different financial services," says David Rothstein the principal of Cities for Financial Empowerment Fund who oversees BankOn, a national platform that encourages financial inclusion.
Choose a lender that is right for you
If you are afraid of banks or you've had difficulty obtaining an account before you can open a bank account, community banks and credit unions are typically more friendly than national banks. They are often mission-driven -- for example, focusing on the financial wellbeing of their communities.
"We're extremely accommodating when it comes to giving people a second chance to try again," says Pedro Murillo, area branch manager in the San Francisco Bay Area for Self-Help Federal Credit Union. "If an employee comes in to apply for a loan and doesn't have pay stubs to show, do they have anything else (can they) bring to us? An email from (their) company? We're not willing to surrender."
Like other credit unions, Self-Help requires that a member open a savings account to be a member. The minimum amount required to open an account is typically a few bucks. Members are then able to apply for other services including a credit-building loan.
You can look up the term "CDFI" -- that stands for the community-based financial institution -which is a reference to . A lot of them require members to be located in the same state where the credit union or bank has branches.
What do you need to learn about applying
To create an account, you'll usually require to have your Social Security number, one or two forms of identification as well as money for your first deposit.
It is common to open two bank accounts at once: a checking and a savings account. The checking account allows access to a debit card and bill payment system as well as other services, while the savings account allows you to put funds aside and, in the ideal case increase its value by accruing interest.
Banks generally screen potential applicants using ChexSystems which is a nationwide reporting agency that maintains records of closed accounts at the request of a person. If you have lost access to an bank account in the past, you might be rejected by different banks until you pay off your ChexSystems record. This could mean the payment of debts to banks or disputing the errors in the records.
Once you're cleared, consider what banks typically refer to as a or a BankOn-approved checking account. Many of these don't charge fees for overdrafts. These occur if you attempt paying for something that will make your account negative.
The process of opening a bank account involves some effort. However, once you've been approved having a safe place for your money and a better likelihood of getting affordable loans will make it worth the effort.
"To have a checking account... is the cornerstone for any empowerment financial initiative," Rothstein says.
The post was written by NerdWallet and first published by The Associated Press.
The author's bio: Spencer Tierney is a writer and NerdWallet's official authority for certificates of deposit. He has had his work highlighted by USA Today and the Los Angeles Times.
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