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How to Start If You’ve Never Had a Bank Account

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How to Begin If You’ve Never had a Bank Account

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 finances for individuals since the year 2013, with a particular focus on deposits and certificates as well as other banking-related topics. 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 Banks Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms around the across the country as a reporter as well as an editor. Her interests are personal finances, science-fiction fiction novels and ridiculous Broadway musicals.

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Controlling your finances without having a bank account is possible. But it can pose challenges — and the COVID-19 pandemic has added more.

The economic impact payment may have come in a few weeks or months later than others’ did and was in the form of a check or a prepaid debit card since you weren’t able to choose the faster delivery option of direct payment into the bank account. And if you’ve gone to the market recently you might be required to pay with a debit or credit card or with exact cash due to an overall shortage of coins and worries about the transmission of germs.

A bank account will make life easier in these situations, among other things. To avoid problems in the future you should consider opening a bank accountor try it again when you’ve had a rejection in the past. Here’s a step-by-step guide for getting to the point of starting.

Check your needs for money

If you’re one of the 14 million people who don’t have a banking account within the U.S., you might have a method that works for you. Perhaps that means making use of alternative products like prepaid debit cards and Check cashing companies. Financial advisor Brandy Baxter has worked with clients who utilized check cashing services to meet practical reasons.

«They prefer to walk into their homes, then leave with cash in hand» says Baxter, an accredited financial counselor and financial coach who runs the firm Living Abundantly in the Dallas-Fort Worth region.

Check cashing stores like Check ‘n’Go and ACE Cash Express may operate more hours that banks and offer easy approval procedures to receive cash fast. But this comes with a steep fee, which could range from 1% to 6%, or more than the amount of your check.

Bank accounts are able to meet your the needs of money beyond what prepaid cards and check cashing services are able to. For instance, their anti-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 when stolen.

After you’ve formed a relationship with a financial institution, you’ll have other options are available: Credit cards as well as small or auto loans and more affordable alternative in payday loans may eventually be within reach.

Checking accounts «don’t just aid in saving costs, they’re also the foundation for using different financial services,» says David Rothstein director of Cities for Financial Empowerment Fund who oversees BankOn an online platform in the United States which helps to increase financial inclusion.

Find a bank that will work for you

If you find banks intimidating or you’ve had difficulty obtaining an account in the past, community banks and credit unions tend to be more flexible than national banks and tend to be mission-driven, for example, focusing on the financial health of their neighboring communities.

«We’re extremely accommodating when it comes to giving someone a second chance,» says Pedro Murillo, area branch manager in the San Francisco Bay Area for Self-Help Federal Credit Union. «If an employee wants to apply for an loan and does not have pay stubs to show, what else (can they) provide us? An email from (their) company? We’re not willing to be left out.»

Like other credit unions, Self-Help requires that a member create a savings account in order to be a member. The minimum required to start an account is usually a few bucks. Members are then able to apply for other services including a credit-building loan.

It is possible to search the internet for the term «CDFI» which stands for Community Development Financial Institution -which is a reference to . A lot of them require members to be in the same state in which the credit union or bank has branches.

What do you need to learn about applying

To create an account, you’ll typically require the Social Security number, one or two forms of identification and the money to make your first deposit.

It’s typical to apply for two accounts with a bank at once that is a checking account and an account for savings. The checking account allows access to a debit card, bill payment system and other features, while the savings account lets you put money aside and, ideally, grow by accruing interest.

Banks typically screen applicants based on ChexSystems, a national reporting agency that keeps records of closed accounts at the request of a person. If you have lost access to a bank account before and you’re not sure if you’ll be denied by other banks until you settle your ChexSystems file. This can mean paying off debt to banks or disputing the errors in the records.

Once you’re cleared, consider what banks typically refer to as an approved BankOn checking account. Many of these don’t charge overdraft charges which are charged if you attempt to pay for something which would place your balance in negative.

Finding and opening the right bank account involves some effort. But once you’re approved, finding a safe location for your money as well as a greater likelihood of getting low-cost loans will make it worth the effort.

«To have an account in a checking… can be the foundation for any empowerment financial initiative,» Rothstein says.

This piece was written by NerdWallet and was originally released by The Associated Press.

About the author: Spencer Tierney is an expert on deposits in certificates at NerdWallet. His work has been featured in USA Today and the Los Angeles Times.

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