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How to Start If You’ve Never Had an Account with a Bank
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How to Begin If You’ve Never Had a Bank Account
Written by Spencer Tierney Senior Writer | Certificates of deposit, ethical banking, banking deposit accounts Spencer Tierney is a consumer bank writer for NerdWallet. He has been writing about the personal financial sector since, with a focus on certificates of deposit and other topics related to banking. He has had his work featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. The location of his work is Berkeley, California.
Aug 11, 2020
Edited by Carolyn Kimball Assigning Editor — Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms around the nation as a reporter and editor. Her interests encompass personal finance, Sci-Fi fiction novels and absurd 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 epidemic has only increased the risk.
Your economic impact check may’ve arrived weeks or months after the other one with the form of a check or prepaid debit card, since you weren’t able to choose the quicker transfer option of direct transfer into a bank account. If you’ve been to the store lately you may have been asked to pay with a credit or debit card, or with exact cash due to a nationwide shortage of coins and concerns regarding the spread of germs.
A bank account will make life easier when faced with these kinds of situations, as well as other situations. To avoid future issues 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 adults with no financial institution in the U.S., you might have a system that is working for you. Perhaps that means making use of alternative products like pre-paid debit cards or Check cashing companies. Financial advisor Brandy Baxter has worked with clients who have used check cashing services to meet practical reasons.
«They prefer to go into their homes, then leave with cash,» says Baxter, an accredited financial advisor and financial coach, who runs the company Living Abundantly in the Dallas-Fort Worth area.
Check cashing stores such as Check ‘n’ Go or ACE Cash Express may operate more hours that banks, and have easy approval processes to get cash quickly. However, they charge a steep fee, which can vary between 1% and 6 percent or more than the amount of your check.
Bank accounts can meet requirements for money that are not met by pre-paid cards or check cashing services will. For instance, their fraud security can restrict the amount you pay if you’re victimized. Many accounts allow you to lock your debit cards remotely in the event of theft.
And once you’ve begun a relationship with a financial institution, you’ll have other possibilities are open: Credit cards and small business loans and other less expensive alternatives for payday loans may eventually be at hand.
Checking accounts «don’t only help you save costs, they’re also the stepping stones to use various financial instruments,» says David Rothstein the principal of Cities for Financial Empowerment Fund which manages BankOn an online platform in the United States that encourages financial inclusion.
Look for a financial institution that fits your needs.
If you find banks to be intimidating or have had issues getting an account previously, community banks and credit unions tend to be more flexible than national banks and are usually mission-driven — for example, focusing on the financial health of their neighboring communities.
«We’re very lenient at giving someone another possibility,» says Pedro Murillo, area branch manager in the San Francisco Bay Area for Self-Help Federal Credit Union. «If an employee comes in to request an loan and doesn’t have pay stubs to show, what else (can they) show us? An email from (their) employer? We’re not going to surrender.»
Similar to other credit unions, Self-Help requires that a member open a savings account to join; the minimum required to start an account is usually just a few dollars. Then members can apply for other products such as a credit building loan.
You can look up the term «CDFI» that stands for the community-based financial institutionwhich is a reference to . Some require that those who join to be part of the same state in which the credit union, or bank has branches.
What to know about applying
To open an account, you’ll generally require to have your Social Security number, one or two forms of identification as well as money for your first deposit.
It’s common to apply for two accounts with a bank at once one checking and the other 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 set money aside and, ideally it will grow through earning interest.
Banks generally screen potential applicants using ChexSystems which is a national reporting agency that records the details of closed accounts at the request of a person. If you’ve lost access to a bank account before it is possible that you will be refused by other banks until you have settled your ChexSystems file. This could mean paying off debt to a bank or disputing errors on the record.
When you’ve been cleared, you can think of what banks typically refer to as the BankOn-approved checking account. A lot of them don’t charge fees for overdrafts which are charged if you attempt to make a payment that could put your account in the negative.
Finding and opening the right bank account requires some effort. Once you’ve been approved, having a secure place to keep your money and a better likelihood of getting low-cost loans can make it worthwhile.
«To have an account with a bank… will be the core to any money-empowering initiative,» Rothstein says.
The article was written by NerdWallet and was originally printed in The Associated Press.
About the author: Spencer Tierney is an expert in the field of deposits in certificates at NerdWallet. He has had his work highlighted on USA Today and the Los Angeles Times.
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