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How to Get Started 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 and ethical banking, as well as banking deposits Spencer Tierney is a consumer banking writer at NerdWallet. He has covered personal finance since 2013, with a particular emphasis on deposits and certificates as well as other topics related to banking. His work has been featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is located in Berkeley, California.
Aug 11 10th, 2020
Editor: Carolyn Kimball Assigning Editor — Banks Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms around the nation as a reporter and editor. Her interests include personal finance, sci-fi fiction novels and absurd Broadway musicals.
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Managing your money without the need for a bank account is feasible. However, it isn’t without challenges — and the COVID-19 epidemic has only added more.
Your economic impact check may’ve arrived weeks or months after other ones, in the form of a check or prepaid debit card since you weren’t able to choose the quicker delivery option of direct transfer into a bank account. If you’ve visited the shop recently you may be asked to pay with a credit or debit card or with exact cash due to a nationwide shortage of coins and worries about the transmission of germs.
A bank account will make life easier in these situations, among other situations. To avoid future issues, consider opening one -or revisiting after being rejected in the past. Here’s how to get going.
Review your financial needs
If you’re among the 14 million adults without a bank account in the U.S., you might have a system that is working for you. Perhaps that means making use of alternative products like credit cards that are prepaid and check cashing services. Financial advisor Brandy Baxter has assisted clients who utilized check cashing services to meet practical reasons.
«They prefer to go into their homes, then leave 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 like Check ‘n Go or ACE Cash Express may operate extended hours than bank and offer easy approval procedures to get cash quickly. But this comes with an expensive fee that can range from 1% to 6 percent or more than the amount of your check.
Bank accounts are able to meet your money needs beyond what checks and prepaid cards services will. For instance, their anti-fraud protections may limit the amount you pay if you’re targeted, and a lot of accounts let you lock debit cards remotely if they are stolen.
And once you’ve begun working with a bank, other options are available for you to consider: Credit cards as well as small or auto loans and cheaper alternatives for payday loans may eventually be at hand.
Checking accounts «don’t just help you save expenses; they’re also the foundation for using various financial instruments,» says David Rothstein, principal at Cities for Financial Empowerment Fund, who manages BankOn an online platform in the United States that helps to increase financial inclusion.
Look for a financial institution that will work for you
If you find banks intimidating or have had issues getting an account before, community banks and credit unions tend to be more friendly than national banks. They are usually mission-driven — for instance, they focus on the financial wellbeing of their communities.
«We’re extremely accommodating when it comes to giving someone another opportunity,» 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 does not have pay stubs, is there anything they (can they) provide us? A letter from (their) company? We don’t want to be left out.»
Like other credit unions, Self-Help requires a person to create a savings account in order to be a member. The minimum to open an account is typically a few bucks. Members are then able to apply for other products including a credit-building loan.
You can look up the term «CDFI» which is a reference to the community-based financial institution — to . A lot of them require members to be part of the same state in which the credit union, or bank has branches.
What should you learn about applying
To create an account, you’ll typically need to have your Social Security number, one or two forms of identification as well as money for your first deposit.
It’s typical to apply for two accounts with a bank at the same time that is a checking account and a savings account. The checking account grants access to debit cards as well as a bill payment system, among other features, while the savings account allows you to set funds aside and, in the ideal case it will grow through accruing interest.
Banks usually screen applicants on ChexSystems which is a national reporting agency that maintains records of closed accounts against the will of an individual. If you’ve been denied access to your bank account before and you’re not sure if you’ll be denied by other banks until you settle your ChexSystems record. This can mean the payment of debts to a bank or disputing errors in the records.
When you’ve been cleared, you can think of what banks typically refer to as an approved BankOn checking account. A lot of them don’t charge overdraft fees which are charged if you try paying for something that could put your account in negative.
Opening the correct bank account requires some effort. Once you’ve been approved, finding a safe location for your money, and a better likelihood of getting low-cost loans will make it worth the effort.
«To have an account in a checking… is the cornerstone of any financial empowerment initiative,» Rothstein says.
This piece is written by NerdWallet and first published in The Associated Press.
About the author: Spencer Tierney is an expert in the field of deposits and certificates of deposit with NerdWallet. His work has been highlighted on USA Today and the Los Angeles Times.
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