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How to Start If You’ve Never Known About a Bank Account

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6 months agoHow to Begin If You’ve Never Known About a Bank Account

By Spencer Tierney Senior Writer | Certificates of deposit ethics, ethical banking, bank deposit accounts Spencer Tierney is a consumer banker at NerdWallet. He has covered finances for individuals since the year 2013 with a particular focus on deposit certificates and other topics related to banking. He has had his work featured in 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 10th, 2020

Edited by Carolyn Kimball Assisting Editor Banking Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms around the country as a reporter and editor. Her passions are personal finances, science-fiction books and groovy Broadway musicals.

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Managing your money without the need for a bank account is feasible. However, it could be a challenge – and the COVID-19 pandemic has only added more.

The economic impact payment may have been received weeks or even months after others’ did with an e-check or prepaid debit card due to the fact that you didn’t have the speedier payment option of direct transfer into an account at a bank. If you’ve visited the store lately, you may be asked to pay using a credit or debit card or in exact change due to an overall shortage of coins and worries over germ transmission.

A bank account can be a boon in these scenarios, and others. To avoid future issues you should consider opening a bank accountor try it again if you’ve been rejected in the past. Here’s how to get started.

Check your needs for money

If you’re among the 14 million Americans with no bank account in the U.S., you might have a solution that works for you. It could be that you are the use of alternatives such as credit cards that are prepaid and check cashing services. Financial counselor Brandy Baxter has assisted clients who have used check cashing services for practical reasons.

“They prefer to go into the store, and leave with cash in hand” says Baxter who is a certified financial counselor and financial coach who runs the firm Living Abundantly in the Dallas-Fort Worth region.

Check cashing shops such as Check ‘n’ Go or ACE Cash Express may operate extended hours than bank, and have simple approval processes to receive cash fast. But this comes with an expensive fee that can vary from 1% to 6%, or more than the amount of your check.

Bank accounts can meet the needs of money beyond what checks and prepaid cards services are able to. For example, their fraud protections may limit the amount you’ll be charged in the event of being victimized. Many accounts let you lock debit cards remotely if they are stolen.

And once you’ve begun working with a financial institution, you’ll have other doors open for you to consider: Credit cards as well as small or auto loans and other less expensive options in payday loans may eventually be in your reach.

Checking accounts “don’t only 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, a national platform that promotes financial inclusion.

Look for a financial institution that is right for you

If you find banks to be intimidating or have had issues getting an account previously you can open a bank account, community banks and credit unions are generally more flexible than national banks and are often mission-driven — for instance, they focus on the financial wellbeing of their 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 someone comes in to request a loan and does not have pay stubs, do they have anything else (can they) provide us? An email from (their) employer? We don’t want to be left out.”

Like other credit unions, Self-Help will require a person to establish a savings account before they can be a member. The minimum amount required to open an account is usually just a few dollars. Members are then able to apply for other services, like a credit builder loan.

It is possible to search the internet for the word “CDFI” — that stands for community development financial institution — to . Some require that those who join to be part of the same area or state where the credit union or bank has branches.

What do you need to know about applying

To create an account, you’ll generally require the Social Security number, one or two identification documents and money for the first deposit.

It is common to open two accounts with a bank simultaneously that is a checking account and an account for savings. 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 in the best case, grow by making interest.

Banks generally screen potential applicants using ChexSystems which is a national reporting agency that records the details of accounts that were closed against a person’s will. If you have lost access to your bank account previously it is possible that you will be refused by other banks until you settle the ChexSystems account. This could include paying off debts to banks or disputing the errors on the record.

After you’ve cleared your account, think about what banks typically refer to as the BankOn-approved checking account. Many of these don’t charge overdraft charges that kick in when you attempt to pay for something which would place your balance in the negative.

Finding and opening the right bank account takes some effort. However, once you’re approved having a secure place to keep your money and a better chances of getting low-cost loans will make it worth the effort.

“To have an account in a checking… is the cornerstone for any empowerment financial program,” Rothstein says.

The piece originated from NerdWallet and was first printed in The Associated Press.

About the author: Spencer Tierney is an expert in the field of certificates of deposit at NerdWallet. He has had his work highlighted on USA Today and the Los Angeles Times.

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