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How to Get Started If You’ve Never Had a Bank Account

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

by Spencer Tierney Senior Writer | Certificates of deposit, ethical banking, banking deposits Spencer Tierney is a consumer bank writer for NerdWallet. He has been writing about the personal financial sector since, with a particular emphasis on deposit certificates and other topics related to banking. His work has been featured on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is located in Berkeley, California.

Aug 11 Aug 11, 2020

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The management of your money without having a bank account is possible. However, it isn’t without challenges — and the COVID-19 pandemic has added more.

Your economic impact payment might’ve come in a few weeks or months later than other ones and was in the form of an e-check or prepaid debit card, since you weren’t able to choose the quicker payment option of direct transfer into a bank account. If you’ve visited the store lately, you may have been asked to pay using a credit or debit card or with exact cash due to the widespread shortage of coins and worries regarding the spread of germs.

A bank account can be a boon in these situations, among others. To avoid problems in the future, consider opening one -or revisiting if you’ve been rejected in the past. Here’s a guide to getting to the point of starting.

Check your needs for money

If you’re one of 14 million Americans without a banking account within the U.S., you might have a solution that is working for you. It could be that you are the use of alternatives such as pre-paid debit cards or Check cashing companies. Financial counselor Brandy Baxter has worked with clients who utilized check cashing services to meet practical reasons.

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

Check cashing shops like Check ‘n Go or ACE Cash Express may operate more hours that banks and have simple approval processes to get cash quickly. But this comes with a steep fee, which can vary from 1% to 6 percent, or even more, of the check amount.

Bank accounts can meet the needs of money beyond what checks and prepaid cards services are able to. For instance, their anti-fraud security can restrict the amount you pay if you’re victimized, and many accounts allow you to lock debit cards remotely when stolen.

Once you’ve established an association with a bank, other options are available such as credit cards as well as small or auto loans and other less expensive alternatives to payday loans may eventually be within reach.

Checking accounts “don’t just aid in saving costs; they’re the foundation for using other financial products,” says David Rothstein director of Cities for Financial Empowerment Fund, who manages BankOn an online platform in the United States which promotes financial inclusion.

Find a bank that will work for your needs.

If you are afraid of banks or had trouble obtaining an account previously you can open a bank account, community banks and credit unions tend to be more accommodating than national banks and tend to be mission-driven, for example, they are focused on the financial health of their surrounding communities.

“We’re extremely accommodating when it comes to giving someone another chance,” 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 but doesn’t have pay stubs, do they have anything else (can they) show us? Perhaps a letter sent by (their) boss? We don’t want to surrender.”

As with other credit unions Self-Help requires a person to open a savings account to be a member. The minimum amount required to open an account is usually just a few dollars. Then members can apply for additional products, like a credit builder loan.

You can search online for the word “CDFI” that stands for Community Development Financial Institutionwhich is a reference to . A lot of them require members to be located in the same state or region where the credit union or bank has branches.

What do you need to be aware of when applying

To create an account, you’ll usually need the Social Security number, one or two forms of identification and money for the first deposit.

It is common to open two accounts with a bank at once that is a checking account and a savings account. The checking account allows access to debit cards and bill payment system as well as other services, while the savings account lets you put funds aside and, in the ideal case increase its value by earning interest.

Banks generally screen potential applicants using ChexSystems, a national reporting agency that records the details of closed accounts against the will of an individual. If you have lost access to your bank account previously it is possible that you will be refused by other banks until you have settled the ChexSystems account. This could include the payment of debts to the bank or disputing mistakes in the records.

Once you’re cleared, consider what banks often call an approved BankOn checking account. Most of them do not charge overdraft fees, which kick in if you try paying for something that would put your balance in negative.

Finding and opening the right bank account requires some effort. Once you’ve been approved, finding a safe location for your money and a better likelihood of getting affordable loans will make it worth the effort.

“To have an account in a checking… will be the core of any financial empowerment effort,” Rothstein says.

This piece originated from NerdWallet and first released by The Associated Press.

Author bio Spencer Tierney is an expert in the field of deposits and certificates of deposit with NerdWallet. The work of Spencer Tierney has been highlighted in USA Today and the Los Angeles Times.

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