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

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

Written by Spencer Tierney Senior Writer | Certificates of Deposit and ethical banking, as well as banking deposits Spencer Tierney is a consumer bank writer for NerdWallet. He has been writing about personal finance since 2013, with a particular focus 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 other publications. He is located in 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 across the country as a reporter as well as an editor. Her passions are personal finances, science-fiction books and ridiculous Broadway musicals.

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Controlling your finances without the need for a bank account is feasible. However, it isn’t without challenges – and the COVID-19 epidemic has only added more.

The economic impact payment may have been received weeks or even months after the other one and was in the form of an e-check or prepaid debit card, since you weren’t able to choose the faster payment option of direct deposit into the bank account. If you’ve visited the store lately you may have been asked to pay with a debit or credit card or with exact change due to a nationwide shortage of coins and worries regarding the spread of germs.

A bank account can make life easier in these situations, among others. To avoid problems in the future you should consider opening a bank account- or try again if you’ve been rejected in the past. Here’s how to get to the point of starting.

Review your financial needs

If you’re one of the 14 million people with no bank account in the U.S., you might have a method that can work for you. Maybe that includes the use of alternatives such as credit cards that are prepaid and checking cashing service. Financial counselor Brandy Baxter has assisted clients who have used check cashing services for practical reasons.

“They prefer to walk in, walk out with cash,” says Baxter who is a certified financial advisor and financial coach, who runs the company Living Abundantly in the Dallas-Fort Worth area.

Check cashing stores like Check ‘n Go and ACE Cash Express may operate longer hours than banks, and have simple approval processes to get cash quickly. But this comes with an expensive fee that can range between 1% and 6 percent or more on top of the amount you pay for your check.

Bank accounts can meet requirements for money that are not met by prepaid cards and check cashing services will. For instance, their fraud protections can limit what you’re charged if you’re targeted, and a lot of accounts allow you to lock debit cards remotely in the event of theft.

Once you’ve established an association with a bank, other possibilities are open such as credit cards, auto or small business loans and cheaper alternatives for payday loans may eventually be in your reach.

Checking accounts “don’t only help you save costs, they’re also the foundation for using different financial services,” says David Rothstein, principal at Cities for Financial Empowerment Fund who oversees BankOn the national platform that promotes financial inclusion.

Look for a financial institution that fits your needs.

If you find banks intimidating or have had issues getting an account in the past the community banks or credit unions are generally 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 possibility,” says Pedro Murillo director of the branch in the San Francisco Bay Area for Self-Help Federal Credit Union. “If an employee comes in to request a loan and doesn’t have pay stubs to show, do they have anything else (can they) bring to us? Perhaps a letter sent by (their) company? We don’t want to surrender.”

Similar to other credit unions, Self-Help requires that a member open a savings account to join; the minimum amount required to open an account is typically only a few dollars. Members are then able to apply for additional products such as a credit building loan.

You can search online for the term “CDFI” — that stands for Community Development Financial Institution — to . Many require 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 create an account, you’ll usually require the Social Security number, one or two forms of identification and money for the first deposit.

It is common to open two bank accounts at once: a checking and savings account. The checking account grants 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 typically screen applicants based on ChexSystems which is a nationwide reporting agency that keeps records of accounts that were closed against a person’s will. If you have lost access to your bank account in the past, you might be rejected by other banks until you settle your ChexSystems record. This could mean paying off debt to the bank or disputing mistakes in the records.

Once you’re cleared, consider what banks typically refer to as the BankOn-approved checking account. Most of them do not charge overdraft charges which are charged if you attempt to make a payment that could put your account in negative.

Finding and opening the right bank account takes some effort. However, once you’re approved having a safe place for your money as well as a greater likelihood of getting low-cost loans could be worth it.

“To have an account with a bank… is the foundation of any financial empowerment effort,” Rothstein says.

The post was written by NerdWallet and was first released in The Associated Press.

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

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