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How to Get Started 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

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 the personal financial sector since, with a particular emphasis on deposit certificates and other topics related to banking. He has had his work featured on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is based in Berkeley, California.

Aug 11, 2020

Edited by Carolyn Kimball Assisting Editor – Banking Los Angeles Times, San Jose Mercury News Carolyn has been employed in newsrooms across the across the country as a reporter as well as an editor. Her passions include personal finance, sci-fi novels and groovy Broadway musicals.

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Controlling your finances without a bank account is doable. But it can pose challenges – and the COVID-19 epidemic has only added more.

Your economic impact payment might’ve been received weeks or even months after other ones with the form of a check or prepaid debit card, due to the fact that you didn’t have the faster delivery option of direct payment into an account at a bank. If you’ve been to the store lately, you may be asked to pay by debit or credit card or in exact change due to the widespread shortage of cash and fears over germ transmission.

A bank account will make life easier in these situations, among other things. To avoid future issues, consider opening one -or revisiting when you’ve had a rejection previously. Here’s how to get going.

Assess your money needs

If you’re among the 14 million Americans with no bank account in the U.S., you might have a solution that can work for you. Maybe that includes using alternative products such as pre-paid debit cards or check cashing services. Financial counselor Brandy Baxter has worked with clients who used check cashing services to meet practical reasons.

“They prefer to walk in, walk out 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 area.

Check cashing shops like Check ‘n’Go or ACE Cash Express may operate longer hours than banks, and have simple approval processes to get cash quickly. However, they charge an expensive fee that can vary from 1% to 6 percent, or even more on top of the amount you pay for your check.

Bank accounts can fulfill the needs of money beyond what pre-paid cards or check cashing services are able to. For instance, their fraud security can restrict the amount you’ll be charged in the event of being victimized, and many accounts let you lock debit cards remotely when stolen.

After you’ve formed an association with a bank, other doors open such as credit cards, auto or small business loans and other less expensive alternative to payday loans may eventually be in your reach.

Checking accounts “don’t just help you save costs, they’re also the foundation for using various financial instruments,” says David Rothstein the principal of Cities for Financial Empowerment Fund who oversees BankOn, a national platform that helps to increase financial inclusion.

Look for a financial institution that will work for you

If you are afraid of banks or have had issues getting an account before the community banks or credit unions are generally more accommodating than national banks and tend to be mission-driven, for instance, they focus on the financial wellbeing of their communities.

“We’re very accommodating in giving someone another opportunity,” says Pedro Murillo director of the branch in the San Francisco Bay Area for Self-Help Federal Credit Union. “If someone comes in to request an loan but doesn’t have pay stubs, what else (can they) provide us? A letter from (their) boss? We’re not willing to give up.”

As with other credit unions Self-Help will require a person to create a savings account in order to be a member. The minimum to open an account is usually just a few dollars. Members are then able to apply for other products, like a credit builder loan.

You can look up the word “CDFI” — which stands for community development financial institution to . Many require those who join to be part of the same area or state in which the credit union, or bank has branches.

What do you need to be aware of when applying

To create an account, you’ll typically require to have your Social Security number, one or two forms of identification as well as money for your first deposit.

It is common to open two bank accounts simultaneously that is a checking account and savings account. The checking account gives access to a debit card and bill payment system as well as other services. The savings account lets you put money aside and, ideally, grow by earning interest.

Banks generally screen potential applicants using ChexSystems, a national reporting agency that keeps records of accounts closed against the will of an individual. If you’ve lost access to your bank account in the past and you’re not sure if you’ll be denied by different banks until you have settled the ChexSystems account. This can mean paying off debt to a bank or disputing errors on the record.

When you’ve been cleared, you can think of what banks call it an approved BankOn checking account. Most of them do not charge overdraft fees that kick in when you attempt to pay for something that could put your account in the negative.

Opening the correct bank account takes some effort. Once you’ve been approved, having a safe place for your money, and a better likelihood of getting affordable loans could be worth it.

“To have a checking account… can be the cornerstone of any financial empowerment program,” Rothstein says.

This piece was written by NerdWallet and first printed by The Associated Press.

About the author: Spencer Tierney is an expert in the field of deposits in certificates at NerdWallet. The work of Spencer Tierney has been highlighted on USA Today and the Los Angeles Times.

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