It’s All About (The) Payday Loans Near Me
How to Get Started If You’ve Never had an Account with a Bank
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How to Start If You’ve Never had a Bank Account
by Spencer Tierney Senior Writer | Certificates of deposit, ethical banking, banking deposit accounts Spencer Tierney is a consumer banking writer at NerdWallet. He has written about the personal financial sector since, with a focus on deposits and certificates as well as other banking-related topics. He has had his work highlighted in The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is based in Berkeley, California.
Aug 11 10th, 2020
Editor: Carolyn Kimball Assisting Editor Banks Los Angeles Times, San Jose Mercury News Carolyn has been employed in newsrooms across the nation as a reporter and editor. Her passions are personal finances, science-fiction fiction novels and absurd Broadway musicals.
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The management of your money without having a bank account is possible. But it can pose challenges — and the COVID-19 epidemic has only increased the risk.
The economic impact payment may have arrived weeks or months after other ones with an e-check or prepaid debit card because you couldn’t choose the speedier delivery option of direct transfer into an account at a bank. And if you’ve gone to the shop recently you might be required to pay with a credit or debit card or with exact change due to an overall shortage of cash and fears regarding the spread of germs.
A bank account can make life easier in these scenarios, and others. To avoid future issues, consider opening one — or try again when you’ve had a rejection previously. Here’s how to get to the point of starting.
Assess your money needs
If you’re one of 14 million people who don’t have a financial institution in the U.S., you might have a system that can work for you. It could be that you are making use of alternative products like pre-paid debit cards or check cashing services. Financial counselor Brandy Baxter has assisted clients who utilized check cashing services for practical reasons.
“They prefer to go into their homes, then leave with cash in hand,” says Baxter who is a certified financial counselor and financial coach who runs the company Living Abundantly in the Dallas-Fort Worth region.
Check cashing stores such as Check ‘n’ Go or ACE Cash Express may operate for longer hours than banks and have simple approval processes to get cash quickly. However, they charge high fees, which can vary between 1% and 6 percent, or even more than the amount of your check.
Bank accounts can meet requirements for money that are not met by prepaid cards and check cashing services can. For example, their fraud protections may limit the amount you’ll be charged in the event of being targeted, and a lot of accounts allow you to lock your debit cards remotely in the event of theft.
Once you’ve established working with a bank, there are other options are available: Credit cards as well as small or auto loans and cheaper alternative to payday loans may eventually be at hand.
Checking accounts “don’t just aid in saving costs, they’re also the first step to using various financial instruments,” says David Rothstein the principal of Cities for Financial Empowerment Fund who oversees BankOn, a national platform which promotes financial inclusion.
Choose a lender that fits you
If you are afraid of banks or have had issues getting an account before the community banks or credit unions are generally more friendly than national banks. They are usually mission-driven — for example, focusing on the financial health of their surrounding communities.
“We’re very accommodating in giving people 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 wants to apply for a loan and doesn’t have pay stubs, what else (can they) provide us? An email from (their) company? We’re not going to surrender.”
Similar to other credit unions, Self-Help requires that a member establish a savings account before they can become a member; the minimum amount required to open an account is usually a few bucks. Then members can apply for additional products including a credit-building loan.
You can search online for the term “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 should you know about applying
To create an account, you’ll typically need the Social Security number, one or two identification documents as well as money for your first deposit.
It’s common to apply for two bank accounts at the same time that is a checking account and a savings account. The checking account gives access to a debit card as well as a bill payment system, among other features, while the savings account lets you put money aside and, ideally it will grow through earning interest.
Banks generally screen potential applicants using ChexSystems, a national reporting agency that maintains records of accounts that were closed against the will of an individual. If you have lost access to a bank account in the past 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.
When you’ve been cleared, you can think of what banks call it the BankOn-approved checking account. A lot of them don’t charge fees for overdrafts that kick in when you try paying for something that would put your balance in the negative.
Opening the correct bank account involves some effort. Once you’ve been approved, having a secure place to keep your money and a better chance to get low-cost loans can make it worthwhile.
“To have an account in a checking… is the core of any financial empowerment initiative,” Rothstein says.
This article was written by NerdWallet and was first printed by The Associated Press.
Author bio Spencer Tierney is an expert in certificates of deposit at NerdWallet. His work has been featured in USA Today and the Los Angeles Times.
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