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How to Get Started If You’ve Never Had A Bank Account
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How to Begin If You’ve Never had 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 been writing about personal finance since 2013, with a particular emphasis on deposit certificates and other banking-related topics. His work has been highlighted in The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. The location of his work is Berkeley, California.
Aug 11 Aug 11, 2020
Edited by Carolyn Kimball Assisting Editor – Banks Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms around the nation as a reporter and editor. Her passions include personal finance, sci-fi novels and ridiculous 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 added more.
The economic impact payment may have been received weeks or even months after others’ did and was in the form of the form of a check or prepaid debit card, because you couldn’t choose the faster transfer option of direct payment into an account at a bank. If you’ve been to the shop recently, you may be required to pay using a credit or debit card or with exact change because of the widespread shortage of coins and worries regarding the spread of germs.
A bank account can be a boon in these scenarios, and others. To avoid problems in the future you should consider opening a bank accountor try it again if you’ve been rejected previously. Here’s a step-by-step guide for getting to the point of starting.
Review your financial needs
If you’re one of 14 million Americans with no banking account within the U.S., you might have a method that is working for you. It could be that you are using alternative products such as prepaid debit cards and Check cashing companies. Financial counselor Brandy Baxter has assisted clients who used check cashing services for practical reasons.
“They preferred to walk 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 area.
Check cashing establishments like Check ‘n’Go and ACE Cash Express may operate for longer hours than banks and have easy approval processes to get cash quickly. But they do charge a steep fee, which can range between 1% and 6 percent or more, of the check amount.
Bank accounts can fulfill money needs beyond what prepaid cards and check cashing services are able to. For instance, their anti-fraud security can restrict the amount you’re charged if you’re victimized, and many accounts let you lock debit cards remotely when stolen.
After you’ve formed working with a financial institution, you’ll have other doors open: Credit cards and small business loans and more affordable alternative to payday loans may eventually be within reach.
Checking accounts “don’t just help you save expenses; they’re also the first step to using other financial products,” says David Rothstein, principal at Cities for Financial Empowerment Fund, who manages BankOn, a national platform that promotes financial inclusion.
Choose a lender that is right for you
If you find banks intimidating or had trouble obtaining an account before, 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 accommodating in giving someone a second chance,” says Pedro Murillo director of the branch in the San Francisco Bay Area for Self-Help Federal Credit Union. “If someone comes in to apply for a loan but doesn’t have pay stubs to show, do they have anything else (can they) bring to us? An email from (their) employer? We’re not going to surrender.”
As with other credit unions Self-Help requires a person to open a savings account to be a member. The minimum required to start an account is usually just a few dollars. Members are then able to apply for other products including a credit-building loan.
You can look up the term “CDFI” — which stands for community development financial institution — to . Many require those who join to be located in the same state in which the credit union, or bank has branches.
What should you know about applying
To start a bank account, you’ll typically need the Social Security number, one or two identification documents and money for the first deposit.
It’s typical to apply for two bank accounts simultaneously one checking and the other an account for savings. The checking account allows access to debit cards, bill payment system and other services, while the savings account lets you put money aside , and in the best case it will grow through earning interest.
Banks typically screen applicants based on ChexSystems, a national reporting agency that maintains records of closed accounts at the request of a person. If you’ve been denied access to a bank account previously it is possible that you will be refused by other banks until you settle your ChexSystems file. This could include paying off debt to the bank or disputing mistakes on the record.
After you’ve cleared your account, think about what banks typically refer to as a or a BankOn-approved checking account. Most of them do not charge overdraft fees which are charged if you attempt to make a payment which would place your balance in negative.
Opening the correct bank account involves some effort. However, once you’re approved finding a safe location for your money as well as a greater likelihood of getting affordable loans could be worth it.
“To have a checking account… can be the foundation for any empowerment financial effort,” Rothstein says.
The post originated from NerdWallet and was originally published in The Associated Press.
About the author: Spencer Tierney is an expert in the field of certificates of deposit at NerdWallet. His work has been featured by USA Today and the Los Angeles Times.
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