How to Get Started If You’ve Never had A Bank Account
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How to Begin If You’ve Never Known About a Bank Account
Written by Spencer Tierney Senior Writer | Certificates of deposit ethics, ethical banking, bank deposit accounts Spencer Tierney is a consumer banking writer at NerdWallet. He has written about the personal financial sector since with a particular emphasis on deposit certificates and other topics related to banking. The work he has written for him was highlighted by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is located in Berkeley, California.
Aug 11, 2020
Written by Carolyn Kimball Assisting Editor 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 are personal finances, science-fiction fiction novels and absurd Broadway musicals.
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Managing your money without having a bank account is possible. However, it could be a challenge — and the COVID-19 pandemic has made it worse.
The economic impact payment may have arrived weeks or months after other ones and was in the form of an e-check or a prepaid debit card since you weren’t able to choose the faster delivery option of direct transfer into the bank account. If you’ve been to the market recently you might have been asked to pay using a credit or debit card or in exact change due to a nationwide shortage of cash and fears over germ transmission.
A bank account can make life easier when faced with these kinds of situations, as well as other things. To avoid any future problems, consider opening one -or try it again after being rejected previously. Here’s a guide to getting going.
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 solution that works for you. Maybe that includes the use of alternatives such as prepaid debit cards and Check cashing companies. Financial advisor Brandy Baxter has worked with clients who used check cashing services for practical reasons.
«They preferred to walk into the store, and leave with cash in hand,» says Baxter, an accredited financial advisor and financial coach who runs the company Living Abundantly in the Dallas-Fort Worth area.
Check cashing stores such as Check ‘n’ Go or ACE Cash Express may operate longer hours than banks and offer easy approval procedures to receive cash fast. However, they charge an expensive fee that can vary from 1% to 6%, or more, of the check amount.
Bank accounts are able to meet your requirements for money that are not met by prepaid cards and check cashing services are able to. For instance, their fraud protections can limit what you’ll be charged in the event of being victimized. Many accounts let you lock debit cards remotely in the event of theft.
Once you’ve established an association with a bank, there are other doors open for you to consider: Credit cards, auto or small business loans and more affordable alternative to payday loans may eventually be in your reach.
Checking accounts «don’t just aid in saving costs; they’re the first step to using various financial instruments,» says David Rothstein the principal of Cities for Financial Empowerment Fund, who manages BankOn the national platform which helps to increase financial inclusion.
Find a bank that is right for your needs.
If you find banks intimidating or have had issues getting an account before the community banks or credit unions are generally more accommodating than national banks and are often mission-driven — for example, they are focused on the financial health of their surrounding communities.
«We’re very accommodating in giving people 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 and does not have pay stubs, do they have anything else (can they) bring to us? A letter from (their) employer? We don’t want to surrender.»
Like other credit unions, Self-Help requires a person to create a savings account in order to become a member; the minimum to open an account is typically only a few dollars. Members can then apply for other services including a credit-building loan.
You can search online for the word «CDFI» that stands for the community-based financial institution — to . Some require that those who join to be located in the same area or state in which the credit union or bank has branches.
What should you learn about applying
To start a bank account, you’ll generally require the Social Security number, one or two forms of identification and the money to make your first deposit.
It is common to open two bank accounts at once one checking and the other a savings account. The checking account allows access to a debit card, bill payment system and other features, while the savings account lets you put funds aside and, in the ideal case, grow by accruing interest.
Banks typically screen applicants based on ChexSystems, a national reporting agency that keeps records of closed accounts against a person’s will. If you’ve been denied access to your bank account in the past and you’re not sure if you’ll be denied by other banks until you settle your ChexSystems record. This can mean paying off debt to the bank or disputing mistakes on the record.
Once you’re cleared, consider what banks call it a or a BankOn-approved checking account. Many of these don’t charge overdraft charges, which kick in if you attempt to make a payment which would place your balance in the negative.
The process of opening a bank account takes some effort. But once you’re approved, finding a safe location for your money and a better chance to get affordable loans can make it worthwhile.
«To have a checking account… will be the core of any financial empowerment initiative,» Rothstein says.
The article is written by NerdWallet and first published in The Associated Press.
The author’s bio: Spencer Tierney is an expert in certificates of deposit at NerdWallet. He has had his work highlighted by USA Today and the Los Angeles Times.
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