How to Get Started If You’ve Never had a Bank Account
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How to Get Started If You’ve Never Had an Account with a Bank
By Spencer Tierney Senior Writer | Certificates of deposit ethics, ethical banking, bank deposits Spencer Tierney is a consumer banker at NerdWallet. He has written about personal finance since 2013, with a particular emphasis on certificates of deposit and other banking-related topics. The work he has written for him was highlighted on 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, 2020
Editor: Carolyn Kimball Assigning Editor – Los Angeles Times, San Jose Mercury News Carolyn has been employed in newsrooms across the country as a reporter and editor. Her interests are personal finances, science-fiction books and groovy Broadway musicals.
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The management of your money without a bank account is doable. However, it could be a challenge – and the COVID-19 pandemic has only added more.
Your economic impact payment might’ve arrived weeks or months after other ones and was in the form of a check or prepaid debit card because you couldn’t choose the quicker delivery option of direct transfer into the bank account. If you’ve visited the store lately, you may be asked to pay using a credit or debit card, or with exact change due to a nationwide shortage of cash and fears about the transmission of germs.
A bank account will make life easier in these scenarios, and other things. To avoid future issues Consider opening oneor revisiting if you’ve been rejected previously. Here’s a guide to getting started.
Review your financial needs
If you’re among the 14 million Americans with no banking account within the U.S., you might have a system that is working for you. Perhaps that means the use of alternatives such as prepaid debit cards and check cashing services. Financial counselor Brandy Baxter has assisted clients who utilized check cashing services to meet practical reasons.
«They prefer to go in, walk out with cash,» 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 stores like Check ‘n’Go and ACE Cash Express may operate extended hours than bank, and have easy approval processes for cash in a short time. But they do charge a steep fee, which could range from 1% to 6 percent or more, of the check amount.
Bank accounts can fulfill requirements for money that are not met by prepaid cards and check cashing services can. For instance, their anti-fraud security can restrict the amount you’ll be charged in the event of being victimized, and many accounts allow you to lock debit cards remotely when stolen.
And once you’ve begun working with a bank, other options are available such as credit cards and small business loans and other less expensive alternative in payday loans may eventually be within reach.
Checking accounts «don’t just help you save costs, they’re also the first step to using different financial services,» says David Rothstein the principal of Cities for Financial Empowerment Fund who oversees BankOn the 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 in the past, community banks and credit unions are generally more accommodating than national banks and are often mission-driven — for example, they are focused on the financial wellbeing of their communities.
«We’re very accommodating in giving someone another possibility,» says Pedro Murillo the area branch manager for 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, is there anything they (can they) bring to us? An email from (their) employer? We’re not going to give up.»
Like other credit unions, Self-Help will require a person to establish a savings account before they can be a member. The minimum amount required to open an account is typically only a few dollars. Members are then able to apply for other services, like a credit builder loan.
You can look up the word «CDFI» which is a reference to the community-based financial institution -which is a reference to . A lot of them require members to be part of the same area or state where the credit union or bank has branches.
What should you know about applying
To open an account, you’ll generally need to have your Social Security number, one or two identification documents and the money to make your first deposit.
It is common to open two accounts with a bank at the same time: a checking and an account for savings. The checking account allows access to a debit card, bill payment system and other services. The savings account allows you to set funds aside and, in the ideal case it will grow through accruing interest.
Banks typically screen applicants based on ChexSystems which is a national reporting agency that records the details of closed accounts against the will of an individual. If you’ve lost access to a bank account before, you might be rejected by other banks until you pay off your ChexSystems record. This could include the payment of debts to banks or disputing the errors in the records.
After you’ve cleared your account, think about what banks call it an approved BankOn checking account. Most of them do not charge overdraft fees that kick in when you try paying for something which would place 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 chances of getting low-cost loans will make it worth the effort.
«To have an account in a checking… can be the cornerstone for any empowerment financial effort,» Rothstein says.
The article was written by NerdWallet and was originally published in The Associated Press.
Author bio Spencer Tierney is an expert in certificates of deposit at NerdWallet. He has had his work featured in USA Today and the Los Angeles Times.
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