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
Written 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 written about the personal financial sector since, with a particular focus on deposit certificates and other banking-related topics. He has had his work featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is located in Berkeley, California.
Aug 11 10th, 2020
Editor: Carolyn Kimball Assigning Editor – Banks Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms all over the nation as a reporter and editor. Her passions include personal finance, sci-fi fiction novels 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 made it worse.
Your economic impact payment might’ve been received weeks or even months after others’ did and was in the form of the form of a check or prepaid debit card since you weren’t able to choose the faster payment option of direct transfer into an account at a bank. If you’ve visited the shop recently, you may be asked to pay by credit or debit card or with exact change because of an overall shortage of coins and concerns over germ transmission.
A bank account can make life easier in these scenarios, and other things. To avoid future issues, consider opening one — or try again if you’ve been rejected previously. Here’s how to get going.
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. Maybe that includes using alternative products such as prepaid debit cards and check cashing services. Financial counselor Brandy Baxter has assisted clients who used check cashing services to meet practical reasons.
«They prefer to walk in, walk out 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 like Check ‘n Go or ACE Cash Express may operate for longer hours than banks, and offer easy approval procedures to receive cash fast. But this comes with high fees, which can vary between 1% and 6%, or more, of the check amount.
Bank accounts can meet the needs of money beyond what checks and prepaid cards services are able to. For instance, their fraud protections can limit what you pay if you’re victimized, and many accounts allow you to lock debit cards remotely when stolen.
Once you’ve established working with a financial institution, you’ll have other doors open for you to consider: Credit cards as well as small or auto loans and more affordable options to payday loans may eventually be at hand.
Checking accounts «don’t only help you save expenses; they’re also the foundation for using various financial instruments,» says David Rothstein the principal of Cities for Financial Empowerment Fund who oversees BankOn an online platform in the United States that helps to increase financial inclusion.
Look for a financial institution that fits your needs.
If you find banks to be intimidating or have had issues getting an account before you can open a bank account, community banks and credit unions tend to be more friendly than national banks. They tend to be mission-driven, for example, focusing on the financial health of their surrounding communities.
«We’re extremely accommodating when it comes to giving someone another possibility,» says Pedro Murillo the area branch manager for the San Francisco Bay Area for Self-Help Federal Credit Union. «If someone comes in to request a loan and doesn’t have pay stubs, do they have anything else (can they) bring to us? A letter from (their) boss? We don’t want to surrender.»
Similar to other credit unions, Self-Help requires that a member establish a savings account before they can be a member. The minimum amount required to open an account is typically just a few dollars. Members can then apply for other services such as a credit building loan.
You can look up the word «CDFI» — which stands for community development financial institutionwhich is a reference to . A lot of them require members 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 need your Social Security number, one or two forms of identification as well as money for your first deposit.
It’s typical to apply for two accounts with a bank at the same time that is a checking account and savings account. The checking account grants access to a debit card, bill payment system and other services, while the savings account lets you put money aside and, ideally increase its value by earning interest.
Banks typically screen applicants based on ChexSystems which is a national reporting agency that maintains records of closed accounts at the request of a person. If you’ve lost access to your bank account in the past it is possible that you will be refused by different banks until you pay off your ChexSystems file. This could mean paying off debts to a bank or disputing errors on the record.
Once you’re cleared, consider what banks often call an approved BankOn checking account. Most of them do not charge fees for overdrafts that kick in when you try paying for something that could put your account in the negative.
Finding and opening the right bank account takes some effort. However, once you’re approved having a secure place to keep your money, and a better chances of getting affordable loans could be worth it.
«To have a checking account… can be the core of any financial empowerment effort,» Rothstein says.
This article was written by NerdWallet and was first printed through The Associated Press.
About the author: Spencer Tierney is an expert on certificates of deposit at NerdWallet. His work has been featured in USA Today and the Los Angeles Times.
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