How to Start If You’ve Never Had a Bank Account
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How to Get Started If You’ve Never Had A Bank Account
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 personal finance since 2013, with a particular emphasis on deposits and certificates as well as other banking-related topics. He has had his work covered on The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is based in Berkeley, California.
Aug 11, 2020
Written by Carolyn Kimball Assisting Editor Los Angeles Times, San Jose Mercury News Carolyn has worked in newsrooms all over the nation as a reporter and editor. Her interests encompass personal finance, Sci-Fi novels and groovy Broadway musicals.
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The management of your money without a bank account is doable. But it can pose challenges — and the COVID-19 pandemic has only made it worse.
Your economic impact check may’ve arrived weeks or months after others’ did, in the form of an e-check or a prepaid debit card due to the fact that you didn’t have the faster delivery option of direct transfer into the bank account. If you’ve visited the store lately you may be asked to pay with a credit or debit card or with exact cash due to a nationwide shortage of coins and concerns regarding the spread of germs.
A bank account can be a boon in these scenarios, and other situations. To avoid problems in the future, consider opening one — or try again when you’ve had a rejection previously. Here’s a guide to getting to the point of starting.
Review your financial needs
If you’re among the 14 million people without a banking account within the U.S., you might have a system that works for you. Perhaps that means using alternative products such as credit cards that are prepaid and Check cashing companies. Financial advisor Brandy Baxter has assisted clients who have used check cashing services for practical reasons.
“They prefer to walk into their homes, then leave with cash in hand” says Baxter, an accredited financial advisor and financial coach who runs the firm Living Abundantly in the Dallas-Fort Worth area.
Check cashing establishments like Check ‘n Go and ACE Cash Express may operate for more hours that banks, and have easy approval processes for cash in a short time. But this comes with a steep fee, which could range between 1% and 6%, or more on top of the amount you pay for your check.
Bank accounts can meet money needs beyond what pre-paid cards or check cashing services are able to. For instance, their anti-fraud security can restrict the amount you pay if you’re victimized, and many accounts allow you to lock debit cards remotely when stolen.
Once you’ve established an association with a bank, other doors open: Credit cards and small business loans and cheaper alternative in payday loans may eventually be at hand.
Checking accounts “don’t just help you save costs; they’re the stepping stones to use different financial services,” says David Rothstein, principal at Cities for Financial Empowerment Fund which manages BankOn an online platform in the United States which encourages financial inclusion.
Find a bank that will work for your needs.
If you are afraid of banks or had trouble obtaining an account in the past the community banks or credit unions tend to be more friendly than national banks. They tend to be mission-driven, for example, focusing on the financial wellbeing of their communities.
“We’re very lenient at giving someone another chance,” says Pedro Murillo director of the branch in the San Francisco Bay Area for Self-Help Federal Credit Union. “If an employee comes in to apply for an loan and doesn’t have pay stubs, do they have anything else (can they) show us? Perhaps a letter sent by (their) boss? We’re not going to give up.”
Similar to other credit unions, Self-Help will require a person to open a savings account to join; the minimum to open an account is typically only a few dollars. Then members can apply for other products, like a credit builder loan.
You can search online for the word “CDFI” that stands for community development financial institutionwhich is a reference to . A lot of them require members to be located in the same area or state where the credit union or bank has branches.
What should you learn about applying
To open an account, you’ll usually require the Social Security number, one or two forms of identification and money for the first deposit.
It’s typical to apply for two accounts with a bank at once: a checking and savings account. The checking account grants access to debit cards as well as a bill payment system, among other services. The savings account lets you put funds aside and, in the ideal case, grow by accruing interest.
Banks usually screen applicants on ChexSystems, a national reporting agency that maintains records of closed accounts at the request of a person. If you have lost access to your bank account in the past it is possible that you will be refused by other banks until you have settled the ChexSystems account. This can mean the payment of debts to the bank or disputing mistakes on the record.
When you’ve been cleared, you can think of what banks typically refer to as an approved BankOn checking account. A lot of them don’t charge overdraft fees which are charged if you attempt to pay for something that would put your balance in the negative.
Finding and opening the right bank account involves some effort. Once you’ve been approved, having a secure place to keep your money, and a better chances of getting affordable loans will make it worth the effort.
“To have a checking account… is the foundation of any financial empowerment program,” Rothstein says.
This post was written by NerdWallet and was originally published by The Associated Press.
The author’s bio: Spencer Tierney is an expert in the field of deposits in certificates at NerdWallet. The work of Spencer Tierney has been featured by USA Today and the Los Angeles Times.
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