How to Get Started If You’ve Never had a Bank Account
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How to Start If You’ve Never Had A Bank Account
By Spencer Tierney Senior Writer | Certificates of deposit, ethical banking, banking deposits Spencer Tierney is a consumer banker at NerdWallet. He has covered finances for individuals since the year 2013 with a focus on deposits and certificates as well as other topics related to banking. His work has been covered 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 Aug 11, 2020
Edited by Carolyn Kimball Assisting Editor – Banking Los Angeles Times, San Jose Mercury News Carolyn has been employed in newsrooms across the nation as a reporter and editor. Her passions 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. But it can pose challenges – and the COVID-19 epidemic has only increased the risk.
The economic impact payment may have come in a few weeks or months later than other ones, in the form of an e-check or prepaid debit card due to the fact that you didn’t have the faster delivery option of direct transfer into a bank account. If you’ve visited the market recently, you may be required to pay with a debit or credit card or in exact cash due to a nationwide shortage of coins and concerns about the transmission of germs.
A bank account can make life easier in these situations, among other things. To avoid future issues you should consider opening a bank accountor try it again after being rejected in the past. Here’s a step-by-step guide for getting started.
Check your needs for money
If you’re one of the 14 million people with no financial institution in the U.S., you might have a method that is working for you. Perhaps that means the use of alternatives such as pre-paid debit cards or checking cashing service. Financial counselor Brandy Baxter has assisted clients who utilized check cashing services to meet practical reasons.
“They preferred to walk into the store, and leave with cash in hand,” says Baxter, an accredited financial counselor and financial coach who manages the firm Living Abundantly in the Dallas-Fort Worth region.
Check cashing establishments like Check ‘n Go as well as ACE Cash Express may operate more hours that banks, and have easy approval processes for cash in a short time. However, they charge high fees, which can range between 1% and 6%, or more, of the check amount.
Bank accounts can fulfill money needs beyond what prepaid cards and check cashing services are able to. For example, their fraud protections can limit what you’re charged if you’re victimized, and many accounts allow you to lock your debit cards remotely if they are stolen.
After you’ve formed working with a bank, other doors open for you to consider: Credit cards, auto or small business loans and more affordable alternatives 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 various financial instruments,” says David Rothstein the principal of Cities for Financial Empowerment Fund, who manages BankOn an online platform in the United States that helps to increase financial inclusion.
Find a bank that fits you
If you find banks to be intimidating or have had issues getting an account before the community banks or credit unions tend to be more accommodating than national banks and are usually mission-driven — for example, they are focused 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 wants to request an loan and doesn’t have pay stubs to show, is there anything they (can they) show us? An email from (their) employer? We’re not going to surrender.”
Similar to other credit unions, Self-Help requires a person to establish a savings account before they can join; the minimum required to start an account is usually just a few dollars. Then members can apply for other products such as a credit building loan.
You can search online for the word “CDFI” — which stands for the community-based financial institution- to . Some require that those who join to be located in the same area or state where the credit union or bank has branches.
What should you learn about applying
To create an account, you’ll usually need your Social Security number, one or two forms of identification and the money to make your first deposit.
It’s common to apply for two accounts with a bank at once one checking and the other a savings account. The checking account allows access to a debit card and bill payment system as well as other features, while the savings account lets you set money aside and, ideally it will grow through earning interest.
Banks usually screen applicants on ChexSystems which is a nationwide reporting agency that maintains records of accounts closed against the will of an individual. If you’ve been denied access to your bank account in the past, you might be rejected by other banks until you have settled your ChexSystems file. This can mean paying off debts to a bank or disputing errors in the records.
Once you’re cleared, consider what banks typically refer to as an approved BankOn checking account. A lot of them don’t charge overdraft charges, which kick in if you attempt to make a payment that could put your account in the negative.
Opening the correct bank account involves some effort. However, once you’re approved having a safe place for your money and a better chances of getting affordable loans could be worth it.
“To have a checking account… will be the foundation to any money-empowering initiative,” Rothstein says.
This piece originated from NerdWallet and first printed in The Associated Press.
The author’s bio: Spencer Tierney is an expert in the field of certificates of deposit at NerdWallet. The work of Spencer Tierney has been featured on USA Today and the Los Angeles Times.
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