How to Begin If You’ve Never had A Bank Account
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How to Begin If You’ve Never Had A Bank Account
By Spencer Tierney Senior Writer | Certificates of Deposit and ethical banking, as well as banking deposit accounts Spencer Tierney is a consumer banking writer at NerdWallet. He has covered the personal financial sector since, with a particular emphasis on certificates of deposit and other banking-related topics. The work he has written for him was highlighted in 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 Assisting Editor Banking Los Angeles Times, San Jose Mercury News Carolyn has been employed in newsrooms across the country as a reporter and editor. Her passions encompass personal finance, Sci-Fi fiction novels and absurd Broadway musicals.
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The management of your money without the need for a bank account is feasible. But it can pose challenges — and the COVID-19 epidemic has only made it worse.
The economic impact payment may have been received weeks or even months after others’ did and was in the form of an e-check or a prepaid debit card due to the fact that you didn’t have the quicker transfer option of direct payment into the bank account. And if you’ve gone to the shop recently you might have been asked to pay using a debit or credit card or with exact cash due to an overall shortage of coins and worries over germ transmission.
A bank account can be a boon in these situations, among other things. To avoid any future problems, consider opening one -or try it again if you’ve been rejected in the past. Here’s a step-by-step guide for getting to the point of starting.
Review your financial needs
If you’re one of 14 million Americans without a banking account within the U.S., you might have a method that works for you. Perhaps that means using alternative products such as credit cards that are prepaid and check cashing services. Financial advisor Brandy Baxter has assisted clients who utilized check cashing services to meet practical reasons.
“They prefer 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 region.
Check cashing stores like Check ‘n’Go or ACE Cash Express may operate for more hours that banks and have simple approval processes to receive cash fast. However, they charge an expensive fee that can range between 1% and 6%, or more on top of the amount you pay for your check.
Bank accounts are able to meet your money needs beyond what pre-paid cards or check cashing services will. For instance, their fraud protections can limit what you pay if you’re victimized, and many accounts allow you to lock your debit cards remotely when stolen.
Once you’ve established a relationship with a bank, other doors open such as credit cards, auto or small business loans and more affordable alternatives to payday loans may eventually be at hand.
Checking accounts “don’t just aid in saving expenses; they’re also the first step to using different financial services,” says David Rothstein director of Cities for Financial Empowerment Fund which manages BankOn, a national platform which helps to increase financial inclusion.
Find a bank that will work for you
If you are afraid of banks or have had issues getting an account previously you can open a bank account, community banks and credit unions are generally more flexible than national banks and are often mission-driven — for example, they are focused on the financial wellbeing of their communities.
“We’re very lenient at giving people a second chance,” says Pedro Murillo, area branch manager in the San Francisco Bay Area for Self-Help Federal Credit Union. “If someone comes in to request a loan but doesn’t have pay stubs, what else (can they) bring to us? A letter from (their) boss? We’re not going to be left out.”
As with other credit unions Self-Help will require a person to create a savings account in order to become a member; the minimum to open an account is usually a few bucks. Members can then apply for other products, like a credit builder loan.
It is possible to search the internet for the word “CDFI” which is a reference to Community Development Financial Institution – to . Many require those who join to be part of the same state where the credit union or bank has branches.
What should you learn about applying
To open an account, you’ll usually need to have 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 bank accounts simultaneously that is a checking account and a savings account. The checking account allows access to debit cards, bill payment system and other services, while the savings account lets you set funds aside and, in the ideal case it will grow through making interest.
Banks usually screen applicants on ChexSystems which is a nationwide reporting agency that maintains records of closed accounts at the request of a person. If you’ve been denied access to a bank account previously and you’re not sure if you’ll be denied by other banks until you have settled your ChexSystems record. This could mean paying off debts to a bank or disputing errors on the record.
After you’ve cleared your account, think about what banks call it the BankOn-approved checking account. A lot of them don’t charge overdraft fees that kick in when you try paying for something that would put your balance in negative.
Finding and opening the right bank account involves some effort. Once you’ve been approved, finding a safe location for your money as well as a greater likelihood of getting affordable loans could be worth it.
“To have an account with a bank… can be the core for any empowerment financial program,” Rothstein says.
The article was written by NerdWallet and was originally printed by The Associated Press.
About the author: Spencer Tierney is an expert in the field of certificates of deposit at NerdWallet. His work has been highlighted on USA Today and the Los Angeles Times.
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