I have problems with ChexSystems and cannot open
a checking account at this moment. I found a Web site online that
says it will make it possible for me to open a check-less checking
account that will allow me to pay bills and make it better for me
to use my paycheck by using direct deposit. Have you heard about
DirectChecking.com? What can you tell me about it? Is this true?
Thanks in advance,
-- Jose Jump-start
Negative information on your consumer banking report with ChexSystems
can make it next to impossible to open an account with a bank that
uses that report in making its decision to accept you as a customer.
Negative information stays on your consumer report for five years
before it drops off.
What DirectChecking.com is offering looks like a product
called a stored-value card. It gives you a "checking account"
without giving you any checks. By forcing you to use its ATM/debit
card or bill-paying service, it can check your balance in the authorizing
process and doesn't have to worry about you writing bad checks.
Checks are an optional feature if you sign up for direct deposit.
You can also link a MasterCard to the "account" like a
secured credit card for an extra fee.
I'm using the "quotes" because I'm not very
comfortable with this whole arrangement. The account forms list
EasyTel/Genie Bank, but you make your deposits at a Bank of America
or a Wells Fargo branch? You have to pay $35 for an ATM card? Checks
are an option?
I went to the FDIC site to see if EasyTel/Genie Bank
is an FDIC-insured institution. I couldn't find it listed. Bank
of America and Wells Fargo are FDIC-insured institutions. If the
account is with one of these banks, why do you need EasyTel/Genie
Bank as an intermediary?
The Federal Reserve Bank of New York, in an article
Value Cards: An Alternative for the Unbanked?" has this
to say about stored value cards:
Specifically, consumers should be aware that some
cards do not currently provide federal deposit insurance to protect
the card holders' funds in the event that the issuing bank fails.
In addition, some cards do not provide protections under Regulation
E, which covers debit cards linked to traditional checking accounts.
Regulation E has several requirements, the most important of which
are provisions for fund replacement in the event of lost or stolen
cards. Visa- or MasterCard-branded cards offer zero-liability
policies, although consumers should be aware that these association
and/or firm-specific policies are not the same as Regulation E
The primary objective of Regulation E is the protection
of individual consumers engaging in electronic fund transfers. Recently
proposed changes in Regulation E would have its provisions extend
to stored value cards.
Not all banks use ChexSystems. Some Web sites maintain
a list of banks that don't use the consumer-reporting agency. This
has a free list of banks that don't use ChexSystems.