||Ask Dr. Don
No checking account blues
Dear Dr. Don,
I am a 24-year-old single parent and a student. I had a checking
account, but the bank closed it. Now I can't open a new account
with another bank because of this account closing. What can I do?
The only way I can save money is if I have a bank account, and it
is hard trying to cash my paychecks.
People understand how a bad credit report can hurt their ability
to get credit but don't consider what a bounced check or other banking
calamity can do to their banking relationship.
There are consumer-reporting agencies that monitor
your banking history. A bad banking report can affect your ability
to open any type of bank account, but especially a checking account.
Negative information, like a non-sufficient funds, will stay on
this report for five years.
is the most widely known agency for reporting banking relationships.
You can order a copy of your report from them. If you have been
declined a banking account within the past 60 days, the report will
If you haven't been declined as a bank customer, the
price you pay for the report varies by state. It's always free for
residents of Colorado, Georgia, Maryland, Massachusetts, New Jersey
and Vermont. It's always free if you are on public assistance. It's
always free if you are unemployed and planning to seek employment
in the next 60 days. It's always free if you believe you are a victim
of consumer fraud. Other than that, Maine residents pay $3, Connecticut
residents pay $5 and it's $8 for everyone else.
As a consumer-reporting agency, ChexSystems has to
follow the Fair
Credit Reporting Act, which gives consumers the right to dispute
information on their consumer reports. You also have the right to
put a personal statement on your report if the reinvestigation of
a disputed item isn't resolved to your satisfaction. Be brief (less
than 100 words) if you chose to make a personal statement because
the agency has the right to summarize your statement in future releases
of your report.
When you've paid off any outstanding claims on your
closed account you want your report to note that "all amounts
owed have been paid." If you've repaid the bank and your report
doesn't reflect that payment, then you need to follow up with the
bank and request, in writing, that they submit this information
For an irreverent look at ChexSystems along with help
on finding a bank that won't turn its nose up at your business solely
on the basis of a bad report, take a look at the ChexSystems
Bites site. There are banks out there that won't rely solely
on a consumer-reporting agency report. This site can help you seek
If you're eligible to join a credit union, then start
your search for a new banking relationship with them. Your school
may have a credit union that you can join.
Some banks in your town may offer alternatives to
account relationships where you can direct deposit your paycheck
to this non-account and then access your money through the bank's
ATM machines. This service is similar to the Electronic Transfer
Accounts that financial institutions provide for non-account holders
who receive federal payments. It's not as convenient as a checking
account, but it beats the heck out of paying a check cashing service.
Your company's payroll department will be able to
tell you if its bank offers that service -- an example of which
Bank of America's Cash Pay. Your employer may also have a provision
in its banking contract that addresses whether the bank will charge
a non-customer employee to cash a paycheck. The folks in payroll
will know the answer to that question too.
-- Posted: May 22, 2002