Bouncing checks? You may have C-ADD (Checking
Account Deficit Disorder)
I've made a terrible mistake, one I wish
I could take back. Unfortunately, there doesn't seem to be
anything for me to do. A few years ago, I had an overdrawn
checking account by about $54. I neglected to pay this charge
and my checking account was closed and reported to an agency
that approves checking accounts. Of course, since I left that
bank, I was able to open a new one, but again last year the
same thing happened. The new account was also overdrawn, this
time by $900. So by now I'm really looking bad. No one will
approve my application. What should I do? I'm paying my bills
with money orders. Is there something I can do to get a checking
I'm glad you realize that you are looking
bad. This behavior is certainly not cute and to do it twice
tells me you were not taking care of yourself financially. Now
that you are taking responsibility, let me help by first clearing
up something in your question. The agency where your checking
account activity (specifically your account overdraws) was reported
does not approve or disapprove checking account applications.
The bank or credit union where you are applying uses the information
gathered by the agency to make a decision about whether
to issue you a checking account.
These agencies are like kissing cousins to credit
bureaus. They share a similar background, but they are not
married! Negative checking account information is reported
to the agency by your financial institution and is kept in
a database that is accessed by banks and credit unions when
making account decisions.
Before we address your last question, "Is
there something I can do to get a checking account?"
let's briefly discuss why you are overdrawing your account
and how to avoid doing so in the future.
Overdrawing your account likely means one of
two things: You are not paying attention (I call it C-ADD,
for checking account deficit disorder) or you are living beyond
Below are tips to avoid overdrawing your checking
- Enter every transaction into your checkbook
register. Make sure to include everything: dates, checks,
debit card purchases, deposits, automatic or preauthorized
withdrawals or deposits and ATM withdrawals. Just as important,
keep a running total of the balance of available funds.
- Consider keeping a cushion of $100 or, in
your case, as much as $900, that is not recorded in your
checking account register as a buffer. When your checking
account gets low, you will still have a safety margin.
- Sign up for overdraft protection either
from a savings account (where you could put the $900) or
in the form of a line of credit. If you believe you will
not abuse it, go ahead and sign up for this added protection.
- Bottom line: If you do not have the money
in your account, do not write the check, do not use your
debit card and do not withdraw money that does not exist
from your account.
Now to your question of how to get a checking
account. My advice is to get your report from the check verification
companies and see just how much damage you have done. By far,
the largest such company is ChexSystems (www.chexhelp.com).
Entries stay on your report for five years and
can be removed only if the information is inaccurate. Be sure
to pay any unpaid balances that you may have at the banks
that closed your accounts. The bank is required to list that
the account was paid.
Once you have cleared up any outstanding balances,
take the report with you to the new bank or credit union at
which you are applying and talk with the new accounts manager.
If you are upfront about your problems (before they check)
and can convince the manager that you are no longer a risk,
you may be offered the account.
Keep trying if you are rejected. Once you obtain
an account, don't overdraw it, or you will be faced with five
more years of bad luck!
The Debt Adviser, Steve
Bucci, is the president of Consumer Credit Counseling Service
of Southern New England. Visit CCCS
for additional debt
advice or click
here to ask a debt question.