6 reasons to be unbanked or underbanked

You became blacklisted by major banks
You became blacklisted by major banks © Deva Studio/

In theory, money and a little personal information are all it takes to open a bank account. But increasingly, many banks are declining business because the prospective account holder has a record of financial mistakes, such as bounced checks or relatively minor overdrafts. In fact, many Americans have effectively been blacklisted from major U.S. banks because they've failed background checks.

"Unfortunately, banks are rules-driven bureaucracies," Weiss says. "If the policies governing new account openings mandate that applicants who fail this background check be declined, impacted consumers will have a tough time convincing clerks to advocate for exceptions."

But it might not be impossible. If a consumer remedies the issue or can prove that there was a mistake in a background check, they might be able to convince the bank to take a chance on them, Weiss says.

It also may be that the consumer should look elsewhere, says George Hofheimer, chief research and innovation officer at Filene Research Institute, which studies consumer finance.

One option is to look for so-called second-chance checking accounts, which are often available at local banks. Alternatively, Hofheimer says, people may want to consider credit unions, which tend to be more forgiving.


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