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What to do if you can’t open a bank account

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Setting up a bank account can be the first step in getting your financial future on track. But just like with a credit card application, not everyone gets approved for a bank account.

If you are struggling to open a bank account, you aren’t alone. Many consumers are unable to open accounts because of problems with a past bank account, such as unpaid fees or a history of overdrawing the account. No matter what circumstances brought you to this point, there are still options, though they may take some persistence.

Find out why you were rejected

Finding out your bank account application was rejected can be upsetting. Instead of dwelling on the bank’s decision, however, find out why the bank rejected your application, so you can move forward.

“Consumers who find themselves unable to open a bank account are probably in this position because they have misused their bank accounts or they have bad credit,” says Howard Dvorkin, CPA, and author of “Power Up: Taking Charge of Your Financial Destiny.”

Contact a bank representative and ask why your application was rejected. If you know what the issue is with your application, you’ll be able to take action to resolve it before your next attempt. It might be as simple as providing further identification, or there may be a more serious issue in your financial history or an error.

Try a different bank

After finding out why a bank rejected your application, try working with a different bank. Banks and credit unions across the country have different rules when it comes to application approval. Some banks, for example, may deny an application made by someone who recently filed bankruptcy. Others require you to pay any outstanding bank account fees before allowing you to open a new account.

Bankrate can help you shop around for the best checking account to suit your needs.

Clear up your checking account report

If you have a blemished bank account history, banks can learn about it from reporting agencies such as ChexSystems or Early Warning Services. These companies provide banks with details of problems consumers have had with bank accounts in the past.

Typically, things on your report that banks consider to be red flags include serial overdrafts, bounced checks or unpaid fees. If you have a negative record, banks might refuse to work with you as a new customer.

If you want to clear up the report, start by getting a copy of it. You can obtain free reports from ChexSystems and Early Warning Services every year to monitor your record.

There are steps you can take to improve your checking account report, such as paying off any unpaid bank fees. Once the bank advises the agency that you’ve paid these fees, the report can be updated accordingly.

It’s also important to review the report for any errors that may keep you from being approved for a bank account. Both ChexSystems and Early Warning Services allow you to submit disputes on their websites so that mistakes can be corrected. After any errors have been removed, you can then resubmit your application to the bank.

Alternatively, if you are unable to clear up your report, consider other options. Not all banks use reports from ChexSystems or Early Warning Services to make a decision on whether you can get a bank account, and going with a bank that doesn’t use those services may be your best bet.

Take a financial education course

Organizations like Bank On work to provide communities with financial literacy education, in addition to helping connect unbanked and underbanked consumers with checking accounts.

“If you’ve had troubles with your bank accounts in the past and feel like you’ve been blacklisted, look for a Bank On program near you,” says Todd Christensen, an education manager at Money Fit by DRS Inc., a nationwide nonprofit financial wellness and credit counseling agency. “Usually, after taking a few hours of basic money management courses, you can automatically qualify for an account with participating banks or credit unions.”

Not only can taking a course help you get a checking account, but it also helps you learn some helpful money management skills.

Use alternative products

It might take some time before you can obtain a standard bank account. In the meantime, you can make use of alternative banking products.

Second-chance checking accounts

A second-chance bank account functions much like a traditional checking account but with some account restrictions.

With a second-chance account, you may need to pay a higher monthly fee or maintain a bigger balance, to protect the bank in the event of problems such as overdrafts.

When opening a second-chance bank account, you may wish to find out about the transition process to a regular checking account. Most banks have clear guidelines that can help you switch over to a regular checking account at some point.

Prepaid cards

If you are struggling to open a bank account, a prepaid card can be a good alternative if you don’t want to pay with cash but lack access to a checking account. Prepaid cards must be front-loaded (monetary value added to them) before they can be used for purchases.

In 2019, 8.5 percent of U.S. households used reloadable prepaid cards, according to a survey from the Federal Deposit Insurance Corp. An advantage of prepaid cards is they can’t be overdrawn, so you won’t incur overdraft fees. A downside, however, is prepaid cards won’t help boost your credit score, since they don’t grant you a line of credit.

Bottom line

A bank account can be a doorway to financial success. Although it may take time to clean up your banking history, it can be done once you’ve made a commitment to changing your financial habits for the better.

–Freelance writer Sarah Sharkey contributed to a previous version of this article.

Written by
Karen Bennett
Consumer banking reporter
Karen Bennett is a consumer banking reporter at Bankrate. She uses her finance writing background to help readers learn more about savings and checking accounts, CDs, and other financial matters.
Edited by
Wealth editor