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 to getting your financial future on track. But not everyone has a checking or savings account.

If you are struggling to open a bank account, you aren’t alone. Many consumers are unable to open bank accounts if they have a history of mismanaging their funds. No matter what circumstances brought you to this point, there are still options. Although it may take some time, you will likely be able to open a bank account with some persistence.

Let’s dive into what you should do if you can’t open a bank account.

Find out why you were rejected

When you find out that your bank account application was rejected, it can be upsetting. Instead of dwelling on the bank’s decision, move forward and find out why the bank rejected your application.

“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.”

Call a bank representative and ask for specific reasons why your application was rejected. If you know exactly what the issue is with your application, then you’ll be able to take actionable steps to resolve that before your next attempt. It might be as simple as providing more identification. Or you might discover a more serious issue in your financial history or uncover 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 for dealing with application issues. What was an issue in your last application may not hold you back from opening an account at another financial institution.

Check out several different banks and credit unions. You can call ahead and ask about their account opening requirements. By asking whether or not your specific issue will be a problem, you can avoid needlessly applying for the account.

If you need help finding different checking accounts to apply to, use Bankrate to help you shop around.

Clear up your ChexSystems report

If you have a bad record of managing a bank account, banks will learn about this blemished history through your ChexSystems report. As a specialty national consumer reporting agency, ChexSystems lets banks know more about your past banking experience.

Typically, mismanagement comes in the form of serial overdrafts, writing bad checks, or other types of account abuse. With a negative record, banks might refuse to work with you as a new customer.

If you want to clear up the report, start by looking for your free copy. You can obtain a free report from ChexSystems every year to monitor your record. When you have the report, review it for any mistakes. It’s possible that an error on your record is causing problems that could impact your financial future. Once the error has been removed, you can then resubmit your application to the bank.

Alternatively, if you are unable to clear up your report, then consider other options. Not all banks use the ChexSystems report to make a decision on whether you can get a bank account. You may need to seek out a bank that is willing to look past this report.

Seek out financial education programs

“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 will 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 use alternative banking products to stash your money.

Ask for a second-chance checking account

A second-chance bank account offers similar functions as a traditional checking account, but you’ll have to live with some account restrictions.

In most cases, expect to pay a higher monthly fee to maintain the second-chance account and/or maintain a bigger balance. The goal of these stipulations is to protect the bank from your history of mismanaging your checking account.

If you need a second-chance bank account, then consider speaking to a banker in-person. You may have better luck obtaining this type of account if you explain your predicament. Also ask about the transition process to a regular checking account. Most banks will have clear guidelines that will help you switch over to a regular checking account at some point.

Prepaid cards

If you are struggling to open a bank account, then a prepaid card can be a good option. A prepaid card lets you spend the amount you’ve deposited on the card.

For example, if you deposited $100 on the card, then you’d have $100 to spend. You will be responsible for front-loading the card before you can use it for purchases. If you don’t want to pay with cash but lack access to a checking account, consider a prepaid card.

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. Make a commitment to change your financial habits for the better.

Featured image by goodluz of Shutterstock.

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Written by
Sarah Sharkey
Contributing writer
Sarah Sharkey is a contributing writer for Bankrate. Sarah writes about a range of subjects, including banking, savings tips, homebuying, homeownership and personal finance.