Can I Get a Checking Account?

There are a growing number of digital ways to receive funds, pay bills and make purchases. Yet, having a checking account remains standard in American society. Those who don’t have one are classified as the unbanked or underbanked. If you don’t have a checking account you may be wondering if you would be eligible. After all, banks and credit union take on risk in accepting an application for checking. You as a customer could write checks for much more than is in the account and disappear. The financial institution is left with a mess.

Usually, if you are legally an adult – that is, 18 years or older – you can start the process rolling. You need to have government-issued identification such as a driver’s license, Social Security number, a physical or email address, and money to deposit. You can approach a brick and mortar or online financial institution for the checking account. Of course, before you do you should research which ones provide you the best terms and conditions for your needs.

After you apply, the financial institution will then verify with ChexSystem if you have a record of problems with any other checking accounts. Those could range from overdrafts to fraud. ChexSystem operates much like credit-rating organizations which create FICO scores. The only difference is that its focus is the checking account.

If there were overdrafts and the money was paid back, the financial institution may offer what’s called a second-chance account. For that you pay higher than standard fees. There will also be more requirements than with a regular account. One could be that you have to attend, in person or online, a course in money management. After a year or two years of second chance checking and there are no major problems, the financial institution could upgrade you to a standard account. Not all do, so ask that. If it doesn’t have that option, you should research those which do.

Increasingly, college students are finding it useful to have a checking account. That helps develop basic financial literacy, provides convenience at no or low cost and is safe since the funds should be FDIC insured. Also, college students with jobs may have employers who only pay via direct deposit. That saves employers the expense of issuing paper checks.

More and more financial institutions have designed special accounts for college students. They usually have no monthly fees, no or a low minimum balance requirement, reimbursement for out of network ATM fees and provision for one free overdraft. Banks and credit unions want to develop a long-term relationship with youth. A survey by NerdWallet found that special student accounts save an average of $110 or more in fees annually, compared to standard accounts. It’s up to you to research the best “deal” for your needs. Incidentally, most student accounts do not provide any interest on deposits. Therefore, if you do have a high balance, you might transfer some of that into an account which does provide interest. Those range from savings accounts to certificates of deposit.

If you are not a minor, you can open the checking account yourself at a financial institution which offers this option. You will need your Social Security number, physical or email address and government-issued ID such as a driver’s license, Passport or birth certificate. If you are a minor you cannot enter into a contract. Therefore, the financial institution will require that a parent or guardian co-own the account. That means it functions much like a joint account. Your parent will have full access to it.

Providing accounts for you if you are 13 and older is becoming more common. That’s because experts have shown the need to develop financial literacy as early as possible in life. Managing a checking account plays a role in that. For those younger than 13, parents and guardians wanting to establish an account will have to research the financial institutions which provide them. If the child receives income, as in working in commercials or selling a digital product or service, and that is only paid via direct deposit, then a checking account is needed. The parent or guardian who co-owns the account has total access. Therefore, the child wary of their honesty might consult with a lawyer about establishing another kind of financial vehicle for receiving and paying funds.

Not having a checking account could mean you will transact your financial affairs in a high-cost manner. Fees for check-cashing services are expensive, for example. Also, the process is inconvenient. Meanwhile you are not creating a record of a financial history. The absence of that could increase the interest rates paid on items such as car loans.

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