What to Do When You Have Been Rejected for a Checking or Savings Account

Most adults and many young people have a checking and/or savings account; but did you know that financial institutions can turn you away when you try to open an account? It is important to know why some consumers are denied checking and savings accounts and what to do if it happens to you or someone you know.

A common reason financial institutions deny applications for checking or savings accounts is that reports show that a previous institution closed an applicant’s checking account due to unpaid overdrafts. Mismanaging of your accounts can cost you. The Fair Credit Reporting Act (FCRA) allows negative information to appear on your reports for up to seven years. Such negative information can include checks written without sufficient funds, or even possible fraudulent transactions if not resolved. A poor credit report can also hurt your chances of opening a new account.

If you are denied a checking or savings account because of mistakes you’ve made, ask the bank or other financial institution if they will reconsider. According to Keith Ernst, FDIC Associate Director of Depositor and Consumer Protection, “Every bank decides for itself how to evaluate the information in a consumer’s report.” Just because you have negative information on your report does not necessarily mean a bank will want to reject your business. Also be sure to request the report the bank used to deny your account. You might find incorrect information; if so, you will want to dispute it, providing the correct information wherever possible. This might enable you to open up a new account, after all.

Another option for getting needed financial services is a “second chance” account. According to the FDIC, “one in four banks offers accounts that give an option to some consumers unable to open a regular checking account.” Even though these accounts have higher fees and added restrictions, they are easier to manage and cost less than money orders and check-cashing services. You might also be required to attend free money management training, but look at that as a bonus: it never hurts to learn more about managing your money.

READERS, what do you think?

1.    Have you ever tried opening a savings or checking account? Were you able to open one? If not, did you find out the reason?

2.    What would you do if you were rejected for a savings and/or checking account?

Reference:

Federal Deposit Insurance Corporation. (2013, Fall). You’ve been turned down for a checking or savings account. Now what? FDIC Consumer News. Retrieved October 22, 2014, from https://www.fdic.gov/consumers/consumer/news/cnfall13/deniedchecking.html.