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.
