Can I Open A Bank Account If I Owe Another Bank Money?
Can I Open A Bank Account If I Owe Another Bank Money?
While we would love to be able to give a clear-cut answer to that question, it’s actually not a black or white type of situation. There all different circumstances that can come into play and influence the outcome, depending on your personal financial picture. Let’s take a look at each possible answer.
First answer: NO
This one, although the least popular answer, is probably the most likely one. In most cases, the person doesn’t find out that they can’t open a checking account until they’ve actually been to a branch to do so, and were declined. The majority of banks in the United States use a database called ChexSystems to screen prospective clients. If your name shows up on that database, that means that a bank has had a negative experience with you and has reported your name to ChexSystems. The particular case we’re looking at, unpaid debt, is definitely one that can get a bank to report you.
As for how long your information stays on Chexsystems, well unless corrective action is taken, that info stays there for five years, after which it is purged. In that time frame, it gets very hard to open new checking accounts, because an estimated 80 percent of the banks use Chexsystems and will turn down your business if you’re on that list.
Second answer: IT DEPENDS
Some banks, known as non chexsystems banks, do use ChexSystems but don’t automatically turn you down if you’re on that list. They tend to be the smaller and/or regional banks. You may have to jump through a few hoops but they will hear you out before making a decision. There are about 20% of banks out there who are more flexible when it comes to that, so you might have to look at your neighborhood banks. Establishing a personal relationship also works better in those smaller institutions.
Third Answer : YES (with caveats)
If you have no other options, your best bet might be to get a prepaid debit card. Of course, it’s not an ideal setup, because most of them will cost you way more than a regular checking account ever would, but at least they will give you almost all the convenience that you would get. Standard free features include direct deposit of your paycheck online bill pay, and the ability to manage your prepaid card online. As for the other stuff, that’s where you will need to comparison shop. There are a lot of fees to keep track of: annual (or monthly) fee, transaction fee (pin or signature), ATM withdrawal fee, reloading fee, inactivity fee, setup fee…
Not every card has ALL those fees, but they all charge you different combinations of fees, so it pays to know exactly what you’re going to be using the card for, and see which offering best matches your personal circumstances. If push comes to shove, a prepaid debit card might be the closest thing to a bank account that you can get.