Gina Noe

Gina Noe Extension Agent

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 a previous institution closed an applicant’s checking account because of unpaid overdrafts.

Mismanaging 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 also  can 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 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 may find incorrect information. If so, you will want to dispute it and provide the correct information wherever possible. This may enable you to open 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.”

Although these accounts have higher fees and added restrictions, they are easier to manage and cost less than money orders and check-cashing services.

You also may be required to attend free money-management training. Consider that as a bonus. It never hurts to learn more about managing your money.

(Source: Robert H. Flashman, Extension Specialist for Family Resource Management, University of Kentucky Cooperative Extension Service)

Educational programs of the Cooperative Extension Service serve all people regardless of race, color, sex, religion, disability or national origin.

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