Explore checking account alternatives if you have credit problems
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At one time, getting a checking account was a simple matter. You didn't even have to produce your social security card as long as you knew the number and they only gave a cursory glance at your driver's license. But in the post 9/11 world where money laundering is a huge concern, getting a checking account is somewhat of an ordeal. And for many of our bankruptcy clients, we hear that they struggle to find a bank that will take them on if they try to open a new account after bankruptcy.
We've written here before about why you may want to change your bank prior to filing bankruptcy – for instance, in cases where your bank is a creditor that may seize funds in your account to offset debts. But if for some reason you lose your account during your bankruptcy and need a new one, you may find yourself getting turned down again and again. The good news is, there are alternatives to traditional bank accounts that you can easily obtain without being put through the wringer.
Why It's Harder to Get a Checking Account After Bankruptcy
Every bank and credit union will run a credit check on you prior to allowing you to open an account with them. Because bankruptcy lowers your credit score in the short run, you will likely not measure up to the required standards to get a new account. Most banks won't even allow you to open a savings account if you don't meet their credit requirements and if this is what you find, you'll be interested in one of the checking account alternatives that are mushrooming in popularity.
Checking Account Alternatives
For many that can't get a traditional checking account, dealing with paychecks can be a hassle. Check cashing facilities charge exorbitant fees to cash paychecks and even if your employer is on a list for check cashing at a grocery store or other money center, you'll face long lines and inconvenience, plus it's scary walking around with cash. To make matters worse, you won't have checks to pay bills with and paying bills with cash necessitates more errand running and time wasted.
Bluebird card allows you to use direct deposit to load your card and charges few fees
Image source: MyBankTracker.com
Consumer Reports recently recognized several prepaid cards as highly rated for dealing with payroll and paying bills without a traditional checking account. Here are our favorite three of these recommended programs that the magazine rated highest and how you can take advantage:
American Express Bluebird – AmEx launched this program in conjunction with WalMart and it's great because there are almost no fees (except a modest $2 ATM fee if you use a machine outside of the network). There's no fee to get the card and you can add cash via direct deposit from payroll, by snapping a picture of a check with their handy smartphone app or using cash at a WalMart register. You can use it like a debit card anywhere that accepts AmEx and they also offer online bill pay for participating vendors.
H&R Block's Emerald Prepaid Mastercard – You have to go into an H&R Block to sign up for a card. There is no set up fee and like AmEx, you can upload money via direct deposit or through an app. The difference comes with fees. Reloading with cash at participating retailers costs up to $4.95 per transaction. Use of the mobile check app comes with a minimum fee of $2 per check. You can get cash back at registers for no charge and $2.50 from ATMs. Bill pay comes at 95 cents per transaction. These fees aren't terribly high, but are not as modest as the Bluebird fees.
green dot Prepaid Cards – These cards can be signed up for online or at Kmart, CVS, Walgreens and a host of other retailers. If you sign up online instead of in-store, there is no activation fee. The downside to green dot is that there are more fees than either of the other two options. You can add funds for free via direct deposit or pay up to $4.95 to add cash at a retail store. green dot comes with a monthly charge of up to $5.95, $2.50 to use a non-money pass ATM. There's an app to find locations and check your balance, but doesn't let you add funds with checks. No bill pay is offered either.
If you've got money problems and are overdrawn with your bank, you may want to go ahead and change over to a checking account alternative now to protect your money even if you're still working through your financial problems. To find out if your debt circumstances can be relieved with a North Carolina bankruptcy, contact the law offices of John T Orcutt for a free consultation.