Checking Basics 101 – Acquiring a Checking Account or Functioning Without One

(Originally Posted 19 May 2008 )

One of the most important tools for getting yourself out of debt is a continuallybalanced checkbook. (Please note that I did not say a bounteous checking account, although that helps!) This requires that you actually have a checking account, or develop a way to function without one.

For many of you, having a checking account is something you take for granted. However, there are those of us who – for one reason or another – have not only lost our checking accounts, but have been reported to ChexSystems (the banking equivalent of TransUnion, Equifax and Experian). For us, acquiring a checking account becomes an exercise of the same approximate ease as finding the Holy Grail.

For those of us in this position, there are two alternatives (which are not, actually, mutually exclusive).

First, you can develop ways to survive without a checking account. This can take some creativity on your part, but here are some things I did to survive without having to continually pay out fees to pay things.

• You can pay to buy money orders for everything. The advantage: you will have a receipt for your payments. The disadvantage: you will pay anywhere from $.75 to $3.00 for a money order. These fees mount up very quickly.
• You can use an agency to cash your paychecks. The advantage: if you have a government or corporate paycheck, this will give you quick easy access to your money. The disadvantages: check cashing facilities ALWAYS take a percentage of your check as a fee. For my checks, which were in the $560 range, this meant I was giving the check cashing facility $7-8 per check. Again, these fees mount up. Also, these places will only cash certain types of checks. If a friend offers to help you out, for example, you will not be able to cash his check. Further, these places often have time limits as to how long you can hold a check before cashing it. Most will not honor a check more than thirty days after the date it was issued.
• You can ask a friend to cash your paychecks and other checks you receive. The advantage: no fee. The disadvantages: your friend will know what your income is. Also, unless you have an exceptionally supportive friend, he or she may get tired of doing you this favor. Further, his or her bank might not want to take a third-party check.
• You can ask a friend to write checks for you. The advantage: no fee. The disadvantages: you will pretty much need to have the money in hand to give to your friend when asking (or at least have a definite date when you will put the cash in his or her hand). And, as above, your friend may tire of having to keep writing checks for you.

While you are doing the above, you should be researching the second alternative: acquiring a new checking account. First, there is an interesting article here that you should read. The author has been through the process and has a good idea of what you are up against. The main thing to remember is to avoid any site that wants to sell you a list. The lists are on the Web for free. A Google search on “ChexSystems victims” provided more than ten pages of resources.

If all else fails, there are a ton of websites that will sell you the lists, but they tend to ask $50 to $100 for a list. Again, since you can – with a bit of patience – find the information yourself, I don’t recommend this.

What I did was to look for banks and credit unions in my area. I found that all the banks did use either ChexSystems or Telecheck, but that many of the local credit unions did not. I also found that some banks would open a savings account without using ChexSystems, but these were the exceptions rather than the rule. Credit unions, I found, often had a set of idiosyncratic requirements for opening accounts, but were much more available to folks with problems (for example, the credit union I’m now using only required that I either live or work in Brooklyn, New York, and I do both). Since my job and home are some distance from the credit union, I filled out a form at work to deposit my paycheck directly, and they do so free of charge.

Okay. You have now (hopefully) acquired a new checking account. The next step is to keep that account balanced and functioning in a way that maximizes your money. I will cover that in the next installment of this series.