Opening a Bank Account

Bank regulations and requirements can be confusing, that’s we want you to know ahead of time what you will need to bring with you when coming in for a new account. Depending on how you open a bank account there will be various resources required. Of course, before you open a bank account determine what kind of account you need, and where you want to bank. In the majority states, before you can open an account of your own the general requirements at most banks will be; proof of your age, address, social security number and legal status. If you are opening a joint account with another person it will facilitate the process by collecting all of your information and you may want to plan on being together to open the account. These requirements are usually true whether you open a bank account in person, on the phone, or on the Internet. Most banks try to make the process as easy without absorbing a lot of your time. Banks are still an extremely competitive industry and want your business; customer service at the bank will be very proactive and help establish new accounts.

You usually need two (2) forms of ID, one (1) of which must be a photo ID. Standard forms of identification needed to open a new CD, checking account or saving account include;

State Driver’s License
State ID Card
Military ID Card
Passport
U.S. Alien Registration Card
Firearm License
Social Security Card
Property Tax Bill
Voter Registration Card
Birth Certificate

When you open a bank account, along with verifying your identification and address, the bank will most likely run your name through a bank credit verification system. If your credit report indicates you have a history of mishandling an account—perhaps you’ve bounced a lot of checks or done something to cause another financial institution to close one of your accounts, the bank may refuse to open an account for you. If the bank does decline your application based on information in a credit report, you must be told so and be given a chance to correct information in your report that may be inaccurate.

Check reporting protects financial institutions and merchants, such as retailers and grocery stores, from losses associated with bounced or fraudulent checks. Under the Fair Credit Reporting Act (FCRA), a bounced check or other wrongdoing reported to a check reporting service may stay on your record for as many as seven years. ChexSystems, Inc. is the largest. ChexSystems, Inc is a consumer reporting agency that is regulated under the Fair Credit Reporting Act.

ChexSystemsSM is comprised of a network of member banks and credit unions that regularly contribute information on how a consumer have handled deposit accounts at banking institutions. A consumer’s ChexSystems report contains banking irregularities such as check overdrafts, unsatisfied balances, depositing fraudulent check, or suspicious account handling that other banks have reported in the past five years. According to ChexSystems, they only share information with the member institutions and do not decide on whether a new account is opened.

Unfortunately for many consumers, people who end up in the ChexSystems database don’t learn of it until they try to open a checking account and are turned down. Banks use this system because the bank wants to know if the prospective customer is a high risk due to previous banking activities.

If your credit report indicates you have a history of mishandling an account—perhaps you’ve bounced a lot of checks or done something to cause another financial institution to close one of your accounts the bank may refuse to open an account for you. If the bank declines your application based on information in a credit report, you must be told so and be given a chance to correct information in your report that may be inaccurate.

Bouncing a check or two isn’t likely to earn you a file in ChexSystems, but if your account is closed because it’s overdrawn, you’ll most likely wind up there.

Information is reported to ChexSystems by financial institutions when an account has some of the following problems;

Is closed due to account abuse (i.e. consumers have had a negative balance for an extended period of time)
The account holder had requested to have an account closed because they have lost or had their checks stolen
A consumer committed fraud or suspected fraudulent activities.

A bank will not likely change your account once it is open regardless of the findings in ChexSystems, but a bank may close your deposit account and give you your money back for other reasons. Examples of when that could happen: You bounce a certain number of checks. You refuse to pay the fees for bouncing checks or some other fees. Your account balance falls below a certain amount. Or, you don’t make any deposits or withdrawals for many years and the bank’s efforts to locate you prove unsuccessful, in which case the bank typically will transfer funds from these “dormant” accounts to the state government’s unclaimed property office.

ChexSystems, Inc provides deposit account verification services to its financial institution members to aid them in identifying account applicants who may have a history of account mishandling.

Chex Systems is similar to any credit information bureau. Financial institutions report individuals who mishandle checking and savings accounts. If your name winds up in the ChexSystems database, you could find it extremely difficult to open a bank account for quite a while. ChexSystems neither approves nor declines accounts for banks and credit unions. The decision is entirely up to the banks that utilize the system.

Each report submitted to ChexSystems remains on our files for five years, unless the bank or credit union that filed the report requests its removal or ChexSystems becomes obligated to remove it under applicable law.

This entry was posted on Sunday, October 12th, 2008 at 11:56 am and is filed under Banking and CD Guide. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.