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How does an open checking account help you?

By Ruth Racey
Published: Saturday, November 21st, 2009

Credit card issuers always search for bank accounts because they are a sign of financial stability. Obviously, they also look for bank accounts so that they know how you will pay them. If undergoing credit application and you do not have an open checking account, you may not be given credit.

One way of getting your creditors’ attention is by having other accounts such as a savings or money market account. Although you have not deposited additional money into those accounts, creditors will assume that you use them. Having savings and bank accounts reassures credit issuers of two things: One, you are striving to save money in your own way, and two, if in case you fail to pay them, they have a source where they can sue you.

Just because you have a poor credit background, does not mean you should be deprived of a bank account. Shop around and compare different fees such as ATM fees, check writing fees, monthly service charges, interest rates on savings, and the like.

However, creditors may not issue a bank account if you have a bad check writing history. There are check verification companies which monitor different banks’ experiences with their customers. Most of the time, banks will ask a check verification company to hand them a copy of your check writing history to be assessed. Only then will they open an account for you. If you get into trouble with the check verification company resulting in a refusal of the bank to open an account, you can call that company to resolve the problem. If the problem cannot be resolved, you can charge them of having inaccurate or incomplete information in their files. Here are some popular check verification companies: International Check Services, Global Payments (formerly CheckRite), ChexSystems, Telecheck, and SCAN.

In opening a checking account, avoid issuing bouncing checks. There is a new federal law, “Check 21,” which makes bouncing checks more common to every consumer. It allows banks to process electronic images of checks instead of the original paper versions. This only means that checks are cleared much faster than what many have been used to. In relation to this, consumer representatives advice consumers not to issue checks while the funds are not yet in their accounts.

If you experience bouncing a check to a creditor, she or he will most likely report a payment failure to a credit bureau, which would put all your hard work in repairing your credit at risk. If bouncing checks are a part of your history, opening bank accounts in the future may be more difficult.

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