One bounced check? No more bank accounts for you

[Newsjock]

Source: New York Times

Mistakes like a bounced check or a small overdraft have effectively blacklisted more than a million low-income Americans from the mainstream financial system for as long as seven years as a result of little-known private databases that are used by the nation’s major banks.

The problem is contributing to the growth of the roughly 10 million households in the United States that lack a banking account, a basic requirement of modern economic life.

... The ranks of those without bank accounts have swelled — up more than 10 percent since 2009, according to the Federal Deposit Insurance Corporation — as banks have sharpened their focus on more affluent customers who typically generate twice the revenue of their lower-income counterparts. Many banks are closing branches in poor areas and expanding in wealthier ones, according to an analysis of federal data.

Rejection for would-be bank customers can come as a shock. Tiffany Murrell of Brooklyn says a credit union denied her checking account application in September 2012 even though she had a job as a secretary and was up to date on her bills. The obstacle, it turned out, was a negative report from ChexSystems, a consumer credit reporting firm that provides customer data to virtually every major bank and credit union in the nation. The black mark stemmed from a overdraft of roughly $40 in June 2010, according to a copy of a letter that the 31-year-old Ms. Murrell later received from ChexSystems.

Read more: http://dealbook.nytimes.com/2013/07/30/over-a-million-are-denied-bank-accounts-for-past-errors

[Cairycat]

1. More and more employers are requiring

employees to have paychecks deposited directly into a checking account. This would really put people in a bind.

[Katashi_itto]

2. Go to a small credit union. This happened to me. I refuse to pay what was a false charge.

I was blacklisted by ChexSystems. Went to a credit union, never looked back. Some Credit Unions don't look into your background.

[Liberal_in_LA]

8. +1

[pnwmom]

11. The woman in the OP was denied an account in a credit union. n/t

[Katashi_itto]

14. I know. I said go to a small credit union. Very small. They always take you.

No background checks nothing. I rebuilt my credit through them. Build up savings then take out a secured loan against that.

[AndyA]

3. Break the banks up and regulate them

Abolish the high fees and remove the hindrances to having a checking account. I also think potential employers should be prohibited from viewing credit reports, as many people with good credit lost their jobs due to the economic collapse and weren't able to pay their bills. This is not their fault, it is the fault of those who took risks and ended up crashing the economy. Those responsible haven't been penalized for their actions, innocent workers shouldn't be, either.

I'd also like to see regulations on how much interest a bank can charge customers, based on the amount of interest the bank pays on savings and CDs. It's obscene that they charge 20-something percent interest on credit cards, yet pay a rate of 1 percent on savings and CDs. The free market isn't regulating this, all of the banks pretty much charge the same rates and pay the same interest, the system is fixed in their favor and they're making a killing on it. Time to shut the abuse down.

If 2008 didn't prove we need more regulations and oversight in the banking/financial industry, nothing else ever could.

[warrprayer]

4. great post

I have gone through this myself. The 1% stacks the deck in their favor - always.

[SheilaT]

5. This is not that new.

It happened to my brother who bounced a check

in about 2000. At the time it didn't occur to me to suggest a credit union.

He was unemployed for several years and then went to work for Target, doing overnight stocking, a job he still has. I cashed his checks through my own bank for a few months, then said he ought to see if as a Target employee he could simply open an account at whatever bank it was that had a small branch at his store. That worked.

[pnwmom]

12. The woman in the OP was denied an account in a credit union. n/t

[deafskeptic]

6. I had a similar experince when I tried to open a new account in another bank.

that's when I learned about ChexSystems.

[SoCalDem]

7. Modern banking is no longer a "service" to the community

They are just the financial part of Big-Box, USA, Inc.

Banks do make money from the fees they charge , but small accounts that routinely cycle through every penny deposited....with the often occurring overdrafts, are not a benefit to them, so they shit-can them every chance they get.

Even my dear little community bank now requires a $1500 minimum daily balance in order to have overdraft protection for checking accounts. MOST people cannot afford to always have $1500 sitting unused in their checking accounts.

What's even sillier, is that with the new check acceptance at most shopping venues, the second they scan your check, they know if it's NSF, and most will just hand it back to the customer and tell them they cannot accept the check to start with. Debit cards are so much better than checks, as long as the transactions are done with pin codes..When people are using them as "credit "transactions and having to sign at purchase point, they may be creating overdrafts, and creating a nightmare for themselves.

[Sivart]

9. I switched to a green dot card.....

I switched to a green dot card about a year ago, and it has really worked out well.

I can get my paycheck direct deposited to it, no problem, and it works just like any other debit card.

The only fees there are kick in if I dont use the card a certain number of times per month, or if I dont dont hit a certain deposit amount, both of which have never happened since I started using it.

And the best part is that you can get a card without dealing with chexystems and all of that kind of crap.

The card looks like a regular card with my name on it.

For direct deposit, they will give you a voided "check" to give to your employer.

YMMV

[laundry_queen]

10. K&R

Disgusting.

[BlueJazz]

13. "The black mark stemmed from a overdraft of roughly $40 in June 2010"

$40 whole dollars..like 4000 cents ?
Plus she had a decent job and was up to date on her bills ??

Is this the same group that WE taxpayers bailed them out ???