Without a bank account, even an online payday loan is impossible. Paying regular bills such as rent and utilities are difficult without a checking account. There are check-cashing stores which will charge a fee for banking services. As handy as these companies can be, the more dependent a person becomes using these services, the more of their paycheck will go towards their revenue. In California, there are over 17 million adults who are considered "unbanked", holding no bank account to their name.
When consumers look into opening a bank account, the bank will run their names through a scoring system to determine a rank on their banking rate. If there had previously been too many overdrafts, the bank will typically decline the opportunity to open a new bank account.
For the last six years, "Bank on California" has been helping people open checking accounts for low or no cost. These "Bank On" accounts, now reach amounts of over 214,000 accounts since the end of 2008. Besides creating accounts for the unbanked Californians, there have been over 2,000 financial education workshops for families with low or moderate income. The project began in San Francisco and has branched out to eight other state communities. The Department of Financial Institutions wants to continue the outreach and is looking for additional financial partners for San Diego and for more rural areas. Each of the eight area programs have a large group of financial partners including non-profit and local government agencies which offer the starter bank accounts and are provide financial workshops. There are more than 30 banks and credit unions participating in the program as well.
There are a few of these programs running which do not charge the individual fees for opening and using the accounts. Many include a debit card which will not have transactions processed unless there is money in the account to cover the cost. Getting the help needed in order to learn how to keep a bank account in good status is a great way to help get what is learned in the workshops into reality. These accounts also give the people a place to put their money. A cash checking store will cash the check but then the person will carry around money in their pocket or find a place to store it in their home. Having one of these accounts is a much safer place for the account holders to stash their cash.
These types of programs in California and other states are a great platform for individuals to get themselves acclimated into the banking world. There are still many individuals which will need some extra persuading to get them to participate in the banking world again. Quite a few of these individuals had a negative experience with banks. Monthly account fees, bounced check fees, and unexpected debits all contributed to the closed bank accounts. Getting a check cashed and then have the bank immediately take most of it in fees leaves it difficult for the family to afford food and run their household.
Online payday loans will do business with good standing bank accounts.These lenders do not dig into your credit history, but look into how you manage your bank account. Most responsible lenders will want to see the most recent 30 day statement in order to process a loan. Since payments come from your checking account, a bank account with too many overdrafts is a red flag warning for a direct online payday loan lender.