Can a bank or credit union refuse to open a checking account for me? | Consumer Financial Protection Bureau (2024)

FAQs

Can a bank or credit union refuse to open a checking account for me? | Consumer Financial Protection Bureau? ›

A bank or credit union may refuse to open a checking account for someone who cannot provide the identification that it requests. Tip: If you can't get a checking account because you are listed as having a prior problem with handling a checking account, try another bank or credit union.

Yes. Banks generally have discretion to determine to which parties and under what conditions they provide their products and services.

Financial institutions check to see if a past account was “closed for cause,” meaning the bank or credit union shut down the checking account because of something you did. If the report shows you have a record of mismanaging other bank accounts, the institution could refuse to open a new account.

Why can't I open a bank account? A bank can deny your request to open an account because of past accounts that were closed due to negative balances, a history of overdrafts or problems verifying your identity. If you're unable to open a bank account, here are some tips on what to do next.

In some cases, banks are allowed to refuse to open a bank account for an individual. You may, for instance, be refused a bank account if you have previously been declared bankrupt, or you have a very poor credit rating, or you have a fraud conviction. They are not required obliged to explain their reasons for refusal.

Common reasons consumers are turned down for a bank account include a history of overdrafts, unpaid bank fees or suspected fraud. Applications can also be denied due to mistakes on one's checking account report. If you've been denied a bank account, ask the bank why this happened.

Credit unions often use ChexSystems to evaluate potential customers. They might use these reports and scores to decide whether to approve or deny applications, just as many banks do.

You can be denied a checking account for a number of reasons, such as negative marks in your banking history, suspicions of fraud or an inability to verify your identity.

Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.

Basic bank accounts are intended for people with bad credit records or blacklistings. The application process for these accounts does not involve a credit check, but they provide necessary banking services.

Why would the bank choose to not open an account for you? ›

(1) Your credit score is very low. (2) You have been prosecuted for writing bad checks or credit card fraud. (3) You are not of legal age to open a checking account. (4) You have or had an overdrawn account at that particular bank before.

Having too large an overdraft: the account provider may not want you to transfer your debt. Having an undischarged bankruptcy: this can make getting a standard current account impossible until it is cleared. Defaulting on payments: this can impact your credit history and make you seem less attractive.

Chime Second Chance Banking

Chime is an online-only fintech company that offers banking services through The Bancorp Bank, N.A. or Stride Bank, N.A. Its Second Chance Banking option boasts no monthly fees and no credit or ChexSystems check.

Yes. Your bank may hold the funds according to its funds availability policy. Or it may have placed an exception hold on the deposit.

Bank accounts are typically frozen for suspected illegal activity, a creditor seeking payment, or by government request. A frozen account may also be a sign that you've been a victim of identity theft. Each situation requires specific actions to unfreeze the account.

Such negative activities that show up on your report and hurt your approval chances include bouncing checks, leaving an overdraft balance unpaid, abusing a debit card or applying for too many accounts in a short period of time, according to credit bureau Experian.

When the bank denies your application for a checking account, checking your ChexSystems report and fixing any problems or errors could help. If you still can't get a regular checking account, consider getting a second-chance bank account or prepaid debit card to help manage your spending.

A bank account freeze means you can't take or transfer money out of the account. Bank accounts are typically frozen for suspected illegal activity, a creditor seeking payment, or by government request. A frozen account may also be a sign that you've been a victim of identity theft.

Yes. Your bank may hold the funds according to its funds availability policy.