When looking for a financial institute to do business with, there are 22 tips you ought to consider before settling on one.
1 – Keep the Accounts You Have Right Now
You should never just close accounts, just because. Keep it! You might need it someday.
2 – Locate a Bank With the ChexSystems
Nearly 80 percent of all banks are using ChexSystems. However, some smaller banks and credit unions don’t use ChexSystems to verify accounts. It’ll be a little difficult; but you can find a bank that doesn’t.
A trend of ignoring incidents files over two years ago is occurring with many of the well-known banks (Bank of America, Citibank, etc.). Perhaps it’s because the Federal Reserve was look into ChexSystems, which was highly publicized with Wall Street Journal articles. If you’re going to make things work for you, you’ll need to school the bank representative or the accounts clerk about changes they were ordered to do. You want to persuade them to research the changes.
Credit unions have strict restrictions – you need to live in the city or county where it’s located or work for a particular company or in a particular industry. Because of these restrictions, most people think they won’t qualify for an account with a credit union. Don’t worry! There is hope. Do you have someone in your family who is eligible? If so, then immediate family tends to be automatically eligible. And, here’s the best part: when you’re a member and your family member leaves the credit union or you need to move for a job, your membership won’t be affected.
Credit unions are much more likely to allow you to have savings-only accounts, regardless of the ChexStystems record you have. Read the fourth recommendation as to why this may be the one thing you need.
Avoid the bank and go with direct deposit. If you’ve got direct deposit, you’ll qualify for a debit card either from ecount or Directo. Be sure to talk with the Human Resource department at your job to see if they use or have thought about using Directo. Many banks are also offering these cards as well. However, banks are also offering convenience checks to use at stores who don’t accept debit cards.
3 – Don’t Get Overdraft Protection
Some folks have been denied accounts because they wanted the overdraft protection. When you request this service, the bank will use your credit to verify the ChexSystems record. If you have a negative ChexSystems record and bad credit, the bank will deny your application. If you believe this is what happened to you, reapply with that option.
Bear in mind that some banks will reject any new application you make automatically because of the system they have. It may be for all branches or just that bank branch. However, every time a request for your record is made, it gets recorded with ChexSystems. If there are three or more requests in 90 days, it’s a negative point against you.
4 – First Obtain a Savings Account
Before you apply for a checking account, get a savings account because some banks don’t use ChexSystems for savings accounts. A savings account opens up several options to you like Electronic Funds Transfer (EFT), PayPal and Automated Clearing House transactions (ACH).
5 – Go at Closing Time
Nobody likes working late or overtime. If you go to the bank 10 minutes before they close, the person doing the application is less likely to do a ChexSystems verification. The smaller the bank you apply to, the more chances for this to work.
6 – Ask for the “Offline” Verification
Many banks verify consumers with the online program at ChexSystems. Tell the clerk that you feel ChexSystems is wrong and that you’d rather do an offline verification. An offline verification is much more specific because it’s mainly done by human with ChexSystems, not a computer. If you do it this way, it’s less likely to find any incidents in your name or names similar to you. If you believe you’re a victim of identify fraud, be sure you call the Social Security Fraud Hotline (800-269-0271) or the FTC Identity Theft Hotline (877-438-4338).
7 – You and Your Spouse Should Apply Individually
Couples should apply individually because ChexSystems may not match them to an incident. Apply for individual accounts and don’t mention the other person. If this doesn’t work at one bank or branch, your spouse should apply for his/her own account.
One you’ve got the account and have banked for a time with the company, they’re generally more willing to change the account from individual to joint… even with a negative ChexSystems record. This particularly works with online banks. Joint accounts are not a good idea to have anyways.
Keep in mind though, each time you apply to a credit union or bank and a request is made for your record, it’s recorded at ChexSystems. Three or more requests made in the past 90 days will hurt your record.
A donor with a bank account could grant you Power of Attorney. After the document is notarized, you can be presented to that bank, allowing you to certify deposits and sign any checks on the account. Keep in mind that granting Power of Attorney is not without some risks and you may want some legal advice about it.
One more thing: if you’re reported to the ChexSystems because of an issue with your spouse’s account and it’s not a joint account, this is a common error by banks. Be sure you tell the bank branch manager, ChexSystems and the Federal Reserve Complaints Department so they stop now.
8 – Mexican ID
Any person with a Mexican ID can open an account with Bank of America, Citibank, Chase Texas or Wells Fargo. Folks with Mexican ID do not have social security numbers and, because of that, it’s less likely to produce negative results with ChexSystems.
9 – Canada or Foreign Bank
Consider opening a U.S. Dollar account at a foreign bank such as a Canadian Bank. Many people who are moving to Canada will open an account before they actually move there. Some of the banks in Canada that’ll open accounts to residents of the United States include:
- Bank of Montreal
- Canada Trust
- Royal Bank of Canada
- Toronto Dominion
To open an account, you will need some type of identification such as U.S. driver’s license, passport, etc. Since Canadians use a social insurance number, you’re not likely to be asked for your social security number.
10 – Get an ETA Account
If you have government benefits, it’s imperative you get an electronic transfer account (ETA). Find banks or credit unions using the ETA-Find.gov website.
11 – Deal With the Issue
Bear in mind that the above suggestions are just quick fixes. If none of them work for you, then the other options at your disposal are going to take more time as well as some effort. For example, a month will have passed before you get any kind of reply with ChexSystems. Whatever the reason for the issue, no solution will be clear things up immediately. If you don’t have an account and cannot open one, life can be a little harder.
Cash Your Paycheck – Some folks, without a checking account, will use a check cashing place to cash their check. The problem with this is that these places take 2 percent or more of the total check. If you have access to a bank, you don’t have to worry with this and you don’t have to have an account with that bank. Just have identification on you.
Consider having a friend or relative cash the check for you. However, the majority of banks will place a hold on these funds for five business days and could be an issue for the person cashing the check for you.
Be sure you take precautions when carrying a lot of cash.
Paying Your Bills – Money orders can be purc
hased from many places – Wal-mart, grocery stores, post office, banks, etc. Prices range from 40 cents to $2. Personal checks or credit cards are generally not accepted to pay for money orders. Traveler’s checks are similar to money orders.
Budget Your Money – Be sure to prepare for possible issues by having a cash reserve. For example, your vehicle may break down or your paycheck could get lost in the mail. Things like that do happen, and when you have a reserve of cash, you won’t be caught off guard and unprepared.
12 – Modify the ChexSystems Report
After you got a copy of the ChexSystems report, you want to ensure that all banking institutions read that you have paid off all owed amounts. This follow up report to what your bank files saying you no longer owe money on the account. ChexSystems requires all banks to do this but very few will do.
If you notice this happening to you, talk to the bank that reported it to ChexSystems and ask them to submit an update with ChexSystems so that it shows you have paid all debts owed. Contact ChexSystems yourself to requests that the incidents be amended but it takes time to do. You’ll want to do because some banks ignore those ChexSystems incidents so long as they show you have paid your debt. Once amended, apply again or apply at another bank.
13 – Negotiations
If you’re in debt to the bank that reported you, use it as leverage to help you with ChexSystems.
14 – Dispute Incidents with Reporting Bank
Talk with the financial institution that reported you to ChexSystems to see if they’ll file a “delete record” request. You should give them a very good reason why you deserve their help. While the bank policy is typically to let loss prevention employees handle this matter, ChexSystems will speak to any person from their bank that knows the banks’ ChexSystems security code. Find a sympathetic ear in the bank that will call ChexSystems on your behalf.
Important: the only way to get that rusty wheel going is with a little grease. If you paid off the amount you owed shortly after you were notified, be sure you mention this. Be sure to play on their emotions and be persistent. Many folks who play the sympathy card do have their voices heard.
Here are some things you’ll need to do:
- A – Talk with the bank manager of the bank that reported you and ask him/her file the deletion with ChexSystems. It’s much more effective to do in person instead of by phone.
- B – If you don’t get answers, wait one day. Then try step A again. Do it until you’re successful.
- C – If your bank has more than one branch, be sure to try using the same method with another branch.
Here’s something else you should keep in mind: There’s so much wrong information out there about ChexSystems in the banking community and inside ChexSystems too. If you do face to face communications, take a notepaid with you or get a tape recorder. This puts them on the defensive since they can’t make things up just to get you to leave. Record any and all conversations – but make sure you let them know first.
15 – Dispute Incidents Right to ChexSystems
If you find any information that’s wrong in the ChexSystems report, send a written, signed letter to dispute the incident to ChexSystems. That letter should be sent via certified mail and have return receipt. If not, ChexSystem can claim that they never received the item. There are two reasons you want to dispute this:
- A – ChexSystems will agree with you and remove it.
- B – The process to remove it works too much work for both the bank and ChexSystems, which causes them to drop the ball.
You can get a sample dispute letter from the FTC.
Be sure you carefully go over the report to find anything inaccurate, as this can make you eligible to file the dispute. ChexSystems will then be required to obtain verification from the reporting bank. This is where bureaucracy can help you. If the bank doesn’t respond within 30 days, ChexSystems will have to remove the incident from the report until the bank does what’s been asked. Banks don’t like verifying ChexSystems incidents because it generates no income for them and is time consuming. If the bank you do business with has been bought or merged, additional effort must be taken to verify the incident.
ChexSystems will let you know the results within 30 days. Should the bank respond, the results will include the bank source’s name, phone number and address. From that, you can talk to that person directly about the incident. However, if they don’t respond, you’re off the hook.
If you’d like, you can request that the dispute be placed into the incident file so that every time the incident is read, the dispute is available to be read as well. This can help and hurt you case, depending on the situation.
Bear in mind, the process to dispute something costs the banks and ChexSystems money while there is no cost to you. Don’t believe ChexSystem’s claim that you must send the dispute right to the reporting bank.
16 – Bring the Matter to Court
Nobody likes going to court especially when it comes to money being involved. If you’ve got proof of a bank error or feel you’ve got a decent argument, consider taking the chance and going to court. If you can afford it, have a lawyer help you. However, if you choose to go alone, here are some good suggestions to make your case:
The first thing you need to do is get the name, title, telephone and address of the General Counsel of the reporting bank. Be sure you let them know what you intend to do so they’ll take it more seriously if they don’t delete anything. Be sure you’re clear that you want to open another account somewhere else and your old bank is not allowing this to happen. Be sure you let them know a specific date you want things to be done by. Send that letter by certified mail and get a return receipt.
If the bank fails to respond or that it will not delete the information, you need to work with ChexSystems as your next move. File a dispute with ChexSystems if you have yet to do so and get them to verify the information from the reporting bank that’s in your file. Once you verify these things, tell ChexSystems you plan on challenging those records. Send a copy of the letter you write to the bank’s General Counsel.
This is the point you need to start thinking like a lawyer or retain one to represent you. The things that you can do to at this point are:
- Write additional letters to ChexSystems or the bank that reported you
- File a civil suit
- File a small claims court case
There are numerous arguments you can use to your advantage including the pretty general one: the bank failed to follow reasonable procedures when it reported you to ChexSystems.
17 – Bring it to Your State’s Attention
Sometimes you don’t get any cooperation, and if that’s happening in your case, take your issue to your state’s Attorney General who will look into it. If you really want to mess with the hornet’s nest, take to a person in the bank’s Treasury Department. Remind these folks who they are working for.
18 – Take Advantage of Variation In Your Identity
When you want a bank account, they’ll want the following information to provide to ChexSystems:
- Social security number
- Prior addresses
- Birth date
- Driver’s license number
- A – If you don’t have a social security number, it’ll be more difficult for ChexSystems to match you to a record they have for your name. If you have no SSN and you’ve changed your address since it was reported, it’s unlikely that ChexSystems will be able verify you. Don’t volunteer any information if you can help it.
- B – There are occasions where information that identifies someone changes over time; this makes it more difficult for ChexSystems to match each person to their respective files – moving from one state to another, new address, new driver’s license number, name changed after marriage, etc. You can take advantage of this and many other loopholes.
The list below contains some of the information ChexSystems look into for banks that inquire about a new account applicant.
A – Social Security Administration
ChexSystems will run your social security number against SSA, just to get a confirmation that number you have is legit, what state that number was issued in and when it was given out. Be sure to check out the Informus site where you’ll enter in the social security number. The SSN on the application is used to identify you and enable the bank to report income to the IRS. If you provide an inaccurate number, it’s a negative mark on the ChexSystems record. Plus, you’ll get the attention of the IRS and SSA.
B – Driver’s License Bureau
If your bank does work with ChexPlus, which is a ChexSystems additional service, the system will verify the state identification number and driver’s license. They will then search for data about you on the SCAN Retail Check Network. This number will then be verified against the DMV records.States vary but the majority will verify just that the number is properly formatted. Other states – Florida, Minnesota and Texas, will give ChexSystems the name, birthdate and address of the person under the number.
C – Retail Checking Network
Should the bank be a ChexPlus subscriber, ChexSystems will take the driver’s license number on the application and run it against the retail check network SCAN. This will tell them if there are some unpaid NSFs.
D – Banking Institution Incident Reports
If you have an incident that’s been reported to the ChexSystems, the bank reporting it will provide the system your name, full or last four digits of the SSN, address, account number and reason for the report. Any search for incidents performed on the SSN will show up.Since many incidents on the ChexSystems report don’t have the full SSN, an additional search using your name and address will be performed. Due to the high amount of duplicates that can appear, just incidents that come under the current state you live in are factored in the search.Thus, do not place or give any prior addresses or information to the banking institute to use against you.
19 – Have the Bank Beg You for Your Business
Banks don’t make a lot of money from their checking account because of the low average everyday balances. Thus, they could really care less if you stayed and do business with them. However, invest in CD or got loans through the bank and they’ll consider you a valuable member of the bank – especially the financial consultants and loan officers.
Invest in a short-term CD from your bank; some mature within a month. When it does, the financial consultant will do whatever he/she can to get you to renew the CD. He/she may even do some finagling on your behalf and have the ChexSystems incident deleted.
20 – Open a Checking Account Through a Brokerage or Money Market Account
Be sure you look at Yahoo!’s Broker Directory or MSN MoneyCentral’s Fund Directory to assist you here. For the most part, no brokers or funds verify the new accounts using ChexSystems. Many of them offer consumers a low initial deposit with either low or free cost checking. Many will also present you with a bonus for being a new customer. Here are some places that will welcome your money:
- Merrill Lynch – You can open an account for $2,500 and doesn’t use ChexSystems for verification.
- Prudential Securities – There is no minimum opening requirement for most locations. However, some do ask for a minimum opening amount of $100. You can also apply over the phone.
- TD Warehouse – This allows you to apply on the Internet for a brokerage account with the money market option. This is not a checking account but rather a broker’s account. However, you will get checks and an ATM/Visa card. But, you must choose the Money Market account on your application to get this. Bear in mind that after one year, TD will do an account review and can cancel the checking privileges if you fail to do stock transactions.
- Charles Schwab – This banking institute does not do credit checks and you get a checking account and debit card with their Schwab One securities account. However, you need $5,000 to open this kind of account.
- Franklin Templeton Investments – This institute has a money market account that doesn’t do verification with ChexSystems and comes with a checking account. There are no minimums at this moment.
- Strong Funds – This also has a money market account with no ChexSystems verification. No minimums either.
Important: if you rely on this brokerage account to be your only bank account, you need to ensure that it can deposit your paycheck or other made out to you checks. If not, you’ll need to get an EFT or ACH to fund the account.
You may also use them as Internet bill-pay service and have the funds withdrawn from the account. Services like PayPal use EFT and ACH transactions, which is an option available to you.
21 – Get The Filing Guidelines of the Banking Institute
Believe it or not, but you can have your name removed from ChexSystems reporting policy but demanding the bank give you the reporting policy in writing. ChexSystems doesn’t edict the policy and the majority of banks have yet to design one. That means you’re asking them to do something they have yet to get accomplished.
The FCRA does have some certain words in regards to reasonable procedures and reporting data to the credit bureaus. And, if the bank has no filing guidelines, they cannot prove they followed the reasonable procedures when they reported the incident to ChexSystems. This makes them quite vulnerable to lawsuits because banks that don’t have reasonable procedures in place or don’t follow them can be held liable for damages due to their negligence. The bank may decide it’s less costly for them to delete the incident with ChexSystems than deal with you for an extended period of time.
In the letter you write, be sure that you demand the bank’s ChexSystems reporting policy is in compliance with the requirements as mandated by the FCRA. Be sure you let them know that if you they don’t have this policy that you will talk with an attorney and let the lawyer get the information.
Let them know that you want to see the bank’s Community Reinvestment Act file for no charge. They must do so upon your asking for it. While you won’t win friends asking for this, that’s not the goal you’re going after.
22 – Look Into ChexSystems
The majority of states demand that companies register with the Secretary of State before they can do business in that state. However, ChexSystems doesn’t always do this. Virginia is one state that demands it. One Chex Victim sent a letter to the bank with carbon copies to the state’s attorney general and Chex Systems. There are other local, county and federal regulations that can also help you. Use the red tape to your advantage.
Good luck to opening an account with the financial institution of your choice!