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Can A Bank Refuse A Checking Account?

With developing countries closing in on the gap as 53% of their inhabitants holding a bank account at a financial institution, it’s no surprise that the number of bank account holders worldwide increased by 700 million between 2011 and 2014. Although this a stellar figure, there is still a large chunk that remains unbanked or has no access to a checking account. What is alarming is that this is not exclusive to developing countries. A portion of Americans are also finding it hard to move beyond the simple savings account and upgrade to a checking account. What are the reasons for this?

A Bank Can Refuse Customers A Checking Account

One of the biggest reasons a bank can refuse a customer a checking account is because the account carries a little more clout than a savings account. There are also a few things the bank “allow” with a checking facility that savings accounts don’t offer. 

  • Check cards don’t always take the amount off the balance immediately, which can cause the account to go into excess.
  • Some banks have a system that honors debits even when the account will go overdrawn.
  • A checking account often has a checkbook linked to it, which can be a risk to the beneficiary of the check.
  • There is an internal rating that provides the bank with an internal score on the account. Banks then use this information only for small finance deals and even credit cards.
It’s All In The Numbers

Customers who have had their account refused, can request their information from a company that works much like a credit bureau, called ChexSystems. Customers can read about it here to discover more details regarding reasons they may have been refused in the past. For many, it could be due to excessive returns on their accounts, fraudulent use, and more. A report from the other credit bureaus might also be helpful as there may be derogatory information on there too.

All is not lost when it comes to checking accounts as customers who find themselves in a predicament may be offered a second chance account. These accounts don’t allow the account to go overdrawn and customers won’t have access to a check book. These accounts are for remedial purposes and tend to be rather costly. With this account, customers have the chance to start over and rebuild their internal banking score, as well as overall credit score.