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? ›

Each bank or credit union has its own policies about the way the information in your banking history report impacts your ability to open an account. This can include the amount of time that has passed since events like an involuntary closure or repeated overdrafts.

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

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.

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.

If you've been denied a bank account, ask the bank why this happened. Depending on why you were turned down, you may be able to move forward by clearing up your checking account report, trying a different bank or using alternative banking products.

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.

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.

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.

Unusual credit activity, such as an increased number of accounts or inquiries. Documents provided for identification appearing altered or forged. Photograph on ID inconsistent with appearance of customer. Information on ID inconsistent with information provided by person opening account.

Some major banks that don't use or rely solely on ChexSystems when approving new deposit accounts include Bank of America, Capital One, Wells Fargo, and U.S. Bank. Other options include Navy Federal Credit Union, Varo Bank, and OneUnited Bank.

Can a bank legally not give you money? ›

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

– Do I have a right to a bank account? The law does not include a universal right to a bank account for either people or businesses, according to the FCA. As long as they comply with the relevant rules and legislation, firms can decide whether to provide a payment account based on commercial and risk factors.

If your name is listed in the system and it reports a low score, your banker will give you a copy of the free ChexSystems report and likely decline your application. When you're denied an account due to a low ChexSystems score it can be disappointing—but do not lose hope.

MISHANDLED ACCOUNTS

The closure of the account and/or (b.) The dishonor of any check thereunder which may be presented to the BANK after the closure of the account and/or (c.) Reporting by the BANK of the closure of the account and the reason/s thereof to the BAP.

Yet, the longer it takes for someone to complete an application, the higher their chances of abandoning it. Banks that fail to provide a seamless and effortless account opening experience risk losing valuable customers to competitors.

This might include paying off debts, maintaining good financial behavior, and rebuilding creditworthiness. Once the debts are settled or resolved, the blacklisting or associated fees may eventually expire or be removed, depending on the bank's policies and credit reporting regulations.

You can be denied an account if you're in debt to another bank because of an overdrawn account or overdraw your account too often.

How long does negative information stay on ChexSystems and/or EWS consumer reports? Generally, negative information remains on ChexSystems and/or Early Warning Services (EWS) consumer reports for five years. Under the Fair Credit Reporting Act, certain negative information may be reported for up to seven years.