Checking account alternatives: Your options when you can't get a bank account

Everyone wants financial security, and for most, that starts with a bank account. For some people, though, this isn’t an option.

There are many reasons why a person can’t or doesn’t want a bank account. Luckily, there are plenty of checking account alternatives available.

Money makes the world go around. If you want to buy something online or don’t have cash on hand, a check or debit card would be a great choice. You may think you've lost many financial avenues without a bank account, but that’s not true.

There are several alternatives that provide you with the flexibility of a bank account without actually having one.

Prepaid Credit Cards Are Common Checking Account Alternatives

One of the most popular alternatives is a prepaid credit or debit card. This isn’t a checking account, but a card that you load money onto, even your paycheck. Many of these cards offer direct deposit or mobile banking.

You can even get prepaid debit card loans for those days when there’s a little too much month left at the end of the money.

The advantage is that you have the ability to buy online and don’t have to carry cash around everywhere. If you lose cash or it's stolen, there’s isn’t much to do. If someone steals your prepaid credit or debit card, you can have it shut off and cut the losses.

In case you want to improve your credit rating, then this is not an option. Prepaid credit cards don’t report to credit bureaus.

There are also a large number of vendors available, so you can do research and pick the one that best fits your needs.

Second Chance Bank Account for People Denied Regular Accounts

A traditional bank account has a small interest rate connected to it and doesn’t usually carry a monthly fee. It also may come with overdraft protection and other benefits. If you’re denied for a traditional account, then ask if they have second chance bank accounts.

These accounts are for people who have had problems in the past but deserve a second chance. They're like a regular checking account with a debit card and checks. The only downside is that they lack the bells and whistles of a traditional account.

The bank is taking a risk on you, so there may be a monthly fee and a minimum balance. You may not qualify for overdraft protection. There can also be higher fees for overdrafts.

If you maintain a good balance and don’t incur any fees, then you may eventually qualify for overdraft protection and other benefits. It also counts as a checking account, so the bank reports positive and negative behavior to credit bureaus.

Carrying Cash Is Always an Option

There are many people who prefer the feeling of cold hard cash in their hands. They don't want to fork their money over to a bank.

You can take your paycheck to one of many available check cashing places and get cash in hand. You’ll likely pay a nominal fee.

The benefits of having cash is that you always know exactly what you have available. You don’t worry about something clearing that wasn’t expected. With a checking account, you cannot realize how much you spent until you’re down to your last dollar.

It’s also limiting. You can’t buy anything online and paying the utility bills might be difficult. Many utility companies have designated pay centers, but there may not be one near you.

There’s also the risk of theft. If someone steals cash, there's little chance of getting it back. Even if the police catches the person who took it, they likely spent the money.

If you’re trying to make savings, then there needs to be a physical place to put it in, such as a cookie jar.

Secured Credit Cards Help Build Credit

If you want to have the benefits of a debit card and build your credit, consider a secured credit card. A traditional credit card is like a loan. You have as much money as you can borrow and then must pay it back with interest.

With a secured credit card, you provide the company with money in advance to cover the limit on the credit card. For example, if you want a $500 limit on the card, then you pay the credit card company $500 to secure the card.

If you default on the card, they have the $500 and suffer no loss.

The biggest downfall is the need to have the money upfront. Also, you’ll still need to find a way to cash your paycheck and send in the money to the credit card company. This includes the initial security payment and monthly payments.

You’ll have a credit card to help build your credit and a way to pay for items online.

Be careful, though. Despite having the security money, late payments can still damage your credit. If you choose a secured card, be sure to make payments on time.

Work to Get a Bank Account

If you want a traditional bank account, then ask the bank what you need to do. These alternatives provide the benefits and flexibility of a checking account.

Once the bank tells you what you need to do, work to complete it. Clean up your credit or pay of a negative balance on a previous account. Eventually, you’ll get the account back, but that doesn’t mean you have to stop using the alternative.

You Have Options

When you’re turned down for a bank account, it may feel like you’re cut off from the financial world. Many of these checking account alternatives give you the benefits of standard checking. Choose which one fits your situation best.

Interested in how to borrow money with a bad credit rating? Check out our post to see how you can do it!