Getting Banked: Opening (or Reopening) a Bank Account

*Going without a bank account is more common than people think — roughly 1 in 25 U.S. households are “unbanked” (about 5.6 million, per the FDIC’s 2023 survey), and the most-cited reason isn’t fraud or bad credit, it’s the belief that you don’t have enough money to meet a bank’s minimum (FDIC National Survey). It’s also expensive: without an account, cashing a paycheck and paying bills means fees that quietly add up to far more than a basic account costs. This module is the on-ramp — why an account beats check-cashers and prepaid cards, exactly what you need to open one (including with an ITIN if you’re not a citizen), how the low-cost “safe” accounts work, and what to do if you’ve been denied. It builds on Week 5 (Bills and Banking), which explains what checking and savings accounts and overdraft are — this picks up where access is the problem. It’s for anyone who is unbanked, was turned down, or is helping someone get set up. This is general financial education, not advice about a specific bank or product.*

Why an account beats the alternatives

When you don’t have an account, the everyday tasks of cashing checks and paying bills get routed through services that each take a cut:

• Check cashers typically charge a percentage of every check — so a chunk of each paycheck disappears just to access your own money.
• Money orders to pay bills cost a fee apiece, and you often have to buy and mail them in person.
• Prepaid debit cards can carry activation, monthly, reload, ATM, and even customer-service fees, they don’t always let you load cash easily, and — importantly — they don’t build any banking history that helps you later.
• Carrying cash means a lost wallet, a fire, or a burglary can wipe out your money with no recourse.

A basic bank or credit union account flips all of that: you can get paid faster and free through direct deposit, pay bills online at no cost, and your money is federally insured (by the FDIC at banks or the NCUA at credit unions, up to $250,000) and far safer than cash. Week 5 covers how checking and savings accounts work; the point here is simply that being inside the system is almost always cheaper than being outside it.

Opening your first account: what you actually need

The barrier to entry is lower than most people expect. Generally you’ll need (FDIC, GetBanked):

• A photo ID — a driver’s license, state or military ID, or passport. Many banks also accept other forms, like a foreign passport or a consular ID.
• A Social Security number or an Individual Taxpayer Identification Number (ITIN). You do not have to be a U.S. citizen to open an account at many banks — an ITIN, foreign passport, or consular ID is often enough.
• A small opening deposit — sometimes nothing, often as little as $25.

You can usually apply in person, online, or through a bank’s mobile app, and you must generally be 18 (a parent or trusted adult can help a minor open one).

The fix for the biggest barrier: low-cost “safe” accounts

Since the number-one reason people stay unbanked is worry about minimum balances and surprise fees, it’s worth knowing that there’s a whole category of accounts built to remove exactly that worry. Bank On certified accounts — built to national standards by the nonprofit Cities for Financial Empowerment Fund, and promoted by the FDIC — are designed to be safe and affordable: no overdraft or insufficient-funds fees, a low monthly fee (most are $5 or less), little or no minimum balance ($25 or less), free online bill pay, and federal deposit insurance. You can find one near you (many open online) at joinbankon.org or through the FDIC’s GetBanked page. Credit unions and online banks are also often lower-cost and more flexible than large traditional banks, so they’re worth comparing.

If you’ve been denied: ChexSystems and second-chance accounts

If a bank turns down your application, it’s usually not a credit-score problem — it’s a banking-history report. Most banks check ChexSystems, a specialty consumer reporting agency (overseen by the CFPB and FTC under the Fair Credit Reporting Act) that works like a credit bureau but for your deposit and debit history. It can flag things like unpaid negative balances (often from old overdraft fees), an involuntarily closed account, or bounced checks (CFPB). A few facts give you real power here:

• You’re entitled to a free ChexSystems report every 12 months, and you can dispute errors — under federal law the agency must investigate, generally within 30 days. Request it from ChexSystems directly (chexsystems.com); the CFPB even provides sample dispute letters.
• Negative items generally fall off after about five years, and paying off an old unpaid balance won’t erase the record but does get it updated to “paid.”
• You still have ways in now. Second-chance checking accounts are built for exactly this situation — they may carry a monthly fee and fewer features (sometimes no paper checks), but they let you rebuild, and many banks move you to a regular account after 12–24 months of responsible use. Some banks and credit unions don’t use ChexSystems at all, and the low-cost “safe” accounts above are often available too.

Steering clear of the overdraft trap

One thing connects being denied an account, the fees that drain a thin balance, and the payday loans in Week 13: the overdraft. Overdraft fees are a leading cause of negative ChexSystems records and a major, avoidable drain — a single overdraft fee can rival or exceed the amount you overdrew. Two protective moves: opt out of overdraft “coverage” so that a transaction you can’t afford is simply declined instead of triggering a fee, and turn on low-balance text or email alerts. Choosing a no-overdraft “safe” account does both for you by design. Getting banked with direct deposit also reduces the pull toward check cashers and the high-cost payday and title loans covered in Week 13 — your own account, used carefully, is the cheaper foundation underneath all of it.

The money relationship in all this

Being unbanked is almost always about access, cost, and trust — not about failing at money. The system genuinely has traps that punish honest mistakes (the overdraft-to-ChexSystems pipeline is a real one), and plenty of people were pushed out by a single bad stretch — about half of unbanked households had an account before. None of that is a verdict on you. Getting banked is a foundational, dignity-restoring step: it makes nearly everything cheaper, keeps your money safe, and — over time — opens the door to credit and the rest. If the first “no” stings, it’s a paperwork problem with known workarounds, not a closed door.

The honest limit

This module explains the landscape and the options; it can’t tell you which specific bank, credit union, or account is right for you, and the exact fees, ID rules, and second-chance terms vary by institution. Account types and overdraft mechanics live in Week 5; the high-cost loans to avoid are in Week 13. For trustworthy, noncommercial help finding and comparing accounts, the FDIC’s GetBanked resources and joinbankon.org are good starting points, and the CFPB (consumerfinance.gov) covers your rights if you’re denied or charged unfairly. Compare a few real accounts before you choose; the right one is the one whose fees and rules fit how you actually live.

Key takeaways

• Being outside the banking system is expensive. Check cashers take a slice of every check, money orders and prepaid-card fees add up, and cash isn’t protected — a basic insured account with direct deposit is almost always cheaper and safer.
• Opening an account is easier than it looks: usually just a photo ID, an SSN or ITIN (you don’t have to be a citizen), and as little as ~$25 — in person, online, or by app.
• “Safe”/Bank On accounts solve the top barrier: no overdraft fees, ~$5-or-less monthly, little or no minimum, federally insured. Find one at joinbankon.org or FDIC GetBanked; credit unions and online banks are also worth comparing.
• Denied? It’s probably ChexSystems, not your credit score. Get your free report, dispute errors, and use a second-chance account (or a bank that doesn’t use ChexSystems) to rebuild — negatives fall off in about five years.
• Dodge the overdraft trap: opt out of overdraft coverage, set balance alerts, and prefer a no-overdraft account — it protects both your money and your future ability to open accounts.

Educational disclaimer: This page provides general financial education for a general audience in the United States. It is not advice about any specific bank, credit union, or account, and it doesn’t recommend a particular product. Account features, fees, identification requirements, and second-chance and ChexSystems policies vary by institution and change over time, so confirm the current details directly with the bank or credit union and at official sources such as fdic.gov, joinbankon.org, and consumerfinance.gov. Figures here (including the share of unbanked households) were drawn from official sources as of June 2026; the FDIC updates its household survey periodically, so check there for the latest. Deposit insurance protects you against a bank or credit union failing, not against theft or your own mistakes.