Manage Your Money Without a Checking Account

Reloadable credit cards and prepaid Visa or Mastercard accounts help you manage your money without a checking account. They provide tools like online bill payment and account management, ATM access, and direct deposit just like a checking account without the risk of overdraft fees.

These cards are also much easier to obtain than a checking account. Because banks risk losing money on checking accounts through fraud or misuse, they require certain identification and a ChexSystems check before you can be approved. ChexSystems is a warehouse of information about consumers’ negative checking account activity.

If you overdraw your checking account or have a returned check issue, your bank may report you to ChexSystems. That information is then relied upon by other banks when you go to apply for a new checking account.

In 2000, consumer complaints about ChexSystems led some banks to revise how they used the information in the warehouse but it did not lead to overall reform. Instead, a new warehouse of information was created called Early Warning Services. All of the information banks report to ChexSystems also tends to get reported to Early Warning Services. Now, consumers might be denied a checking account because of information in either of these two databases of checking account activity.

In practice, these services allow banks to share information about any negative experience they had with YOU as a checking account customer. This can make it difficult to obtain a new checking account. Is it unfair? Probably – in some cases.

Everyone makes mistakes, especially financial ones. It should not mean you are unable to access the tools most people are able to use to manage their money. Reloadable credit cards (prepaid credit cards) solve that problem. They offer all the benefits of checking without requiring a ChexSystems account check.

Another reason consumers are drawn to prepaid cards for account management is that the use of checks is significantly declining. Checks are antiquated forms of payment.

The Reserve Banks have continued their efforts to downsize their paper check processing infrastructure as paper check volumes continue to decline nationwide. The Reserve Banks have already reduced the number of sites at which they process checks from forty-five in 2003 to nineteen in 2007 and have announced that they will consolidate to four check processing offices by early 2011.

Making a change in how we manage our money takes time but the internet continues to play a role in delivering new and better ways to handle our income and pay our bills.

Can’t get a checking account? Reloadable credit card companies say it doesn’t matter to them – they appreciate your value as a customer.