BY Sadediji2gist
Updated August 16 2018
Things are typically easier with a bank
account . But you might have your reasons for
living life without a bank account. It might be
a temporary thing, while you clear up identity
theft issues or problems you’ve had with
banks in the past. Or you might have just
decided to do without banks altogether.
Either way, it’s essential to know how to
function bank-free.
One solution is to use a prepaid debit card , a
bank-like tool which helps you accomplish
most common financial tasks on your own.
You don’t need to use prepaid cards, but they
are a shortcut to banking (without all of the
same problems that come with banks).
Apps and online services are also
alternatives. They have slightly less
functionality than prepaid cards, but they
might fit your needs better.
Prepaid Cards
Prepaid cards let you do many of the same
things that you’d do with a checking
account. However, you don’t need to open a
fully functional bank account. Instead, you
“load” funds onto your card and spend the
money that you loaded. Key differences
between prepaid cards and bank accounts
include:
Some prepaid cards have monthly
maintenance charges and other fees,
but there are free cards out there . If
you do end up paying fees, you might spend
a lot less than you’d pay to a bank or credit
union. For example, cards like the Amex
Serve card can virtually replace a checking
account at little or no cost.
Now, on to some basic banking tasks, and
how to get them done without a traditional
bank account.
Everyday Spending
Until society goes cashless, cash is an option
for day-to-day expenses. For things like food,
gas, transportation, and entertainment, cash
is often an acceptable form of payment. The
main drawback is that you need to carry
cash on you, which can be a safety issue.
Plus, if you lose cash, there’s no way to get
it back.
There’s also the issue of getting cash in the
first place: You can’t withdraw funds from an
ATM unless you have a bank account or
loaded prepaid card.
Cash is fine in most places. But you might
have trouble getting change (or with requests
for exact change). To make things easier, try
to get small bills, and buy passes (such as
bus or subway passes) to reduce the amount
of cash handling required—and the number
of coins you end up with .
Prepaid debit cards can help with most of
your everyday spending needs. There are
certainly a few places that don’t accept
plastic , but most merchants are happy to
take payment with a prepaid card. In fact,
they’ll probably never know whether it’s a
prepaid card or a standard bank-issued debit
card . You can spend as much money as
you’ve loaded, and if the card is lost or
stolen, you can cancel it and get a
replacement. If you ever need cash, it’s easy
to withdraw funds at an ATM .
Paying Bills Without a Bank Account
Unfortunately, billers typically don’t accept
cash. Utility companies (gas, water, and
electric), phone companies, insurers, and
subscription services usually want payment
by check, a card, or an ACH transfer from
your bank account . Some billers allow you to
come in person and pay with cash, but it’s a
burden to make the trip every month during
business hours.
If you’re planning to operate with cash only,
ask your billers where you can pay in person.
Some offer local service centers, while others
allow you to pay at national supermarkets
and convenience stores ( using Western Union
agents, for example). If you must mail in a
payment, use a money order made payable to
the biller instead of cash.
Again, prepaid cards can make things easier
(and less expensive). Many prepaid cards
offer online bill payment . You can set up a
payment, and your card issuer will print and
mail a check to your biller (or send the funds
electronically). What’s more, the service
might be free. If your biller accepts payments
from a credit or debit card, you can just
provide the card number instead.
Cashing Checks
When you get paid with a check and you
don't have a bank account, you’ve got
limited. It’s typically best
to deposit checks instead of cashing them.
Depositing funds prevents you from walking
around with a significant amount of money,
which can get lost or tempt you to spend
more than you should.
However, you may occasionally need to cash
a check.
With no bank account available, your best
option for check cashing might be to take the
check to the check writer’s bank. For
example, if the check pays out of an account
at Bank of America (see where to find this
information), take it to a Bank of America
branch to cash it. Just be aware that you
might have to pay a fee if you’re not an
accountholder, and the branch might refuse
to cash the check.
Retailers might also be willing to cash
checks for you. For example, K-Mart cashes
some checks for free, and mom-and-pop
stores that you shop regularly might also do
the same. To use this method, you need
to sign the check over to the retailer , which
can be problematic. Check cashing stores
(often in the same location as payday loan
shops ) might also be an option, but they’ll
probably charge more.
If you don’t need cash right away—or if you
only need a small amount—a prepaid card
can come in handy. Most prepaid cards allow
you to deposit checks to your account
by snapping a photo with your mobile phone.
Within a few days, you can withdraw those
funds at an ATM.
Storing (and Saving) Money
One thing banks do well is hold money for
you. Even if your bank burns down or gets
destroyed by a natural disaster, your money
should be insured by the FDIC . Credit unions
have similar protection. It’s risky to walk
around with large amounts of cash or keep
all of your money in your home—it could get
stolen or burn in a fire. If you’re going to live
without banks or prepaid cards, get a
fireproof safe and find a good place for
installation.
Prepaid cards allow you to safely store
money that you load in an account linked to
your card. The account might or might not be
FDIC-insured, and you might not earn interest
on your savings , but the money can’t “walk
away by itself” or go up in smoke.
Sending and Receiving Money
If you want to pay friends and family (as
opposed to businesses that send you a bill),
there’s good and bad news: You’ve got
several non-bank options available, but many
of those services require a bank account (or
at least a prepaid debit card) to operate.
Apps like PayPal, Square, and Venmo are
often free for person-to-person payments, but
you need a way to fund the payment. For
most people, that means linking a bank
account to the online service, but that’s
obviously not an option if there’s no bank
account to link.
With some services, you might be able to
“load” money into an account by sending a
money order, and others allow you to buy
cards at retailers to add funds to your
account. For example, PayPal offers My Cash
cards, and you can load some prepaid cards
with cash at retailers like Walmart.
Get a Loan
In addition to the logistics of day-to-day
spending, bank accounts make borrowing
easier. But it is possible to get a loan without
a bank account.
Lenders often ask for your bank account
details when you apply for a loan so they can
fund your loan and track where the money
goes. Applying without that information
throws a wrench in the works. What’s more,
even if you get approved, you’ll need to do
something with the loan proceeds—either
cash the check or store the money in a
prepaid account. All of which points to the
fact that borrowing is harder without a bank.
Your options for borrowing are limited when
you’re unbanked. You’re probably left with
less-competitive lenders like payday loan
shops and car title lenders . But fees are
notoriously high when you use those sources.
Before giving up hope, visit a local credit
union or small community bank and ask if
you can get a loan. It may take some effort
to get approved.
When buying a car, you should have better
luck, even without a checking account. Auto
dealers can repossess your vehicle if you
stop paying, which may give them all the
confidence they need to approve your loan.
No comments:
Post a Comment