The Drawbacks of Not Having a Bank Account

It is a personal choice to have a bank account—not a requirement—but going without has its disadvantages

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Believe it or not, there are people who don’t have a bank account. The reasons vary as to why they have been hanging on to their cash, but there are those who feel the fees and hassles of a bank account just aren’t worth it. Instead, they use money orders, prepaid debit cards, or just plain old cash. But not having a bank account can put limitations on your financial life.

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Debbie Dragon
It is a personal choice to have a bank account—not a requirement. However there are times when you may not be able to skirt by the fact you will need to open a bank account. Here are some of those reasons:

Lender/Creditor Requirements. There are situations that will require you to have a bank account as the information will be necessary on an application for a loan or mortgage. Lenders and other creditors may not have a lot of faith in your financial abilities if you are not keeping even a basic checking or savings account.

Check Cashing. There are other issues you may have to contend with throughout your life, such as how to get a check cashed. Personal checks, payroll checks, and other incoming monies may dictate your need for a bank account if you are receiving checks frequently. There are options for cashing checks without a personal bank account, but it may cost you fees for the service. If the check is written from a bank that is not local to you, you may have to go to a check-cashing business which will typically take a percentage of the check amount.

Bill Payments. It can be hard to imagine paying bills via the mail without having a checking account, but there are still consumers who will bypass the banks and use money orders to mail in bill payments. It’s a lot harder to go through this process, including paying for the money orders each month, but the person will be able to skirt some bank fees. However, there is a paper trail concern. While money orders can be tracked, it may not be as convenient as having the backing of the bank in the event your payment doesn’t make it to your creditor.

Lack of Protection. Banks that are FDIC-insured will guarantee the safety and accessibility of your money in the event something happens. When you keep your cash in your drawer or under the mattress, there are no such guarantees. If your home catches fire or you are the victim of a burglary and you cash is gone, it is most likely gone forever. If the same situation strikes your bank, your money is protected.

No Record of Spending. If you spend only in cash and do not write down what you are spending or where, you lose the ability to have accurate financial records for planning purposes. A bank account provides a monthly statement, which shows what you spend and where you spend it. These statements may be necessary at some point in your life, especially if you want to buy a home or qualify for a personal loan.

Exploring Your Options. If you have lived blissfully over the years without a bank account, understand there may still come a time when you will need proof of a bank account to proceed in your financial life. There are several options to explore these days outside of traditional checking accounts. While there are certainly increasing fees for maintaining a bank account, consumers have the option to compare the many different features of bank accounts in both the online and offline markets.

Depending on your specific needs you may be able to open a bank account that is reasonably priced and still offers the services you need at a minimum. If you are just looking for a simple bank account that allows you to direct deposit your payroll check or pay some monthly bills, make sure to compare several banking institutions before making a commitment.

Check for the requirements on minimum balances, cost of account maintenance, ongoing fees for banking services, and other features you need in your financial life. With a little research and comparison shopping, you will likely find a suitable service that fits your needs without costing you a small fortune.

Debbie Dragon is a contributor to MyBankTracker.com, where she writes about savings rates, personal finance and banking.