By 
Predatory lending exists in the mortgage industry. Usually when a mortgage broker adds unnecessary fees to a bad credit application because he knows the applicant is in dire straits.
Predatory banking can also exist for those who ended up with ChexSystems.
ChexSystems is a network of financial institutions (mainly banks) that regularly provide information on account holders who mishandle their checking or savings accounts. Almost all banks within the US are part of this consortium.
If you bounce a check and don’t pay it on time, you could end up with ChexSystems. Even if you receive a fake check and the bank suspects a crime, you could end up in the ChexSystems hot seat.
And the sentence for this financial crime is not light.
If the bank that put you on ChexSystems refuses to reveal your name from the ChexSystems database, it will be nearly impossible for you to get a bank account of any kind for 5 years.
Even if you pay off the offending debt, the bank could still hold you as a prisoner of ChexSystems. Evil, but 100% true.
So naturally, when you have a situation where people are stuck between a rock and a hard place, the vultures come out to feed. Here’s what you can find if you’re looking for a non-ChexSystems bank account.
Before you pay money to any service that claims to provide you with a non-ChexSystems bank account, make sure it passes the following tests successfully.
- Make sure the bank is FDIC insured. According to the FDIC website:
“The FDIC, short for Federal Deposit Insurance Corporation, is an independent agency of the United States government. The FDIC protects you against the loss of your deposits if an FDIC-insured bank or savings association fails. FDIC is backed by the faith and credit of the United States Government.”
Simply put, if you decide to open a bank account with an institution that isn’t FDIC insured, you could essentially lose all of your money if that institution goes out of business. Therefore, it is extremely important to check the status of the banks before opening an account. You can easily verify that a bank is FDIC insured on the FDIC website.
- If it’s a credit union, make sure it’s NCUSIF insured. NCUSIF insurance is similar to FDIC insurance, except it is for credit unions. According to the website of the National Association of Credit Unions:
“Your credit union stock is insured by the National Credit Union Stock Insurance Fund (NCUSIF), a branch of the NCUA. Established by Congress in 1970 to Insuring members’ stock accounts in federally insured credit unions, the NCUSIF is administered by the NCUA under the direction of the NCUA’s three-person Board Its stock insurance is similar to the protection of deposits offered by the Federal Deposit Insurance Corporation (FDIC).
All credit unions that are NCUSIF insured can be found at ([http://www.ncua.gov/indexdata.html]).
- Make sure the institution has a physical branch. This is one of the easiest ways to remove bad seeds. Banks with physical branches are always legitimate financial institutions.
- Do some background work on the bench. Do a WHOIS lookup to see the bank’s domain name registrant. If it’s a single person, that should raise a red flag. It should always be the name of the bank or company name. Look on the banks website. There should be separate phone and fax numbers, and a legitimate mailing address, not a PO Box. You can always call 411 to confirm that the phone number matches the listed address. But also note that some banks have a central location where they take general calls.
- Make sure the bank does NOT require you to use direct deposit to open the account. There are some financial services that offer checking accounts without checks. (As far as I know, this is not a scam.) But what if you don’t receive a direct deposit? Or what if you change jobs and no longer receive your checks by direct deposit? So you’re basically back where you started. What if you want to use checks? I mean a checking account without checking defeats the purpose of getting a checking account.
- Make sure the institution doesn’t charge you for common items like monthly statements, phone services, and withdrawals. I recently noticed a financial service charging outrageous fees for options normally provided for free through regular banks and credit unions. They charged for everything except the kitchen sink, including: a fee to check your balance at the ATM, a fee to receive a monthly statement, a fee if you wanted to return something you bought at a retail store, a fee for use their automated phone service. And that was just the tip of the iceberg!
Just because you’re on ChexSystems doesn’t mean you should become a victim of financial drain tactics like these. There are always better alternatives waiting in the wings.