Everyone, in one way or another, needs a bank account to make transactions. The process of getting a bank account is very easy, but due to some issues, some people’s account applications get denied. Bank account issues are very delicate and should be treated with caution. When issues like that happen, it’s always best to reach out to the bank to help out.
Probably your bank account application has been denied. No worries, this article will teach you how to go about bank application denial, the common reasons for bank application denial, and even how to open a bank account.
What is a bank account?
A bank account is an account opened by an individual for financial purposes and transactions like transfers, bill payment, and wiring. It is monitored by the bank or any financial institution with certain terms and conditions for any bank account type. You can own multiple bank accounts with different owner codes and transaction access.
There are several types of bank accounts we have ;
- Savings account
- Deposit account
- Loan account
- Joint account
- Low-cost account
- Current account
- Money market account
- Fixed deposit account, and many more.
What is a bank account application?
This is like a form to be filled out before being given access to a bank account, the information filled in shows whether one is eligible for the bank account.
A typical bank account application includes the full name of the individual, occupation of the individual, home, and work address, next of kin, gender, date of birth, type of bank account, pictorial identification, financial status, mental status, state, postal code, etc.
This application can be done online, and after a few hours or days, the customer is reached through email or text on the next step if approved, and if not, they inform you of what went wrong and how to rectify it.
How do I Apply for a Bank Account?
No matter how rich you are and how safe you think your money is in a vault in your mansion, you will still need a bank account for other transactions with people who don’t handle cash as well as you do. If you have no idea how to open an application for a bank account, here is a step-by-step guide on how to go about it.
- Firstly, you must have a valid governmental pictorial identification card like a student ID, national passport, or driver’s permit before applying.
- Visit the website or branch of the bank that suits you and request a bank account application.
- Ensure all basic information like your name, telephone number, mail address, home address, and more is correctly imputed.
- Select the type of account you want from the bank’s list
- If you are filling out a joint account, fill in the right details of other parties
- Do well to go through and if not sure, ask questions before submitting an application
- Agree to the terms and conditions of the bank, this shows a legal agreement between the bank and the customer.
- Submit your application and await a response.
If you probably had a bank account before and still want to open one, it’s still the same process.
Bank Account Application Declined
As a job, loan applications are also declined, and bank account applications are also declined. Among the large percentage of applications sent to banks, some will still be declined, which is almost normal.
After an application is submitted, a notification is given to the bank and a background check is done on your profile. Your basic information is intensively scanned, and if it doesn’t tally with what you submitted on your application, your application will definitely be declined.
It’s best to be plain when filling out such forms to avoid a decline at the endpoint.
Why would a Bank Decline an Account?
A bank declines an account for many reasons, best known to them. If they go ahead and watch some bank users mismanage accounts, a lot can happen to the bank’s running, like account malfunction, risk of account type, loss of funds for the bank due to fraud, account freeze, and a lot of other things.
Below are the major reasons why the bank declines an account.
- Discovered errors in data
- Abuse of account
- Excess bounced checks
- Past credit debts
- Unpaid dues
- Several Overdrafts
Fraud is a punishable offense in a court of law. It is a criminal action involving deception for monetary gain, some fake identity, or cooking up some stories and using that to extract a large amount of money from people through their bank accounts.
If by any means your account has been used for fraud, then the bank will definitely decline it at first. Most times, the owners of the account might not be aware of the fraudulent activity on their accounts, which is why it’s always advised not to share banking details with anyone or any company as they can be used for fraudulent activities without your knowledge.
After declining the account, it is mandatory to pay every penny back to the bank before the account might be reconsidered. Once your account is flagged as red for fraud after an investigation by the National Crime Agency, the account is completely declined. Even if you fake an application, it will definitely pop up when scanning.
#2. Discovered Errors In Data
If the bio-data of your account is error-filled, that is another reason for an account to be declined. The process of opening an account in a bank is done carefully in order to avoid errors. Some are always in a hurry to create an account, and they end up giving the wrong information. For example, if you are asked for a telephone number and, on checking, the digits are not complete or the email you wrote is invalid, these things can alter your account; hence, the bank will decline the account and move on to the next.
Do not say it doesn’t matter, every piece of information is needed and also must be correct, not only for now but for future purposes. If your account has been declined, it might be because of errors in your account data.
#3. Abuse Of Account
Agreeing to the terms and conditions of a bank policy on the account is not just ticked while applying, it is also followed in the use of the account. The bank is in charge of the maintenance of every bank account, i.e., every move you make on that account is monitored by the bank.
Abusing an account is another barrier to accessing a bank account. Every type of account has its own standard and limit; if you have a joint account, you can’t follow the terms of a loan account or fixed deposit account. Also, some withdraw huge amounts of money, deposit it back, and repeat it over and over again without control. The bank is left with no choice but to decline such an account.
If you use an account with a maximum balance of $5k and you deposit more than that amount in the account, the account will be declined, and there will be no access until you rectify it in that same bank.
#4. Excess Bounced Checks
Bounced checks are checks that cannot be processed due to insufficient funds from the account owner. When such a check is issued repeatedly, the bank declines such an account. Not only does it portray deceit, but it also causes great harm to the account. After declining such an account, a fee is given to the user to pay for such an act.
Any record of several bounced checks in your account will warrant a decline from the bank. If there are sufficient funds in your account, never issue checks for that amount.
#5. Past Credit Debts
Some prefer to have a credit card linked to a bank account, so they own credit cards and never clear debts, which results in opening an account at a bank. It is never possible because, at the point of application, the account will be declined. It shows that if you can’t pay the credit debt, then you certainly can’t keep an account or even pay off bank loans when taken.
Before you can get your account rectified and recovered, you must clear all your credit debts and apply for an account all over again.
#6. Unpaid Dues
For opening an account, you are to indicate if you have any unpaid dues, if you do then your account will be declined. Unpaid dues are bank loans that are yet to be paid by borrowers. Many banks love to give out loans to customers with a percentage of interest when paid back.
Due to some reasons, some individuals don’t pay up such money. After several calls to pay up, I’d no response the account will be blocked, and even when you try opening another account, if not paid off, will still be declined.
#7. Several Overdrafts
When a bank allows one to make a transaction even without any money in access, it is called an overdraft. Sometimes you might need to make a transaction and if funds aren’t sufficient, the bank allows the transaction to go through and get payment in the future.
When it becomes in excess on an account, such an account is declined, it’s more like a debt that is yet to be paid off. So once, you have such a record on an account it’s best you rectify it and enjoy banking.
Why am I being Denied An Account?
This question is a very common one from bank users, but not everyone seems to know the reason why you have been denied an account, the following can be the reasons.
- Filed bankruptcy
- There is no verified identification of the user
- Excess withdrawals
- Multiple accounts within a short time
Bankruptcy is a legal declaration showing that you don’t have the means to pay your debts. Debts are forgiven and paid back in other ways, like property, cars, and other valuables. Any bank you apply to won’t grant you a request due to your declaration, even if you don’t have any known debts with the bank.
Banks do this because if an account is opened for you, there is no guarantee you will maintain it and agree to the terms, and most times it’s always to the bank’s loss because they are aware you have filed bankruptcy before opening an account for you.
b. No Verified Identification Of User
No bank will give an account without any verified identity of the user. How do banks reach out to you if you don’t have a verified identity? In a typical account application, you are expected to fill in your information with any pictorial identity like your passport, with this, the bank can identify the user and grant access to an account.
Another advantage of having a verified identity is for issues like fraud and money looting, they can tell who you are and what you look like in issues like these.
If you have tried getting an account and you haven’t been granted one, ensure you have a verified user identity.
c. Excess Withdrawals
Bank accounts are opened to keep money when not in use and also for online transactions, withdrawals are only done when there is a need for it. If an individual is going to make use of cash every day then it’s best not to open an account.
Excess withdrawals can deny one of a bank account, for example, withdrawing every 2 hours per day is excessive and doesn’t agree to the terms of the bank, so it’s best to stop to avoid denial of account. If you can’t do without withdrawing, request to close the account and take all the cash home.
d. Multiple Accounts Within a Short Time
Banks allow multiple accounts but not within a short time, a man that owns 7-10 accounts within five months will be denied an account by the bank. This method is used by fraudsters and thieves to keep large amounts of money stolen so as not to be traced, if you take such a step you can be a suspect and your account might be frozen for a long time till you are cleared.
If you handle so much money and you need multiple accounts, get 2 accounts that allow a large intake of money instead of several accounts and give several months’ spacing or even a year.
Reasons for being denied a checking account.
What is a checking account? A checking account is a deposit account that allows users to put in and take out money. This account can get money from ATMs and other withdrawal methods.
One can be denied a checking account and some of the reasons are;
- Bad ChexSystem Report
- Bad Credit
- Basic information mismatch
- Negative financial history involving fraud and money laundering
- Unpaid dues
- Errors in ChexSystem Report
- Unverified Identity
- Many bounced checks
- Excess Overdrafts
If you fall into this category, all hope is not lost. There are ways to go about it which brings you to the next step.
What to do When You Can’t Open a Checking Account
- Get a copy of your ChexSystem Report and ensure there are no errors.
- Do proper cleaning of your bank report if any error is discovered.
- If you can’t get the checking account option, you can go for an alternative account
- Submit a proposal asking the bank to reconsider with valid information.
- Sometimes, it might be a bank issue, try out a different bank and expect a response.
- You can opt for the credit card or cash-only option.
- Clear all debts on your financial record and apply again.
Why is my bank account showing invalid?
There are many reasons but the major reason is that the account type imputed in a transaction is wrong or the transaction limit has reached the maximum, like putting a current account option on savings account withdrawal.
Why are my credit card applications being denied?
- If you have unpaid dues, your application will be declined.
- Extreme loan debts.
- A very low income cannot help obtain a credit card.
- Incomplete filling of the application
- No source of income.
Which bank is not accepted during bank verifications?
Research shows that Canara Bank is not accepted during bank verifications.
A bank account application getting denied can be very painful but can be avoided if corrective measures are put in place.
Alternatives are also available if you can’t get a bank account at all, read through and I hope the piece helps and answers your questions.