How to Live With No Bank Account

Customer paying cashless with smartphone in a cafe
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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:

  • You don’t need to start with a certain minimum balance (although online banks typically don’t have minimum balance or deposit requirements).
  • There are no credit checks.
  • ChexSystems and similar items generally won’t prevent you from opening an account.
  • You can’t spend more money than you have or go into debt.

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 Express Serve card can virtually replace a checking account at little 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 a 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. 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. 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 options. It’s typically best to deposit checks instead of cashing them. Depositing funds prevent 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, 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 account holder, and the branch might refuse to cash the check.

Retailers might also be willing to cash checks for you. For example, Kmart 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)

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, 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. Bill-splitting apps are convenient for settling bills among friends or housemates, but they often need to be linked to P2P apps like PayPal and Venmo.

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, with the PayPal Cash Card you can load the card 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.