Bank Account Denied? Overcome Verification Hurdles and Maximize Sign-Up Bonuses

If you love free stuff, this message is for you.

We're always looking for ways to improve the podcast, which is why, right now, we're giving out prizes for seven lucky winners who fill out our listener survey.

It only takes a few minutes and you'll be entered to win some really cool prizes.

One winner will get a pair of Sony ULT wireless noise-canceling headphones.

And six winners will get the Bagu Cloud Carry-On bag.

And full disclosure, I have one of these bags, and it's one of my favorite travel bags.

Just go to nerdwallet.com slash pod survey and complete the form by September September 15th for a chance to win.

You can read the official rules for more details, which again can be found at nerdwallet.com slash pod survey.

Thank you and good luck.

It's August.

I can't believe it's August.

But Sean, when I say August, what comes to mind for you?

I'm going to say tomatoes from my garden, which are finally ripening.

Yay.

Vacations with family.

And of course, sweating more than I would like to.

I feel you on the sweating part.

I think about Christmas and everyone's mad at me because I keep talking about Christmas in August.

Not even Halloween yet, Elizabeth.

I don't care.

Way too soon for Christmas.

No, summer than Christmas.

All right, you can live in your reality.

I'll live in mine.

Okay, deal.

And I also think about back to school, which took a large chunk of my expenses in August.

So that's a good segue because today we're going to be talking about August expenses.

Welcome to NerdWallets Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds.

I'm Sean Piles.

And I'm Elizabeth Ayola.

This episode, we're going to be chatting about banking, blacklists, and intro offers.

But first, it's about the end of August.

The kids are going back to school.

Most summer vacations have been had.

And many of us are left to face our account balances.

No.

No need to scream at us, Sean.

But I'm going to get in your business and ask what your August spending looked like.

I had a very expensive August.

I finally had to pay for some wedding expenses that I knew were in the pipeline.

I got fitted for my suit with my partner.

I also, thank you, I also booked some flights for my honeymoon to Japan and South Korea.

And I traveled to see my baby niece in California.

And each one of those things cost at least $1,000.

And then on top of that, I had some unexpected expenses for my business.

But, you know, it's all part of growing and getting things to where they need to be for my financial planning firm.

But that's all to say.

At the end of the month, I was feeling kind of broke in a way that I haven't in quite a while.

Just hearing your expenses, they were painful for me to hear, Sean, but joyful too, seeing your baby niece and buying a suit for your wedding, all very fun things.

And I had prepared for these expenses.

Here's kind of the weird emotional part of spending money for my wedding is that I've been saving up for years for this wedding.

And now I'm at the point where the money I saved is being spent.

And I'm glad I have this money stocked away to be allocated for all these different things coming up.

but it still doesn't feel good.

It makes me feel kind of financially vulnerable in a way that I know realistically I'm not, but it just isn't what I want to be doing.

I want to see a higher number in my savings account, basically.

I can relate with that.

When I have to spend anything over like $50, I think my heart breaks a little.

So yeah.

So that's my August, a kind of unusual month for me, but what is a usual month nowadays, I guess?

So what was your spending like, Elizabeth?

Well, my August spending included things like buying flight tickets, gallivanting around town, eating, because what else is there to do in Houston when it's 150 degrees every day?

I know.

Obviously, not 150 degrees, but really hot.

Yeah, you're staying inside where it's air-conditioned.

And sometimes that means going to a restaurant and spending money on food.

Oh, don't get me started on that.

I'm going to talk about that later.

But of course, I had to do back-to-school shopping as well because I'm a mama sita, but I did choose to keep that spending light.

So Elizabeth, how light did you keep your back-to-school school shopping?

It can get so expensive.

I'm proud to say, Sean, that I only spent $200.

That is really impressive.

I probably spent $200 just going out to eat over the course of a single weekend at one point this month.

So congrats.

I think all of this highlights how summer can be really dysregulating just personally and financially because we're all traveling more.

We're spending more money at new places and we're often thrown off from our typical habits.

And this can all really easily lead to overspending.

And this is on top of even normal things being a little bit out of whack.

Like utilities can get so expensive because for me, I'm spending a lot more money on water for my garden.

And we all have the AC running because it gets so hot in the summer.

And it just feels kind of weird and off and hard to retain control.

Do you feel that, Elizabeth?

Well, since you opened the floor to me, I just want to have a little vent event about my electricity bill because It's so hot that I can't go to gardens.

Well, not that I can't.

I refuse to go to gardens and nature reserves, which are some outdoor activities that I like during the summer.

And we have been indoors and my electricity bill has almost tripled this summer.

So fall could not get here quicker.

So have you tried any ways to save money?

Are you cutting out the AC at night or are you using fans or is it just so hot you have to rely on the AC?

I am a fan of cutting out the AC during the day.

I don't mind a little sweat, but the sweat has become so bad that I get irritated because fun fact, I do not like being sweaty.

So guess what?

The more you sweat, the more laundry you have to do.

And then that's another utility that you're paying for.

Look at you.

Exactly.

Sometimes I'm changing three times a day.

And you're absolutely right.

My laundry bill has also gone up because I am sweating more, right?

So you just can't win.

And you know what, though, Sean, I'm remembering that money is there to create comfort as well as, you know, budgeting and all the other things.

And I'm just not going to suffer sweating all day just because I want to save $100 on my electricity bills.

But that might mean pulling back somewhere else.

I'm sure it's hard to both pay for all of that air conditioning and go out to eat as much as you might want to and also keep your son entertained because that's a big thing you have to pay for too.

Absolutely.

So there are some things I've had to sacrifice.

I am very shameless about saying that I do like to shop, especially during summertime because I love dresses.

So I've been doing less shopping.

So that's one area where I've been cutting back.

Yeah, I've been feeling that too.

Usually I can buy what I want pretty easily.

This is the benefit of not having children, I guess, is that if I want something, you know, I'll get influenced by an Instagram ad and just pay for it.

I've had my eye on these ug clogs that look somewhere between like cute and ugly.

And I really can't decide which one they are, but I really am intrigued by them.

But looking at all of my expenses, about everything that I just outlined around my travel and my wedding and everything else with my business, I just can't afford to make that $150 splurge, which is a little pricey, but in previous months, I probably would have felt okay doing that.

But I'm trying to keep my head down, stay focused on what I need to spend money on and save what I can.

Well, Sean, I do want to talk about your upcoming expenses, but since we're having a little event session here, I'm just going to tell you the last two things that I spent money on in August.

Summer camps cost me around $3,000.

So for anyone out there who is thinking about having kids, just want to put that out there.

$3,000 for summer camp?

So that's like $1,000 each summer month to put your kid in camp?

A roundabout, yeah.

And I just could not have him home while I'm working because, you know, this just doesn't work.

So I just had to shell out that money and it's pricey.

So I hope it was enriching for your son because that's a lot of money.

He had a blast and he's asking me when he can go back next.

So next time you have $3,000.

I know, right?

I also paid about $2,000 in private school re-registration fees before I decided to change to a public school.

And unfortunately, those fees were non-refundable.

So that's gone down the drain.

Yeah.

So how did you think about that trade-off?

You just really didn't want your kid to go back to that private school, even though you dropped that 2K to reserve the spot?

Well, I had to cut my losses.

It was 2K or 14K for the year.

So,

yeah.

That's smart.

Yeah.

All right.

Well, tell us about your upcoming expenses now, Sean.

Well, you might be shocked to learn that I have even more wedding expenses coming up.

My partner and I need to get our rings, and gold recently hit a new record high.

So that's going to be fun to pay for.

I imagine it'll be at least $1,000 per ring.

I haven't fully looked into it because I am kind of afraid to.

I also need to finish paying for the harpist for the wedding.

And my partner and I are getting prenuptial agreements, which I know is kind of controversial, but we're going to talk about that in another episode.

I think that's going to be at least $1,000.

And then we need to get our lodging for our wedding and for our honeymoon.

So that's all to say I'm spending money on big things and keeping my discretionary UG clog boot expenses to a minimum.

Wow.

You do have a lot of upcoming expenses.

So I'm assuming that you're going to pay for all these expenses from the money that you've saved for the wedding, correct?

Yes.

I hit around $20,000 in that account earlier this year.

And now it is less than that because I've been spending all this money.

But hey, that's what it's there for.

I'm going to be a little nosy.

I'm sure the listeners might care to know too, but where did you put that money?

Oh, in a high-yield savings account, obviously.

One of my million high-yield savings accounts.

That's the only right answer.

Okay.

Yeah.

What about you, Elizabeth?

What do you have coming up financially?

Hmm.

Well, I'm going to be putting aside money for holiday spending because, you know, I'm excited about Christmas and the holidays are coming and I can't believe we only have about four months left in the year.

I also am going to London with my son in October and we're going to be spending pounds.

It will be fun.

We haven't gone in about two years.

So it's going to be good catching up with family and friends.

And then also the most exciting thing, of course, is my son's birthday and my birthday are coming up in November and December.

And birthdays are splurge times for me.

Yeah.

So what I'm hearing is that you have an expensive rest of the year.

I have an expensive rest of the year.

You are absolutely correct.

So that's what's coming up for me.

Well, as we've just outlined, we're coming out of an expensive season and we're going into another expensive season.

I'm really not convinced that there's a non-expensive season at this point.

So Elizabeth, what lessons are you taking from your August spending that you want to carry with you as we go into another time of dropping a bunch of cash on things?

Well, to not be surprised by a $3,000 summit camp bill next year.

So

there you go.

You're prepared now.

Yeah, thankfully, I was able to pull from savings to pay for it.

But I think it was just a reminder to me, like, hey, girl, you need to be budgeting for that throughout the year because it is a large expense.

So I am putting that into practice with budgeting for my upcoming holiday spending.

Oh, I love that.

Yeah.

I mean, think about $3,000 that you'll want to have saved up by what next June maybe.

Break that out into how much you can save each month.

It'll be a lot more manageable if you do it gradually.

Exactly.

And a lot less painful too.

For me, what I'm thinking about is that for everything, there is a season, of course.

And I'm excited to get into the next next season of fall because summer is a bit too hot for me at this point.

But in terms of my finances, I was in this season of saving and saving and saving for quite a long time.

And I need to be okay with spending the money and not get too emotionally hung up on it because it's there to be spent.

I put it aside to be spent on all of these various things.

And I will understand that after this next busy few months, then I'll be back to saving again.

And it'll take time to gradually build up my savings.

So I feel better about where where I am with my savings account balance.

But I'll get there and that's fine.

I just need to get through this moment and enjoy it and not worry too much about the bottom line while being, of course, responsible with things.

I empathize with that so much, Sean.

But before we go, I want you to tell me how you're doing that.

How are you emotionally dealing with watching your savings account balance go down?

I'm processing it in real time on this podcast, Elizabeth.

But otherwise, it's hard.

I have to talk through it and I have to think, okay, if I get that pang of anxiety, recognizing it for what it is and sometimes just saying out loud, oh, I'm feeling kind of anxious right now because I spent a bunch of money and that doesn't feel great, but it'll pass.

That actually helps the feeling pass and realizing that it's just temporary.

So engaging with it, but not letting it take over my life is how I try to handle that.

I love that.

That's helpful.

All right.

We hope you're ready to hear about banking blacklists and when intro offers on accounts are worthwhile.

But first, listener, you know what's up.

Send us your money questions because this show runs on them.

Think about where you might need some guidance with your finances and how we nerds can help you.

Maybe you're feeling stressed about how you're going to afford upcoming holiday spending, or you can't seem to get a handle on your cash flow.

Whatever your money question is, we nerds are here to help you.

So leave us a voicemail or text us on the nerd hotline at 901-730-6373.

Again, in case you missed it, that's 901-730-NERD.

You can also email us at podcast at nerdwallet.com.

And a special shout out to anyone who lives in Scottsdale, Arizona, or thereabouts.

We smart money folks are going to be there next week for a fun team gathering and we're hoping to meet with a couple listeners and maybe record a podcast episode or two with you.

So if you live in that area, you have a money question for us, let us know.

Again, send us an email to podcast at nerdwallet.com.

All right, let's get to this episode's money question segment.

That's up next.

Stay with us.

Are you looking for ways to make your everyday life happier, healthier, more productive, and more creative?

I'm Gretchen Rubin, the number one best-selling author of The Happiness Project, bringing you fresh insights and practical solutions in the Happier with Gretchen Rubin podcast.

My co-host and happiness guinea pig is my sister Elizabeth Kraft.

That's me, Elizabeth Kraft, a TV writer and producer in Hollywood.

Join us as we explore ideas and hacks about cultivating happiness and good habits.

Check out Happier with Gretchen Rubin from Lemonada Media.

When life gets ahead of your list, just just tap Target.

Between juggling school schedules, surprise messes, and tag team baby duty, life has a way of throwing you off.

Honey, we're low on diapers and wipes and toilet paper

and cat food.

But what they don't know is you already knew.

With Target Circle 360 same-day delivery, it's already on the way.

Delivery when you want it with Target Circle 360, just tap Target.

Membership required, subject to terms and conditions, applies to orders over $35.

We're back and answering your money questions to help you make smarter financial decisions.

This episode's question comes from a listener named Isaac who sent us an email.

Here it is.

Hi nerds.

I wanted to open a new checking account to have part of my paycheck deposited into it specifically for rent.

After going through the reviews on the nerd wallet website, I picked one that I felt would work well for this and applied.

Once I submitted my application, it said they were unable to verify my identity.

I double, then triple checked the application and made sure it matched my driver's license, social security number, etc.

Still no luck.

Determined to get an account, I decided to go ahead with my second choice bank and had the same issue.

I was able to make an appointment at a branch where things went much smoother.

But why did I have this issue in the first place?

Are there places to see what information they're verifying based on and update something that's incorrect?

Thanks so much, Isaac.

To help us answer Isaac's question on this episode of the podcast, we're joined by banking nerd Margaret Burnett.

Hey, Margaret.

Hey, Elizabeth.

Thanks for having me on the show.

We're happy to have you here.

So we're going to answer this listener's question, but also pivot into related banking topics like getting blocked by banks and sign-up bonuses.

I personally have encountered a similar issue to the listener, but I was trying to open up a new credit card.

So is this a common issue, Margaret?

It can be an issue if you don't have a lot of easily identifiable online info out there.

So why might the listener have had issues getting their identity verified online while trying to open this account?

What might have been going on?

What's happening behind the scenes is that banks use automated systems from third parties usually to verify your identity these systems try to match up details like your name address social security number maybe your driver's license with info from public databases and other online records so maybe if you've never opened an account before or if you haven't used a bank service in a while maybe if you just turned 18 and you want to finally open open an account on your own.

Or it could be other reasons too.

Like maybe you just moved and your new address hasn't fully updated everywhere across all these systems yet.

If your info doesn't line up perfectly with some of these automated systems, then those systems might not be confident that they're able to tell the bank that they can verify who you are.

And so the bank may just ask you to visit them in person so they can be sure.

So it could be a mismatch of information there.

So the listener wants to know how they can check what info banks are pulling when applying for an account, Margaret.

So could checking the checks system, which provides information on your banking history and overall financial responsibility, be a good place to start?

And what are some other ways that folks can check what information banks are pulling?

These other verification companies, they're different from check systems.

They're performing a different service.

Those are kind of check systems, it's like a check reporting bureau.

So the bureau may know who you are, but they could deny your bank application because of your past banking history.

But the listener, they were able to open an account at their local branch.

So that wasn't the issue.

So when it comes to figuring out why the online process didn't work, your bank really may not give out specifics because that's all part of their fraud prevention efforts.

So they might kind of keep that close to the best.

But fortunately for the listener, they had other ways to be able to successfully prove who they were and successfully have their ID verified.

And that was because they could go in in person, but there are so many online banks, the ones that offer high-yield savings accounts that we love so much at NerdWallet.

If someone's trying to go that route, they can't really go in person because there's nowhere to go in person.

What would you recommend someone do in that case?

Even with online banks, some of them are owned by banks that do have branches.

So that could be an option if you're able to go in there.

Honestly, some, if they're not able to open the account, you might have to choose another financial institution just so that your name and the ability to verify your identity can kind of go through the system.

And then you may have better luck next time in getting your ID verified.

Like our listener did.

Exactly.

Well, Isaac's questions provide a good opportunity to discuss being blocked by banks.

And that's essentially when you've been labeled high risk by other banks and struggle to open an account as a result.

So how do people end up being blocked?

So banks do report accounts that were closed due to things like too many overdrafts, negative balances that really weren't made whole.

And sometimes there may be suspicious activity or even outright fraud.

So bringing in tech systems, I know we mentioned that earlier, bringing in a place like that, they will have that kind of detail on your record.

And they do come into play if you're told you're denied an account because of your past history.

So you will be able to get more information about that.

And again, just to reiterate, it's not because they couldn't verify who you were.

It's they they knew who you were, but they denied you for other reasons.

Your bank will be able to tell you who to reach out to, such as check systems.

And from there, you should be able to know why.

One thing I want to clarify, too, if folks haven't heard of checks systems, it's spelled checks like the serial and then the word systems.

So you can just look it up that way.

Now, how can you get yourself removed from being blocked?

What steps can you take?

Now, if you're specifically denied an account because of your history, you have the right to contact that bureau.

And it could be check systems.

It could also be early warning services.

Your bank will let you know which entity they use to check on your consumer record.

We have articles here at NerdWallet that help walk you through that.

You can find links to those in today's episode description.

But you generally look at your record.

And first, if there are any mistakes that are there on the bank's part, you can dispute them.

Otherwise, if the information there is correct, It would be smart to try to, you know, make a plan to make your accounts whole, pay off your debts.

And just so you know, records generally drop off after five years.

So it's not meant to last forever.

Now, that doesn't mean that you won't be able to open an account for five years.

There are absolutely banks and financial institutions out there that let you open checking accounts, even if you have a check systems record.

And after you establish a good banking history, say you've got this other type of account for maybe a year or so, you can usually switch to a regular checking account.

And the benefit there is another account might have better benefits or offer promotions or just kind of have better deals and lower fees.

Well, Margaret, since you mentioned benefits from other checking accounts like sign-up bonuses, let's talk about some of them and when it might make sense to pursue a sign-up bonus.

Historically, personally, I've been kind of wary of them because it seems like there are a lot of hoops to jump through.

Can you give us a rundown of how these things work?

If the bonus is, say, a few hundred dollars and the account doesn't come with high fees or long-term obligations, then a sign-up bonus could be a sweet deal.

You just have to make sure you read the fine print.

So you understand things like the monthly fees for that account, how long your money, your deposits have to stay in the account in order to earn the bonus, and also when the bonus will actually be paid out.

So you can find hot offers on our list of best bank bonuses and promotions.

We keep it up to date pretty regularly.

As we're speaking, I realize I have never actually opened an account for a sign-up bonus.

Is opening several accounts to get several sign-up bonuses a thing, Margaret?

Is it a smart financial move to make?

So it is a thing.

Just like some people open up credit cards to get credit card bonuses, there are people that open bank accounts, checking accounts and savings accounts to get sign-up bonuses.

And you can't get extra cash.

Just keep in mind that usually to get a bank bonus, you have to deposit some minimum amount of money and keep it in there for a certain amount of time.

Or maybe you have to make a certain number of transactions, say use your debit card so many times a month in order to qualify for the bonus.

So if you are going to open up several accounts, then you'll need to have a plan to do that for each account.

And that means you'll have to stay organized to keep up with all these accounts and just kind of make sure you know where your money is going as you're spreading out these deposits to all of these different accounts.

You'll also need to be okay with your money being tied up while you're waiting for those bonuses to pay out.

I think pursuing sign-up bonuses can make sense if you're already in the market for a new bank account, but going out and trying to get several sign-up bonuses and across different banks sounds like a lot of work.

And I think it could potentially backfire for people because if you don't meet all of the terms and conditions and have all the deposits set up and you keep your money in the account for the right amount of time, the bank could claw back that sign-up bonus, which in most cases is going to be what, just a few hundred dollars.

So it's just a lot of effort to me if you're not already, again, pursuing a new bank account.

Maybe the sweet spot is if you're ready to open a new account, go and see what bonuses are out there and see if there are any accounts that pay a nice bonus where the features in the account line up with what you're looking for for your finances.

Are there any red flags you think folks should be on the lookout for when it comes to the assignment bonuses besides the terms and conditions?

Read the fine print, make sure that you understand what's going on and that you're comfortable with the rules.

And just be aware of any monthly bank fees the account may charge and know how to avoid them if possible.

Also, something to keep in mind is that bank bonuses are usually taxable.

So after you do get that bonus, you may also get a 1099 form from the bank next year that includes the bonus amount.

And that's for you to report on your taxes.

My chest hurt a little bit when you said that, Margaret, because I remembered that all the interest that I'm getting on my high-yield savings accounts is going to be taxed next year.

So thanks for the reminder.

Well, you know, I say always, there's no problem with having extra cash, usually.

Absolutely.

Thanks for chatting with us, Margaret.

Always a pleasure to have you on.

Sure.

Thank you again for having me.

Remember, listener, that we're here to answer your money questions.

So turn to the nerds and call or text us your questions at 901-730-6373.

That's 901-730-NERD.

You can also email us at podcast at nerdwallet.com.

And don't forget to head to the show description to find links for our new listener survey and our budget rehab form.

Join us next time to hear about how to have money conversations with your partners.

Follow Smart Money on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio, to automatically download new episodes.

And here's our brief disclaimer.

We're not your financial or investment advisors.

This nerdy information is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

This episode was produced by Tess Figland and Anahal Hoski.

Hilary Georgie helped with editing, and Nick Kirstemi mixed our audio.

Huge thank you.

Huge shout out to NerdWallets editors for all of their help.

And with that said, until next time, turn to the nerds.