7 Reasons You Might be Denied a High-Yield Savings Account
You work hard for your money, but what if your money could work for you? This idea is what motivates people to pursue investment options with their savings, one of the most secure being a high-yield savings account.
Selecting a high-yield savings account allows investors the chance to earn some interest with very little risk. If you’re denied a high-yield savings account, the reason could be anything from a problem in your ChexSystems report to a bank’s inability to verify your identity.
Have you been denied from opening a high-yield savings account? Find out the most common reasons for rejection below.
Photo by Christopher Burns
7 reasons you might be denied a high-yield savings account
The reason you’ve been denied could be as simple as having a typo in your address on file. Common causes for denial from a high-yield account are factual errors. ChexSystems, an agency that collects information about your banking history and any fraudulent activity, also produces reports that could influence your chance of approval.
1. The bank is unable to verify your identity
Have you moved recently? Have you changed your name? Any information that isn’t current can be flagged by ChexSystems and keep you from opening an account.
Look through your most recent ChexSystems report to make sure all your personal information is current and spelled correctly. Otherwise, your bank won’t be able to verify your identity and may deny your application for a high-yield savings account.
2. Your ChexSystems report flagged an issue
ChexSystems reports fraud, misuse and other potential problems that have occurred within the past five years. Issues included in the ChexSystems report with your banking history include numerous bounced checks and closed accounts with other banks.
You’re eligible for a free report every 12 months, so you can review your status before applying to a high-yield savings account.
3. Owing money to other accounts
Banks tend to favor candidates with a history of financial stability and a positive balance in their current accounts. After all, if you’re in the red with your current accounts, it doesn’t make sense for your bank to grant you a high-yield savings account. For the best chance of approval, settle up your current checking accounts before applying.
4. Outstanding fees
If you have outstanding fees with your current bank, ChexSystems flags this as a potential reason for denying you a high-yield savings account. Make sure you’re repaying all fees before moving forward with a new kind of savings account.
You can check with your bank via phone or email to ask about any outstanding fees associated with your account.
5. Fraudulent activity
Having a history of fraudulent activity can keep you from opening a high-yield savings account, or any type of bank account for that matter. If you’ve written a check or two that have bounced by mistake, this probably won’t apply to you.
That being said, a proven fraudulent activity not only inhibits your chances of opening a high-yield savings account but could get you in much bigger trouble with law enforcement. If the fraud is recent, it’s probably more likely to affect your ability to open new accounts.
6. Low credit score
A credit score is determined based on factors including the length of your credit history, your income-to-credit ratio, payment history and any adverse financial event such as bankruptcy. Basically, a low credit score means you’re a greater risk to your bank than a client with a high credit score.
If you have a low credit score, you’re at risk of being denied a loan, accessing various lines of credit or having a high-yield savings account. FICO credit scores range from 300 to 850, but a good credit score should fall above 700.
7. Mistakes on your ChexSystems report
While ChexSystems is a service that checks for errors, it’s possible to have an error on the report itself. If you read through your report and find a mistake, you can dispute it with ChexSystems to correct the problem.
Because your ChexSystems report will remain available for reference for five years, it’s worth the effort to look over yours to make sure it’s correct.
Here are the basic steps to dispute your ChexSystems report:
Make a copy of the report
Mark the potential error
Write a “request for validation” letter
Fill out a “verification request form”
Mail your paperwork to ChexSystems
Wait for an update on your account
Check the ChexSystems website for more information on how to get started with your dispute.