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Why a guy making $100,000 a year can’t get a bank account

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Zikomo Fields pulls in more than $100,000 a year as a software engineer in Kansas City. But the 36-year-old has no bank account. It's not that he doesn't want one. Fields simply hasn't found a bank willing to house his money. Instead, he walks around with $23,000 saved on a prepaid debit card.

Fields is exactly the kind of customer banks say they want, a high earner ripe for a car loan, mortgage and all sorts of investments. But he is also among many people whom banks ignore -- because his name appears in a little-known database that tracks financial transgressions, ChexSystems.

Thousands of banks and credit unions screen would-be customers through databases like ChexSystems that document repeated overdrafts, bounced checks, unpaid balances and other behavior that could signal fraud. ChexSystems has declined to say how many people were listed in its database, but regulators say just about every lender subscribes to such services as a measure of fraud prevention.

But instead of weeding out fraudsters, authorities say, institutions are using these databases to bar people who have had even brief money troubles from getting accounts. New York Attorney General Eric T. Schneiderman, for example, has accused six big banks, including Capital One and Wells Fargo, of improperly using the database to deny consumers an account.

People with low incomes, who are more susceptible to overdrawing their accounts, are usually victims of the restrictive policy, according to consumer lawyers. Banks have become more wary of these types of customers as regulations have made it tougher for them to earn money through various fees, including overdraft protection.

No one would consider Fields low-income. He doesn't neatly fit the usual profile of the nearly 10 million Americans who don't have bank accounts. But he, like so many of them, ran into trouble that pushed him to the fringes of the financial system. Four years ago, Fields worked contract assignments that from time to time left him in between jobs. He said those stints of unemployment caused him to overdraw his account at U.S. Bank as he scrambled to pay bills.

"I literally had no other option but to let the account be overdrawn until I was employed again," Fields said.

He eventually wound up with a negative $1,200 balance, half of which was in overdraft fees he couldn't afford. U.S. Bank closed the account and sent the case to a debt collector. (A U.S. Bank spokesman declined to comment on Fields's case, citing customer privacy rules. But the spokesman said that when an account is overdrawn for an extended period of time, the bank is required by regulators to close the account and charge off the balance due.)

After five months of being in default on the account, Fields landed a job and repaid U.S. Bank. Yet it was not enough to erase the blemish on his file.

It takes up to seven years for negative marks, like an involuntary account closure, to be removed from a screening database, much like blemishes on credit reports. The Fair Credit Reporting Act gives people the right to request a free copy of their file and dispute any inaccurate information. It also requires banks to let would-be customers know whether their report played a factor in their rejection. That's how Fields found out he was blacklisted.

He tried to open a bank account last year because his new job required all employees to have their paychecks directly deposited into an account. Fields said he was turned down by credit unions and banks, including Bank of America, who noted his tarnished record in ChexSystems.

A spokeswoman from Bank of America, Anne Pace, said, "We use multiple factors when considering opening an account, including their history with the bank and other institutions, fraud and industry-reported behavior."

With no banks willing to work with him, Fields signed up for Bluebird, the reloadable prepaid debit card sponsored by Wal-Mart and American Express. The card functions like a bank account, with direct deposit and check-writing features, without overdraft or maintenance fees. But there are limitations.

"Writing a check can be a hassle," Fields said.

Bluebird customers have to log into their accounts online to authorize a deduction, then jot down the authorization code on the back of the check for the paper payment to clear. It's a way to protect customers from overdrawing their accounts. 

Still, Fields said, "It can be downright awkward when you're writing a check in public. Also, anything over $2,000 may require additional authorization."

It's not an ideal arrangement, he said, but for now, "Bluebird gets the job done."

Fields said he worries about having a large expense come up and being locked out of his Bluebird account. The card has spending limits that vary depending on the transaction -- up to $2,000 a month on ATM withdrawals, $10,000 on purchases.

There are banks and credit unions, including JPMorgan Chase, Wells Fargo and PNC Bank, that offer "second chance" accounts for people like Fields. These accounts often have higher fees and more restrictions than traditional accounts, but they are cheaper than using check-cashing or money order services, according to the Federal Deposit Insurance Corp.

People with second-chance accounts are often required to open and manage a savings account for a period of time before they're allowed a checking account. And the FDIC says the accounts tend to have low daily withdrawal limits. Yet for millions of Americans this may be the best path to getting back in the banking system.

There is no law or regulation that forces banks to reject people with checkered financial histories. All financial institutions have the discretion to evaluate consumers on a case-by-case basis, and some do just that. But advocates say many banks blindly discredit anyone listed in ChexSystems without reviewing the circumstances that may have landed them in the database. And as a result they are missing out on customers like Fields.

Despite the initial round of rejections, Fields said he plans to try his luck again with a credit union in his area. Time has passed, and maybe this go-round they'll give him a chance.