It’s a common question. One we get every week. So we thought we’d answer it here.
You don’t need an awesome credit score.
You don’t need to jump through tons of hoops.
You don’t need to own a home.
But you do need a checking account.
Payday lenders work almost exclusively with checking accounts.
Yeah, But Why?
It’s easier to send the money you borrow via direct deposit. It shows that you have an account that can make payments via check or online banking. It also is easier for them to withdraw funds from a checking account with an automatic draft, than a savings account.
Savings Accounts Are Still Awesome.
If you have a savings account, you should definitely keep it. Know how money just feels like it is burning and itching to be spent when it’s there waiting in your pocket? Yeah, well, putting all your money in a checking account is a great way to make sure you spend it all. Separating savings into an account that can’t use an automatic draft for frivolous spending is one way to make sure the savings grow. If you have a goal to save it for a house, then you are supposed to put it away and never spend it – no matter what. That’s why people who may have enough in savings, but it is earmarked for a future purchase, may decide to use a payday loan to cover a short-term gap. It forces them to repay the loan from earnings, and it keeps their savings safe.
Linked or Unlinked?
Here’s the thing, if you want to have a savings account linked to your checking account, you definitely can do that. There are plenty of people who have a standard checking account that they use to pay bills and a savings account to create savings. If you overdraft on the checking account, the bank can pull funds from your savings account to cover it. However, many people just prefer to use savings accounts for savings – not bill-paying – and keep the two as separate as possible. That’s really up to you. If you can handle them being connected, do it. If you can’t, keep em apart to make sure you’ve got savings.