Looking for a credit union or bank, and credit card post-bankruptcy

July 27, 2020 1:06 PM

So I filed for bankruptcy last year, and it was finalized and discharged in early February. Right now the only account I have is with my credit union which is associated with my employer. I have a checking and savings account, with a debit card on the checking account. I am looking for an additional credit union or bank to open an account with, and a credit card so I can work on rebuilding my credit.

I want to avoid getting in debt again, but I think that I should start working on re-building my credit, if only for reasons such as car repairs or unexpected vet bills for my two cats, or something like that. Worst-case scenario is if my car gets hit and it gets totaled, and I have to get a new car with a loan. (Current car is paid off, but it's a 2011 so I would probably have to buy a newer car. I worry that I would end up with a ruinously high interest rate and have trouble getting a loan, period).

I also want to get an additional account with another credit union or bank, so that if something goes wrong with my current debit card (fraud, stops functioning, lost, etc), I will have something else to use to pay bills and buy gas and so forth until my new card arrives in the mail (it was 2 weeks processing during pre-Covid times). Right now my debit card is my only card of any kind. I kind of have all my eggs in one basket at the moment, which worries me.

For reference, I have a steady income with an employer I have been with for 13 years or so. I am currently working from home and making the same full-time salary, with no furloughs or gaps in work or pay.

So I am asking for recommendations for:

1. A credit union or bank where I can open an account online, and get a debit card. I want to AVOID any of the major / scummy unethical banks, including Citibank, Bank of America, Wells Fargo, Capital One, etc.

2. A credit card (also avoiding one of the big unethical banks), where a small limit is fine (under $500), and if it needs to be a secured card, that's ok too. I understand a secured card may be the only option I qualify for. Ideally with a DIFFERENT bank / credit union than #1, but I'm willing to consider using the same one.

Note: I do not qualify for USAA.

Thanks in advance for any recommendations.

posted by cats are weird to Work & Money (5 answers total)

I have an additional idea you may want to consider; it is something my old financial counselor told me about once as an additional credit-building option. It's called a "Credit Builder Loan" and is available at a number of different financial institutions, but mainly at the smaller ones. My financial counselor described them as "kind of like a loan in reverse", or like a hybrid between a savings account and a loan.

The way it works is:

* You make a deal with the bank for some certain amount of money for your "credit builder loan". It doesn't have to be a huge sum of money - most of them are somewhere between $500 and a couple thousand.

* You also work out with the bank how long it will take for you to pay that loan back - six months to 24 months is usually what people do.

* Then - you don't get the money yet, but you start making payments on the loan anyway. The bank puts that money into an account it controls. At the end of the payment plan, if you've made all your payments on time, then you get the money.

In some ways, this isn't that different from a savings account, where you're paying into an account and then at the end you get all the money you put in. But the bank processes it as a loan, so that you can rack up the good payment history, which then goes towards building up your credit. And then after you've paid the loan off, you're the one who gets the money.

This may also be a way to start building a relationship with another smaller bank, too; if you get a modest credit builder loan and then are all responsible about it, the bank you get it from may be more willing to work with you on another thing in the future.

Good luck.
posted by EmpressCallipygos at 1:55 PM on July 27, 2020 [3 favorites]

Have you looked into credit unions based on where you live? There’s the Charlotte Area Credit Union for residents of Meckleburg county in NC. Do you or anyone in your household work for the state? That’s how I was able to qualify for my credit union, even though I no longer work for the state I can still remain active.

You may also be interested in https://bankblackusa.org/
posted by raccoon409 at 2:38 PM on July 27, 2020

Most credit unions are now allowed to include as members people who live in their service area as well as those who fall within their "community". So if you just search on "credit unions near me" you will probably come up with a short list that you can check out.

Also, my credit union required you to become a member (by having a regular checking or saving account) before you could access other services, so you should be sure to ask about that.
posted by metahawk at 3:36 PM on July 27, 2020

Your credit union may offer a variety of options, which I have found at a couple of CUs where I have worked:

- A second debit card with a different number on your same checking account, generally for a fee. If one card is lost and has to be blocked, the other will still work.

- You may be able to re-establish credit with a “share-secured” loan. You deposit some money in a savings account, you get a personal loan for the same amount, and they put a hold on your deposit while you pay off the loan. Meanwhile, the CU reports the loan to a credit bureau, so you start building a good credit record.

- Combine both of these ideas with a share-secured VISA card.

If you try any of these ideas, explain to the CU why you’re doing it. They may have special restrictions, or they may have better ideas to help you.
posted by ogooglebar at 8:44 PM on July 27, 2020

If your card stopped working, you could still go into the branch and take out cash if they are open, so I don't think you really have to get another bank. Have you talked to your current credit union about their advice for your credit? most are really helpful.
posted by soelo at 9:07 PM on July 27, 2020