Reasons a Bank Account is Needed

• A line of credit will offer the money you need at a set interest rate. A bank account is required by lenders as security that you will re-pay your loan and the interest on the loan on time. Most of these transactions are done electronically or by mail. You will need to write a check to pay back these loans. This is very rarely done in person with cash through a bank. In addition, if you do not pay back a loan on time, the bank can assess you a fee. If you do not pay back or cannot pay back the fee and must file for bankruptcy, your bank account and assets will be assessed to make sure they really cannot pay back the loan, according to the Bankruptcy Law Network.
  
  

Overdraft Lines of Credit

• A person cannot have an overdraft line of credit without having a bank account. An overdraft line of credit is linked to a bank account in case the bank account is accidently overdrawn or to help customers keep checks from bouncing. Some banks offer these overdraft lines as a courtesy to customers that have a bank account, according to The Federal Reserve. However, these credit lines are temporary and customers are charged a fee; some banks charge for every day your bank account is overdrawn.
  
  

Lines of Credit

• Lines of credit build a credit report. Credit reports are managed by three credit reporting companies: Equifax; Experian and Transunion, according to The Federal Trade Commission. All three can sell your information to your employer, banks, insurance companies or any other companies that may need to make sure you know how to manage your finances. The credit reports keep track of all your repayments and any history of late or missed payments. If a person does not pay back a loan on time, the interest payments on that loan may increase, meaning that a person will be penalized for not paying on time.
  
  

Payday Loans

• Some payday lenders promise to loan money without a bank account. These loans are not lines of credit, but cash that is given to you through a check or deposit. However, you must be careful when providing information to payday lenders because they can charge extremely high interest rates on loans and also require your personal information such as your Social Security number. According to "The New York Daily News," a payday lender could charge $15 to $20 every two weeks for every $100 that was given as a loan, making a loan almost impossible to pay off. In many states such as New York, payday lenders are illegal for this reason.