When banks turn their back on you: your rights and alternatives
Thousands of people across Europe face the same problem each year. They’ve gone to a bank to open an account and been told no. Without clear justification, without a formal procedure, without any indication of who to turn to.
Without a bank account today you can hardly do anything: receive a salary, get a pension or public benefit, pay rent by transfer, sign up for basic services, direct debit utilities. Financial exclusion happens behind closed doors and affects specific people who are often already in difficult situations.
This article covers why this refusal happens, what specific rights exist under EU legislation, how to appeal if you’re denied an account, and what practical alternatives exist to avoid being locked out of the financial system.
Why banks refuse accounts
Banks can deny the opening of an account for several reasons, some legal and others that skirt the edge of abuse.
Legitimate reasons under regulation:
- Well-founded suspicion of money laundering or terrorist financing
- Applicant appears on international sanctions lists
- False or irregular documentation
- Lack of valid identification
Reasons that are problematic:
- Insufficient or unstable income
- Previous history of missed payments with that or another entity
- Unusual residence situation
- Address in areas considered of low commercial interest
- Low expected profitability for the bank
The last five reasons are often what people at risk of exclusion face. In many cases they don’t come as official refusals but as “requests for additional documentation” that never end up being accepted.
Groups most affected by financial exclusion
The profiles that face this situation most frequently are concrete and largely identifiable.
Recently arrived migrants. The process of obtaining residence documents, finding housing, and settling into work creates a limbo where many banks cite “insufficient documentation” to avoid opening accounts.
Homeless people. Without a stable declarable address, most traditional entities block the process. This perpetuates the exclusion: without an account, no benefit can be received by bank transfer.
Benefit applicants. Paradoxically, to receive a benefit designed precisely to reduce exclusion, you need a bank account. Cases of applicants rejected across multiple entities have been documented across the EU.
Older people in rural areas. The closure of rural branches and forced digitalisation have left many older adults without operational access to their long-time bank, even when they technically hold the account.
People with debt history. Even though debt registries have legal retention limits, a past record can become an obstacle for years.
Your right to a basic payment account
Here’s the information most people don’t know and that changes the picture completely.
The Payment Accounts Directive 2014/92/EU establishes the universal right to a basic payment account for all legal residents in the European Union. Each Member State has transposed the directive into national law with specific implementation.
What the account guarantees:
- Opening, maintenance, and closure
- Deposits into the account
- Cash withdrawals at counters or ATMs
- Ordering and receiving transfers and direct debits
- Use of a linked debit or prepaid card
Conditions:
- The maximum cost is regulated, though specific caps vary by Member State
- Free of charge for people in accredited economic vulnerability
- Designated banks are obliged to offer it
Requirements to apply:
- Legal residence in the European Union (includes migrants with valid permits)
- No other active current account in the same Member State
- Not belonging to legally excluded groups (international sanctions, etc.)
This right has existed in practice since 2016-2017 across most of the EU and isn’t always actively communicated to applicants. Many people continue to receive rejections without knowing they can invoke this legislation. The Your Europe portal on bank accounts in the EU summarises these rights across jurisdictions.
How to appeal if you’re denied an account
If a bank has refused to open an account, these are the steps.
- Request the refusal in writing. Ask the bank to formally document the rejection. Many cases resolve simply because the entity doesn’t want to leave a written refusal that can be challenged.
- Explicitly invoke the basic payment account. If your situation fits the requirements, submit a specific application citing the Payment Accounts Directive and the national transposing law. The entity has a set response window (10 working days in most Member States).
- Appeal to the bank’s ombudsman. All entities have an internal customer service. File a written complaint and keep the file number. There’s a maximum response window, usually two months.
- Escalate to the national supervisory authority. Every EU country has a financial conduct supervisor that receives citizen complaints against financial entities. Their resolutions carry weight even when not strictly binding.
- Civil court route in serious cases. Where there’s proven unjustified refusal, courts can recognise the right and order the account to be opened.
Consumer organisations and specialised NGOs offer free advice to people in financial exclusion situations during this process.
Alternatives when a traditional bank isn’t an option
Beyond the right to a basic account, alternatives exist that don’t depend on traditional banking and can be operational while the official application is being processed.
Prepaid cards with associated IBAN. These are electronic money accounts regulated under Directive 2015/2366 (PSD2). They allow receiving transfers, ordering payments, and having a physical or virtual card, without depending on a bank. The Bitsa prepaid card is one of these options. It’s requested in minutes with passport or residence document, works without a linked bank account, and offers an associated IBAN through which money can be received (salaries, benefits, personal transfers).
Neobanks with European licence. Operators registered as electronic money institutions (EMI) or payment institutions (PI) usually have more flexible admission criteria than traditional banking, especially for people with recent residence.
Ethical credit cooperatives. Entities like Triodos, Fiare Banca Ética, or Coop57 apply different criteria from commercial banking and are viable alternatives for certain profiles.
For specific cases of newcomers, the article on prepaid card without a bank account for newcomers goes deeper into the steps to have an operational financial instrument from day one.
Frequently asked questions about bank account refusals
Can a bank refuse to open an account without explaining why?
In practice it shouldn’t. If you’ve applied for a basic payment account under the Payment Accounts Directive as transposed into your national law, the bank is required to respond in writing within a set window, motivating any refusal. Refusal is only allowed in specific cases: money laundering suspicion, international sanctions, already holding another current account in the same country, or serious security risk.
Does the Bitsa prepaid card work for receiving a salary or benefit?
Yes. Bitsa has an associated IBAN and functions as a destination for bank transfers, including salaries, pensions, and public benefits. It’s worth confirming with the payer that they accept the IBAN of an electronic money institution, since in very specific cases some public bodies require traditional banking entities.
How much does a basic payment account cost?
Costs vary by Member State but are capped by regulation. In Spain, for example, the maximum is 3 € per month. For people in accredited economic vulnerability, most jurisdictions provide it free of charge.
What documentation do I need to apply for a basic account?
Valid ID (national ID card, residence permit, or passport with valid residence permit) and a signed declaration that you don’t have another active current account in the same Member State.
What if the bank requires a minimum monthly income I can’t guarantee?
That requirement doesn’t apply to the basic payment account. If imposed to block the application, it’s a practice not in line with the Payment Accounts Directive and can be reported to the national conduct authority.