Can you be rejected for a debit card?

This post comes from Geri Detweiler at partner site Credit.com.

When a clerk at Target told Annette Tierney she could save 5% on her purchases by opening a Target REDcard debit card, it was a no-brainer. "Every time we go in there we get a cart full of stuff," she explains. "We usually spend $250 to $500."

It also seemed simple enough: The store's debit card is set up to draw from a customer's existing checking account. She was shocked, though, when her application for the card was declined.

Since she and her husband avoid debt and have "great credit," her first thought was that perhaps they had been victims of identity theft. But when she called the customer service number provided, she was told her application was declined due to a lack of check-writing history with Target. She told the representative that she uses a bank debit card when she shops at Target, but the representative wouldn't budge. She was told she'd have to first establish a check-writing history with Target to be considered for the card.

Tierney's situation raises the question: Can you get turned down for a debit card? On the surface, it would seem that the answer would be "no," or at least not likely, because the card is only used to access the money you already have in your bank account. But, in fact, you can be turned down for a debit card, though the reason is most often due to prior checking account problems. (Post continues below.)

That's what Rosalie Zamora found out when her application to open a Target REDcard debit card was declined. "I received a 'regret' notice indicating that there was some negative reporting from a reporting agency called Certegy," she said in an email to Credit.com. Certegy provides check authorization and guarantee services to merchants and businesses nationwide, and is considered a specialty consumer reporting agency under federal law.

Zamora called Certegy and was told there was no negative information on file for her. She was then referred to another consumer reporting agency, TeleCheck, which found an unpaid debt from ACCS Bad Check Restitution. When she called that company, she found out that her information had been mixed up with that of someone who previously bounced a check:

I was sent three letters of apology stating that a clerk at a store keyed in a driver's license number incorrectly for someone cashing a $50 check a few years ago that bounced. That driver's license (number) ended up being mine and went on my record. They say that they have unlinked my driver's license to that case and I should be good to go now.

Tierney, on the other hand, still doesn't understand why she can't get the card. The debit card application states (.pdf file)  that "Target may gather any information considered necessary and appropriate, including consumer reports." However, it makes no specific mention of requiring consumers to have a check-writing history at the store.

"They didn't (admit) it was a ridiculous excuse," she fumed.

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She's since sent email complaints to members of Target's executive board. I shared with her that I was surprised by her story because I opened a Target REDcard debit card last year and, to my knowledge, I have never written a check at Target.

Target officials declined to comment for this story.

Tierney speculates that Target would rather have her sign up for its credit card than the debit card. "I feel like they are using this great advertising campaign, but I feel like what they really want is for people to use their credit card. They want to push American consumers deeper and deeper into debt. That's just my theory," she says.

And even though Zamora's check-writing history has been cleared, she didn't appeal the decision with Target. "Forget it," she says. "I'm done with Target. Although it's not their fault, this issue left a bad taste in my mouth."

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