Second Chance Checking

Around 16 million people in the United States don’t own bank accounts, and often,  non-sufficient funds overdrafts, unpaid obligations, and other missteps are the root cause. If you’ve been denied a checking account time and time again, fortunately, there may be an answer for you. Second chance checking could be your ticket to getting back on track.

What is second chance checking?

Second chance checking allows bank access to individuals who have been denied checking accounts due to bad banking history, and also allows those who have been blacklisted to rebuild their history. Second chance checking blends elements of a non-traditional banking system with some benefits of traditional accounts.

Why can't I open a checking account?

There are a number of reasons you may have been denied an account. Misuse of your checking account could include:

• Excessive credit inquiries
• Suspected fraud
• Excessive check orders
• Bounced checks
• Overdrafts

What is ChexSystems?

ChexSystems is a national consumer reporting agency that employs a risk score scale from 100 to 899. (The higher the score, the better your banking history.) ChexSystem reports show your banking history from the day you swiped your first debit card and in addition, utilizes a major credit reporting bureau that checks your credit. Federal regulations allow ChexSystems to keep records for up to seven years, but ChexSystems actually keeps them for five. The ChexSystem consumer disclosure report primarily focuses on negative account history and a copy can be obtained once a year, free of charge. If you'd like to request your score report, visit the official ChexSystems website. It’s important to review your FACTA report for inconsistencies, and, you have the right to dispute anything on the report if you notice an error.

National banks that offer second chance checking

Wells FargoOpportunity Checking (39 states)

• Includes mobile banking and banking features such as checks, debit cards, and bill pay.
• It’s a $25 initial deposit to open an account.
• Though Wells Fargo's monthly service fee is $10, you can avoid the fee with if you post 10 or more debit card purchases/payments, have direct deposits totaling $500 or more or keep a$1,500 minimum daily balance.

Green Dot Bank Go Bank (online and at Walmart)

• Award-winning app
• Free cash deposits at Walmart. You can also deposit checks with your smartphone.
• Pay $2.95 for a sign-up starter kit and $8.95 monthly. The monthly service fee is waived if you put in at $500 or more per month in payroll or direct deposits

Radius Bank Essential Checking (online)

• You can open an account with $10.00 or more.
• There’s a $9.00 monthly service charge.
• You can also enroll in free online banking and receive eStatements.
• You’ll receive a free Radius debit card which can link to Apple Pay, Google Pay, or Samsung Pay for use on your device.

Memory Bank Memory Builder Checking (online)

• Has an $8.95 monthly fee that can be reduced to $6.95 if you use your debit card for at least 15 online and/or in-store purchases or receive at least one electronic deposit or transfer from a financial institution each month.
• Free mobile access
• Access to over 85,000 surcharge-free ATMs
• Has a second chance checking account for those with records in ChexSystems.
• No monthly maintenance service fee for months when you have direct deposit and/or 10 visa debit card point-of-sale withdrawals.

Pros and cons

Pros: 

• Second chance checking is a better option than using a prepaid debit card. Prepaid debit cards aren't always convenient and they don't offer the same perks.
• Online banking isn't always available with other options.
• Cash and check cashing services have costly fees that are outdated and inconvenient
• Opena second chance checking account and you’ll be able to upgrade to a regular checking account in just six months to a year.

Cons: 

• Second chance checking accounts do come with monthly fees that cannot be waived.
• You also aren't able to use checks or enroll in overdraft protection.
• You may be required to take a course on money management to demonstrate your commitment to rebuilding your banking history.

Can everyone be approved for second chance checking?

If you have a recent history of banking or check fraud, then it's likely you won't be approved for second chance checking. If you've filed for bankruptcy in the last 12 months, you're also likely out of luck. If you're not approved for second chance checking, there are still options such as:

• Prepaid debit cards
• Smaller banks may be more open to accepting risky banking history (BBVA Compass, Liberty Savings Bank, and Woodforest Bank.)
• Credit unions will also sometimes work with individuals who report a shakier financial history.

Final thoughts

If traditional banking isn't for you, credit unions offer the same services as banks and give clients a more personalized relationship.  Avoid common mistakes like overdraws or missed payments, which may prevent you from rebuilding your debit history over time. During this time, it is also wise to pay back old overdraft debts, open a secured credit card to boost your credit score, and/or maintain a positive working relationship with your bank.