Second Chance Bank Accounts: Could They Be For You?

If your Chexsystems report makes opening a traditional bank account impossible, then a second chance bank account could, well, give you a second chance!

Access to traditional banking makes a huge difference when it comes to your financial health. But you can also lose access to it relatively easily. If you have made some mistakes with a previous bank account—the same kinds of financial misbehavior that leads to a low credit score—you might have a lot of difficulty opening a new one.

That’s because many banks will run a credit check or look you up in ChexSystems. Among other functions, ChexSystems monitors the bank activity of American consumers. If you’ve previously had overdrafts or negative balances, that will show up when the bank runs your information through ChexSystems.

However, even if you aren’t able to get a traditional bank account, you may still be able to get a second chance bank account. What is a second chance bank account? We’ll answer that, as well as some other questions in this very article! Read on and find out!

Why a bank account is important.

In case you aren’t yet convinced that you need a bank account in the first place, we’re here to convince you that you should probably have one.

One major benefit of a bank account is the obvious one: It’s a great place to keep your money. Not only will you have more room under your mattress, but traditional banks are FDIC insured which means your money will be protected. The Federal Deposit Insurance Corporation (FDIC) is a government insurance company that takes fees from banks so that, even if those banks screw up or get in some sort of trouble, you’ll still be able to access the money you deposited.

Another common benefit is the ability to pay via debit card or withdraw cash from ATMs. If you can choose a bank that has enough ATMs near your personal stomping grounds, you shouldn’t even have to pay a fee to make withdrawals.

It’s also much more expensive to try to get through life without a bank account. Aside from ATM fees, wiring money or cashing checks through your bank account is free, while check cashing establishments will charge you to access your own money. Those fees can be up to 12 percent of the check, which can easily mean losing hundreds of dollars from your paycheck every month.

And if that’s not enough, banks can provide you to access to credit which can be vital to getting a home, a car, or a loan for nearly any other purpose. So if you’re barred from opening up a traditional bank account, it’s a good idea to explore your other options.

Second chance for romance—umm—banking.

If you were caught by ChexSystems, you might still have the chance to open a second chance bank account. It’ll have some significant disadvantages compared to regular bank accounts, but it’s probably better than no bank account at all.

“Simply stated, second chance bank accounts are checking accounts for people who had minor problems with previous checking accounts—for instance, small overdrafts or a history of bounced checks,” explained RJ Mansfield (@DebtAssassin1), consumer’s rights advocate and author of Debt Assassin: A Black Ops Guide to Cleaning Up Your Credit. “Checking accounts with a negative history will be reported to a data repository like Chexsystems.

“These second chance accounts have higher monthly fees, higher bounced check charges, usually require a direct deposit, and can’t be opened online. Because of the consumer’s past history with checking, these accounts are closely monitored and closed quickly if they are mishandled.”

You’ll have to look at the specific second chance bank account being offered and see if it’s a good choice for your situation. If you do decide to get a second chance bank account and maintain it diligently, you may get the chance to graduate to a regular bank account after a year or two of good banking behavior. It’s one of the best features that second chance bank accounts can offer!

There are other possibilities.

If you decide a second chance bank account isn’t for you, there are still some possibilities. You can look at your rights under ChexSystems and see if it’s worth contacting them. If they’ve made a mistake, you should make them aware of it so they can remove it.

You could also try and get around ChexSystems entirely.

“If you have had a previous problem with a checking account, you can avoid being required to open a second chance account by simply Googling, ‘Non-Chexsystems banks’ and opening an account with one of those institutions,” advised Mansfield.

The penalties you face for not having a bank account are yet another example of how the system is often weighted against those who are already struggling. But there are still ways to overcome these hardships. It won’t necessarily be easy or fair, but it is possible.

If you can take advantage of the options available to you, work out a plan, and stick to it, you can build yourself a better financial future.

The worse shape you’re in financially the more likely you are to fall prey to predatory no credit check loans and short-term bad credit loans like payday loans and cash advances. That’s not great! To learn more about how you can improve your long-term financial outlook, check out these related posts and articles from OppLoans:

What other questions do you have bank accounts? Let us know! You can find us on Facebook and Twitter.

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RJ Mansfield (@DebtAssassin1) is a consumer’s rights advocate and author of Debt Assassin: A Black Ops Guide to Cleaning Up Your Credit.

The information contained herein is provided for free and is to be used for educational and informational purposes only. We are not a credit repair organization as defined under federal or state law and we do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit. Articles provided in connection with this blog are general in nature, provided for informational purposes only and are not a substitute for individualized professional advice. We make no representation that we will improve or attempt to improve your credit record, history, or rating through the use of the resources provided through the OppLoans blog.