A checking account is a key part of daily money management, but if you have struggled to manage bank accounts responsibly, accessing this basic financial tool can be a challenge without a second-chance checking account.
Just as your bill-paying record is tracked by the credit bureaus, your banking history — including overdrafts, bounced checks and unpaid fees — is available to financial institutions via ChexSystems or a similar database, such as Early Warning Services or TeleCheck.
“A person who has had difficulty with bank accounts in the past may have a hard time opening another bank account in the future,” says David Frederick, senior manager of high net worth taxes and planning at LBMC in Nashville.
The good news: Some banks offer second-chance checking accounts specifically for people who have had a checking account closed in the past. (Not sure if you’re in the system? You can request a copy of your annual report for free from ChexSystems.)
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What Is Second-Chance Banking?
A second-chance checking account is an option for banking customers who have struggled with deposit accounts in the past, such as with repeated overdrafts, unpaid negative balances or involuntary account closures.
Banks that offer these accounts are willing to overlook past mistakes and help customers access the basic features needed to manage their money. Frederick says that these accounts are rarely offered by large national banks and are usually found at smaller local and online banks.
That said, banks that offer second-chance checking accounts understand that account holders present a higher risk compared with customers who have a clean banking history.
“Second-chance checking accounts typically have higher fees and interest rates than regular checking accounts,” says Max Benz, founder and CEO of personal finance blog BankingGeek. “But they may be a better option than a prepaid debit card or a check-cashing service.” These nonbanking services can be much more expensive and even verge on predatory. Still, he advises reading the terms and conditions carefully before opening a second-chance checking account.
7 Second-Chance Checking Accounts You Should Consider
Frederick says that for people struggling to improve their credit, control their budget or simply put themselves on a better financial path, second-chance accounts can be a valuable tool. Plus, opening a second-chance account can help you achieve good standing again.
“After a customer has had a second-chance account for a set period of time — typically a year or two — with no negative actions or reports, the account will often convert into a normal bank account without extra restrictions or costs,” Frederick says.
Some second-chance checking options are better than others. The best accounts offer low or no fees, widespread ATM access, low opening and minimum deposit requirements, and other perks. Below are seven strong options to consider.
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— Minimum opening deposit: None.
— Monthly fee: None.
— ATMs: 70,000.
— Uses ChexSystems: No.
Though it’s technically not a second-chance account, Capital One stopped relying on ChexSystems when screening account applicants in 2014. So a poor track record won’t prevent you from taking advantage of the benefits of a 360 checking account, including no fees or minimums.
— Minimum opening deposit: None.
— Monthly fee: None.
— ATMs: 60,000.
— Uses ChexSystems: No.
Chime is a financial technology company founded on the idea that basic banking services should be accessible and affordable. Like its other account options, the second-chance bank account doesn’t come with any hidden or monthly fees or account minimums.
GO2bank Checking Account
— Minimum opening deposit: None.
— Monthly fee: $5 (can be waived by meeting certain requirements).
— ATMs: 42,000.
— Uses ChexSystems: No.
This second-chance checking account is offered by GO2bank, a neobank
under Green Dot, a financial technology company. In addition to basic checking account features, this account also provides a highly rated mobile app, ASAP direct deposit and other perks.
GTE Financial Go Further Checking
— Minimum opening deposit: $5.
— Monthly fee: $9.95 (can be waived by meeting certain requirements).
— ATMs: 30,000.
— Uses ChexSystems: Yes.
If you apply for a Go Premium or Go Full Access checking account and are denied, the bank will reach out to you about applying for the Go Further account instead. It’s designed for customers who can’t qualify for a traditional checking account right now but hope to in the future. After 12 months of responsible use, GTE Financial will upgrade your account.
— Minimum opening deposit: None.
— Monthly fee: $5.
— ATMs: 40,000.
— Uses ChexSystems: Yes.
It’s not labeled as a second-chance account, but Fifth Third Bank’s Express checking is designed for customers who want to start building a solid financial history. Users are provided with tools to help manage their money and build credit.
— Minimum opening deposit: None.
— Monthly fee: None.
— ATMs: 40,000.
— Uses ChexSystems: No.
Varo is an all-mobile bank account app that allows customers to perform branchless banking. Its second-chance checking account doesn’t charge monthly or hidden fees.
Wells Fargo Clear Access Banking
— Minimum opening deposit: $25.
— Monthly fee: $5 (can be waived by meeting certain requirements).
— ATMs: 11,000.
— Uses ChexSystems: No.
One of the only major national banks that offers second-chance checking, Wells Fargo has the Clear Access Banking account designed for customers with lower balances, including teens.
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7 Options for Second-Chance Checking Accounts originally appeared on usnews.com
Update 03/26/24: This story was previously published at an earlier date and has been updated with new information.
