Have you ever had your checking account closed? Having a hard time opening a new checking out? Then you’ll likely need a second chance checking account.
Rejected for a Bank Account? Wondering Why?
Have you gone to a new bank and tried to open a new checking account only to be surprised by a rejection from them? You are probably surprised that you could even get rejected by a bank from opening a checking account, unfortunately you can. Many banks run an applicant’s information through a company called Chexsystems. If you have a history of writing bad checks, your bank may close your account and provide your banking history to Chexsystems. When you go to a another bank looking to open a new checking account, if they use Chexsystems as their verifier, they will have all your information. Many banks will view you as a risk and not be willing to open a checking account for you, which is why you may have been prevented from opening a new checking account.
What about Second Chance Checking?
While Chexsystems is the preferred provider for many banks, not all the banks use them to verify an applicant’s history. Other banks use other providers. There are also banks that offer users with dinged up banking history a second chance through Second Chance Checking.
What is a Second Chance Checking Accounts
A Second Chance Checking Account is a type of checking account banks offer to customers with a checkered banking history. These types of accounts usually sought by users who can’t open a regular checking account, they also help users rebuild their bank checking history.
Second Chance Checking may sound great but they do come with limitations, restrictions and additional fees as the banks view users with a bad banking history as more risky.
What are the Limitations, Restrictions and Fees?
While Second Chance Checking does offer banking customers another chance at a checking account. It does come with limitations, restrictions and additional fees. While many banks offer free checking or checking perks, many second chance checking accounts have a monthly fee. While standard checking accounts pay an interest on the money in the account, second chance checking accounts do not pay interest on the money kept on the account. Additionally, there are further restrictions placed on second chance checking accounts. Many banks offer the ability to pull funds from a connected saving account if you write checks that exceed the amount in your checking account, banks that offer second chance checking accounts do not offer that feature.
Pros and Cons of Second Chance Checking?
Pro – The positive aspects of these accounts is that they allow people access to a banking system, which is needed to cash checks, pay bills, have a place to securely hold their money. Second chance checking also allows users to rebuild their banking history, hopefully in a positive manner
Cons – The negative aspects are that individuals looking to open a second chance checking account will have a limited number of banks and credit unions to select from. If you find an bank that offers second chance checking accounts, there will be fees attached to the accounts, restricted features and usage
Picking a Second Chance Checking Account.
When individuals select a bank account that offers a regular checking account, they have plenty of options to select from. However, when selecting a bank that offers a Second Chance Checking Account, your options are far more limited. There are few national banks that offer Second Chance checking Accounts as a result the features that your looking for from a bank maybe limited or reduced. That is something to understanding when opening these types of accounts.
There are some credit unions that verify individuals through a different system then Chexsystems, as a result you maybe able to find a Credit Union that offers checking accounts with more options and features. You may want to call around the local credit unions and see what check verifying system they use.
National Second Chance Checking
Many of the larger banks have elected not to serve people with checkered checking history, so banks like Bank of American and Chase will not work, there are some smaller regional banks and credit unions that accept these types of customers. Listed below are 5 banks that offer second chance checking accounts to customers.
Tips to avoid the need of second chance checking
In life there are things that happen that make you overdraft your account, write a check that bounce due to insufficient funds, it happens, if you have those issues reoccur multiple times, or you if you maintain a negative balance, your bank account will likely close your account. Here is some tips to prevent that from happening.
Create a Budget – Create a list of all your bills, list the amount that you would need to pay on them and the due dates, within that budget list your paycheck, that way know how much money is going out and how much money is coming in.
Keep track of your money – Check your bank account often, daily if possible but every couple days. One if you check your bank account often you can check on your balance, adding funds if needed or delaying writing a check, until you get additional funds in your account.
Be careful of Fees – If you write a check that is rejected for insufficient funds, the bank will assign a fee. If you are charged a fee, keep track of those amounts and account for the in your budget and balance.
Sign up for overdraft protection – One of the main issues when writing checks is when you write checks for more then the amount of money in your account. One feature that some banks offer is the ability for overdraft protection. There are many variations of overdraft protection, some of it maybe text and email notification, others banks will allow you to setup the option that will pull overdraft amounts from your savings account. What ever features they offer, sign up for all of them. One of the best ways to be in good standings with your checking account is to be well informed of your spending and if you do go over your balance to be able to tap your other accounts.
People with bad checking history are likely to have an issue opening new checking accounts, there are a few things you can do to prevent that from happening in the first place such as the keeping tracking of your money in your checking accounts, signing up for overdraft protections. If you get to the point of needing a checking account and you have a bad checking history, then second chance checking accounts are for you, and the banks listed above are for you.