When you apply to open a checking account it isn’t guaranteed that your application will be successful. If you have bad credit or have previously handled a checking account irresponsibly then you may well be turned down. 80% of all banking institutions refer to a report known as Chex Systems to verify that no negative information is held on file regarding your use of previous bank accounts.
The members of Chex Systems which share this information will decline an applicant who is listed, who typically has a history of bounced checks, payments returned insufficient funds or an outstanding balance which was never cleared down.
It is estimated that 62 million Americans are listed on Chex Systems, making the traditional banking route a difficult option. Customers can order a free report once a year from Chex Systems and have any incorrect information removed, but if the information is correct it will stay on the report for 5 years. An alternative option open to those turned down for a bank account it to source a second chance checking account which are designed for customers to re-establish a banking relationship.
Untraditional bank accounts, as second chance checking accounts are also known, typically carry more restrictions than traditional bank accounts and higher fees. However they can enable you to transition to a traditional account, usually within a year of demonstrating responsible handling of the new bank account.
Most of the banking institutes which offer second chance bank accounts will accept those with bad credit, and typically run neither credit checks nor Chex Systems checks. They do offer a second chance, in much the same way that secured credit cards can be used to transition to unsecured credit cards. Second chance checking accounts can be found online, or by searching within individual states. It is advisable to source a bank which is FDIC insured. Here is a selection of some of the second chance bank accounts currently available:
BBVA Compass is the 15th largest commercial bank in America. It offers consumers who want to reinstate their good financial name, a second chance checking account. The account has a monthly service charge of $7.95; accounts can be opened with a minimum deposit of $25; it offers unlimited check writing.
The iBank Up from Upside has no monthly fee for those who make a minimum $300 monthly direct deposit; those who do not pay $1.99 in monthly fees. The account includes a pre paid debit card; you can write personal checks; and there are no overdraft fees.
The Money Control Checking Account has a monthly fee of $29.95. There is no minimum deposit; no overdraft fees; a debit card is provided; customers can write checks and have access to free online banking.
If you are turned down for a bank account then a second chance bank account gives you the opportunity to have a checking account outside the traditional banking area. Before committing to a second chance account compare the fees which it charges and any limitations and restrictions it imposes.
Source: BBVA Compass