What Is a Second Chance Bank Account?

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Everyone deserves a second chance, especially when it comes to banking. Personal finances always come with their ups and downs. Sometimes, when you have had more of the latter than the former, you need a financial institution that will help you open an account and provide you with banking services despite your recent history.

Second Chance Bank Accounts: Quick Take

Second chance banking may be necessary if you are trying to open a new account but need help due to your banking history. Essentially, any activity to and from your checking account is tracked by the reporting system ChexSystems. Banks, credit unions and other financial institutions review these reports, which can impact your ability to access regular banking services if you have a history of chronic overdraft fees or involuntary account closures.

Pros

• Rebuilds positive banking history through ChexSystems
• Second chance bank accounts available in all 50 states
• Often a better alternative to prepaid debit cards or check-cashing services
• Can usually upgrade to a standard checking account within a year

Cons

• Prepaid debit card activity isn’t reported to ChexSystem, so won’t build your banking history
• Doesn’t have all services of a standard checking account
• May require a money management course
• May require direct deposit

How Second Chance Bank Account Works 

Whether it’s in-person or online banking, a second-chance account bridges the gap between not being able to open a regular checking or savings account and building a positive banking history. Though not every bank uses ChexSystems in their decision-making process, many do — and for the most part, it acts like a credit report for banking. The worse your score, the less easily you’ll be able to open accounts.

Opening a second chance bank account gives you the opportunity to not only build a better banking history with ChexSystems but also grants you access to essential banking services while doing so.

Who Benefits From Second Chance Banking?

It is easy to get behind on payments or end up with overdrafts when you have every bill in every account due. Even if you are organized and budget expenses out weeks or days early, you can still run into unexpected bank fees or minimum balance requirements that can add up.

Luckily, second chance banking can assist those who need a bit of banking help. It can benefit low-income communities, the previously incarcerated and people who are simply down on their luck. It can even supply reduced fees and minimum balance structures for critical banking services.

What To Look For in a Second Chance Bank Account

If you have been denied when trying to open a bank account, don’t panic — you do have other options. Do your research before committing to an account, but second chance banking may be worth considering. Be aware that many second chance bank accounts have high monthly fees or don’t issue checks or debit cards for account holders. The best second chance banking accounts will have certain key features, such as:

• Low to no monthly fees
• Free debit card access
• Online bill pay
• Fewer transaction limitations
• No minimum balance requirements