Online Second Chance Banking Options Available in 50 States

Second chance banking is available in all 50 states. It's a great option for people denied a bank account due to bad credit, Early Warning Services or ChexSystems.

Benefits of second chance banking

If you're conducting financial transactions without a bank account, you can rebuild your banking history with second chance banking. Having a bank account can be taken for granted until you don’t have one.

The hassle of a check-cashing store, loading money onto a prepaid card, the fees; not to mention the lack of access to financial products like personal, mortgage, or auto loans can impede you from making major purchases.

Rebuild your banking history with second chance banking

ChexSystems maintains negative banking history for 5 years while EWS, Telecheck, and credit bureaus keep negative information for 7 years.

Mistakes happen. You deserve a second chance at banking to get a fresh start. The banking industry varies when it comes to second chance banking accounts. Second chance banking accounts may come with more limitations than standard checking accounts.

Second chance banking accounts are specifically designed for people who have struggled with a checking account in the past but want to get back into banking.

Some banks and credit unions offer second chance banking with limited or no check writing privileges while other financial institutions allow most features of a regular checking account but tack on a monthly fee.

Another option for people denied a checking account is to find non ChexSystems banks that don't use ChexSystems to open checking accounts. Second chance banking might include pulling a ChexSystems report but the bank doesn't hold past mistakes against you.

Avoid negative banking habits

Once your new account is open, avoid habits that contribute to a negative banking history. With online banking tools, you can always pay attention to checking account balances, keep track of all transactions to avoid overdrafts, and monitor your bank accounts.

Participation in a financial management workshop, often online for 60-90 minutes, might be required by some banks and credit unions prior to opening a second chance banking account. These workshops offer good tips on managing a checking account and avoiding actions that can get you in trouble.

Run from second and third-party checks

NEVER, EVER deposit a third-party personal check via ATM or mobile deposit. A 3rd-party check is when a friend or family member endorses a check over to you to cash or deposit. Banks typically don't like 3rd party checks because of the risk associated.

If a bank accepts 3rd party checks, they may require both you and the original payee to sign the check in the presence of a teller. You may even want to be wary of a 2nd-party check from a friend or family member. 

A 2nd-party check is one written directly to you. Many consumers have innocently deposited a personal check from a friend or family member that ended up as a bounced check.

Banks often see these types of transactions as fraud. And for a bank, fraud is similar to bank robbery. Being reported by a bank for fraud is one of the WORST notations on ChexSystems and Early Warning Services, even if it was unintended.

Second Chance Checking has Pros and Cons

Pros of a second chance checking account:

• Restore a good standing banking history. A second chance checking account helps you rebuild your banking history, but you still need to practice good money management.
• Avoid excessive financial fees. Prepaid debit cards, money orders, cashier's checks, and check cashing services have one thing in common, FEES! Some Second chance checking accounts may have a monthly service but it will be insignificant compared to the above-mentioned alternative banking services.
• Reestablish your banking relationship. A good banking relationship can open opportunties for future financial products like a mortgage, car, business or student loan at competitive interest rates. Opening a second chance account is the first step in rebuilding your relationship with the bank.

Cons of a second chance checking account:

• Monthly maintenance fees. Many second chance checking accounts come with monthly maintenance fees. Over time, these can add up. While you might be able to avoid monthly service fees in some cases, most second chance banks will only waive these charges if you maintain a certain balance or set up a specific number of direct deposits.
• Lack of overdraft protection. Most second chance checking account do not offer overdraft protection. Chime® is one of the rare banks that will spot you up to $100 on debit card purchases with no overdraft fees.
• Won't rebuild credit. Banks do not report good banking habits to the credit bureaus so while a second chance checking account will do wonders for establishing a banking relationship, the account will not do anything to help repair bad credit. If you have bad credit, you'll need to take separate steps to improve it.

Challenge Mistakes with ChexSystems or EWS

Just like creditors report inaccurate information to credit bureaus, banks and credit unions make mistakes too. Challenge errors and inaccurate information reported to ChexSystems and EWS if you think you should have a clean record.

Order your ChexSystems and EWS report for free, once every 12 months. If you’ve been denied a bank account within the last 60-days you are entitled to a free report. Otherwise, there may be a fee.

Final thoughts

When a shaky banking record prevents you from traditional banking, you can't go wrong with banks that offer second chance checking accounts, even if a monthly fee is required.

Take comfort in knowing there are tools to help you restore your banking privileges and, if you have to pay a monthly fee, it will not last forever. Start enjoying all the benefits and conveniences of banking again.