Blemished banking history? Try second-chance checking account

2 min read

Do you have a troubled banking history? Have you had a checking account forcibly closed in the past? In either case, you could face problems opening a new checking account.

A second-chance checking account could be just the trick to help you escape from bad banking choices in the past. These special account products are ideal for people considered to be risky clients by traditional banking standards.

Why was your checking account application denied?

Many bank customers don’t realize that their checking account is being monitored by ChexSystems, a database that 90 percent of banks use to determine customers’ risk level. If you have a low score on ChexSystems due to overdrawn accounts, unpaid debts or false information provided to the bank, you may find yourself denied when you try to open a checking account. A bank may also choose to close your account for any of these reasons.

Luckily, your ChexSystems record is like a credit score—you can request to see your report for free. If you’ve been denied a checking account, your ChexSystems report can help you understand why, since it indicates the actions in your account that were deal-breakers for the bank.

How is a second-chance checking account different?

If you’re in this situation, you may want to seek out a second-chance checking account, which functions like a regular checking account but often has specific stipulations. For example, a bank that offers free checking accounts for most customers may charge a $10 monthly fee for a second-chance checking account.

Likewise, many banks offer checking accounts without requiring a minimum balance, but will require one for second-chance customers. Some banks even require second-chance customers to take a short money management course at one of their branches before opening an account.

What is a second-chance checking account good for?

A second-chance checking account provides the same functions as a regular checking account. You can pay bills, withdraw money and deposit money into your account. What’s more, a second-chance account can help to restore your standing in the eyes of your bank.

If you use your account responsibly for a certain period (usually six months or more), your bank may consider transitioning you back to a free or less restricted account.  That may happen automatically or you may need to put in a request with the bank after you’ve demonstrated greater responsibility for a period of time.

The key to getting a second-chance checking account

If you’ve been denied a checking account—even multiple times—make an appointment with an officer at your bank. Let thm know that you’re interested in a second-chance checking account. Often, sitting down and talking to someone in person may be more effective than simply filling out forms online.

Of course, if you use an online-only bank, you’ll have to settle for contacting customer service through their website or via telephone. During this conversation, be sure to ask about the process for transitioning to a regular checking account.

If you’re unable to get a second-chance account, consider looking for bank that does not use ChexSystems and thus may be less likely to deny your application. For instance, many online-only banks don’t use ChexSystems.