Banks may pull your ChexSystems or TeleCheck report to see if you’re eligible for their accounts. Second-chance bank accounts are designed for people whose banking history is getting in the way of opening a new account.
Compare second-chance checking accounts with top fintechs and banks such as Chase, Chime, PNC, SoFi® and Varo.
10 second-chance checking accounts
These top second-chance bank accounts have no or low opening deposit requirements.
A second-chance bank account is typically considered an account that won’t do a pull of your ChexSystems report, or it’s an account that accepts less-than-ideal banking history.
Other than the fact that second-chance accounts are typically easier to qualify for, they work the same way that traditional bank accounts do. However, you may find that many second-chance accounts have monthly fees as a trade-off for not reviewing your bank history, and they often don’t allow you to overdraft on the account.
What is ChexSystems? ChexSystems is a credit reporting agency under the Fair Credit Reporting Act. Similar to the major credit bureaus, it gathers the details of your banking history focused on deposit accounts, such as savings and checking accounts. It generates a report over the most recent five years for banks to review, and you can also request a copy of your own ChexSystems report at no charge once every 12 months.
Many financial institutions pull your ChexSystems report to see if you have any unresolved issues with past accounts such as repeated overdrafts, accounts that were closed due to failure to pay, or issues of fraud.
If a bank doesn’t use ChexSystems, they may use TeleCheck. TeleCheck is another consumer bureau that tracks banking histories. For example, Chase doesn’t use ChexSystems but it does use TeleCheck.
How to choose a second-chance account
When deciding which to choose, look for some or all of the following features:
Low opening deposits. Find an account that supports your budget out the gate.
Minimal fees. Look for an account with low or no monthly maintenance fees. Some banks waive fees if you enroll in direct deposit, maintain a certain balance or are of a certain age.
Accessibility. Strong accounts that offer ATM access, autopay and mobile banking will offer easier everyday banking in the long run.
Prepaid cards vs. second-chance bank accounts
You could use a prepaid debit card instead of getting a second-chance bank account — but it’s likely to cost you more money in the long run. You have to load cash onto them, and prepaid cards tend to come with a bunch of fees you won’t find with traditional debit cards and checking accounts.
Fees you’re likely to find with many prepaid cards include:
Monthly fees
Transaction fees
Out-of-network ATM withdrawal fees
Balance inquiry fee
Cash reload fees
Bill payment fees
Card cancellation fee
Card replacement fee
Inactivity fees
If you’re in a tight spot and can’t get a bank account immediately, a prepaid debit card can help. However, in the long-term though, the extra fees can really add up.
Pros and cons of second-chance accounts
Second-chance bank accounts can offer you a bank account until your ChexSystem report clears up, but they come with a few cons to watch out for.
Pros
No overdraft fees. Most second-chance accounts don’t come with overdraft fees because they don’t allow the account to be overdrafted. They simply decline charges so your balance doesn’t fall below $0.
Cheaper than prepaid cards. Despite having unavoidable monthly fees, they’re often a cheaper alternative to prepaid debit cards.
Upgrades available. Most banks let you upgrade your second-chance account to a regular checking account once you’ve built up six to 12 months of good banking history.
Cons
May have fees. Monthly fees are usually unavoidable, unlike traditional checking accounts. Most second-chance accounts charge $5 per month and require a $25 opening deposit.
Can’t apply for it directly. Some banks may only offer a second-chance checking account once you’ve been rejected for a regular one.
Possibly no check-writing privileges. Some second-chance accounts don’t offer a checkbook or they limit the number of checks you can write.
Second-chance checking account alternatives
If you’re not keen on opening a second-chance checking account, here are some alternatives to consider.
Digital bank accounts. You might have a higher chance of opening a checking account at an online bank like Chime, SoFi and Varo, as they don’t use Chexsystems reports when reviewing applications.
Prepaid cards. Prepaid cards don’t check your credit or your banking history, so they’re ideal for those with no credit or bad credit or if you’ve been denied a traditional account. Most come with monthly fees attached. The best prepaid cards give you ways to reduce or eliminate this fee completely.
Bottom Line
If past financial mistakes have made it difficult for you to open a new checking account, there’s still hope. There are several quality banks out there that offer second-chance checking accounts for those who have endured bankruptcy, bad credit or a poor history with ChexSystems. Compare your bank account options to find the right account for your needs.
Bethany Hickey is the banking editor and personal finance expert at Finder, specializing in banking, lending, insurance, and crypto.
Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt.
Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others.
Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine. See full bio
Bethany's expertise
Bethany has written 401 Finder guides across topics including:
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