Your chances of approval are higher, but watch out for fees For those who struggle to open a regular checking account due to a poor banking history, a second-chance bank account is a type of checking account. Customers with a complicated banking history are listed in databases like ChexSystems. You might be unable to open new accounts if, for instance, your bank closes your account as a result of unpaid fees. Therefore, even though a checking account serves as the central location for managing daily finances, not everyone can open one. You can use it to deposit money, make purchases with your debit card both offline and online, and pay bills online or with a check. However, some banks are hesitant to open checking accounts for customers who have had prior financial difficulties. There is still hope, though. A second-chance account may provide you with the chance you need to get back on track if you're having trouble getting approved for a bank account.
What Is a Bank Account for a Second Chance?
People who have trouble opening a checking account at a bank or credit union can open a second-chance bank account. Due to a history of overdrafts, fraud, or other issues, you might not be able to open an account. Second-chance accounts give you the chance to use a bank account, though they might have restrictions on check writing and daily spending limits. However, you can typically obtain a debit card, make online bill payments, and get direct deposits.Examples of Bank Accounts for Second Chances
Both online banks and conventional financial institutions offer second-chance bank accounts. Examine monthly costs and any restrictions on how you can use your account funds as you compare offerings. Although the accounts and banking services listed below are accessible everywhere, it's a good idea to contact regional banks and credit unions as you look for a solution.Chime
Chime is a bank that only operates online and has minimal fees. Its "Spending" account has checking-account-like features and doesn't demand a credit check. Chime is distinct from most physical banks in that there is no monthly service fee. Although you cannot write your own checks, Chime can print and mail one from your account on your behalf. Among the account features are:- No ongoing charges
- No opening requirements
- There isn't a constant minimum balance requirement.
- With no overdraft fees
- Members of Chime have access to more than 60,000 fee-free ATMs within their network.
- Limit of $2,500 per day on debit cards
Clear Access Banking at Wells Fargo
You can open a checking account with Wells Fargo's Clear Access checking account and gain access to their extensive network of physical branches. Due to the following characteristics, the account is a good fit for clients seeking a second-chance account:- $5 per month (waived for customers between 13 and 24 years old)
- Opening with a $25 minimum
- No fees for overdrafts or insufficient funds
- No checks on paper
- Available across the country
- Availability of 5,400 branches and more than 13,000 ATMs
Essential Checking Account with LendingClub
A new financial beginning is what LendingClub, an online bank, promises. You have a limited amount of spending and depositing options with its Essential Checking second-chance account, but you can still use a debit card, pay bills online, and write checks. If LendingClub does not first approve you for one of its two other checking accounts, you are qualified for this one. Features of an account include:- $9 per month
- $10 is required to open
- No requirement for a constant balance
- After a year, you might be able to move up to a better checking account.
- Widely accessible
- Over 20,000 fee-free ATMs are accessible.
- LendingClub restricts you to $1,000 daily mobile check deposits, $500 daily debit transactions ($250 for the first 30 days of account opening), and $2,000 every ten days.
Second-Chance Bank Accounts: Pros and Cons
Pros- Convenience and (occasionally) financial savings
- Become a bank customer
- Possible charges
- Limited capabilities
- Pros Explanation
Pros
Convenience and (occasionally) cost savings: A bank account may be the safest, most practical, and most affordable tool for managing your daily finances. Your employer may be able to deposit your pay into your account directly, saving you the time and expense of having to visit a check-cashing location each pay period. Making payments from your bank account could be easier, more affordable, and less cash-intensive than doing so, similar to getting money orders or paying in person. Create a relationship with a bank: Access to banking with financial institutions is made possible by a second-chance account. You might be able to switch to less-expensive and more flexible bank accounts after building up a problem-free history with a bank (commonly a year or so). You're earning and spending history is directly accessible to the bank, which may increase your chances of being approved for loans and other bank services.Cons Explanation
Second-chance bank accounts may be subject to a monthly maintenance fee. Although banks frequently offer ways to have those fees waived, second-chance accounts might not be eligible for those waivers. Monthly fees can be expensive and discouraging, particularly when you're rebuilding your finances. Limited functionality: You might not be able to use all of a checking account's features with a second-chance bank account. For exapmle, you might not be able to write checks, and the bank might place a cap on how much money you can spend (LendingClub, for instance, sets a $250 daily debit card limit for the first 30 days). Additionally, you have fewer options because not all banks offer second-chance accounts.Second-Chance Bank Account Alternatives
You might have other options if you don't want to (or are unable to) open a second-chance bank account. The closest alternative to a checking account may not require you to pass a credit check: prepaid debit cards. Prepaid cards, like second-chance bank accounts, can stop you from spending money you don't have because you have to "load" money onto the card before you can use it. You can frequently deposit checks into your prepaid account, use a card to make purchases, and pay bills online. If you don't have a prepaid account, you might have to combine services from various suppliers. You might be able to turn your paycheck into spending money at check-cashing businesses and grocery stores but watch out for fees. Money orders and cashier's checks may work in situations where cash is not an option, but you will be charged a per-item fee when using those payment methods.Main Points
- Some banks might be reluctant to open an account for you if your financial history includes bounced checks, fraud suspicions, or other problems. Instead of refusing you an account, a bank may offer you limited checking services through second-chance accounts.
- Second-chance accounts might have limited features, like limitations on how much you can spend or how you can pay with your account. Additionally, they have the right to impose monthly service fees without offering customers the chance to opt out.
- There are second-chance accounts that are cost-free, but even those may be worthwhile. A bank account might be the most user-friendly option available for managing your money, and alternative service providers might charge higher fees than your bank.
