15 Best Second Chance Bank Accounts of 2021
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If a negative banking history is stopping you from opening a checking account, a second chance bank account could be the solution you need to get back on track with your finances. Many banks that offer second chance bank accounts don't use ChexSystems or TeleCheck, which makes it easier to make a fresh start.
The 15 Best Second Chance Bank Accounts
If you're thinking about opening a second chance bank account, the good news is you have a long list of options. Here are the 15 best second chance bank accounts to consider.
BBVA offers a second chance checking account called the Easy Checking account, which has a one-time $25 fee to open an account. With this account, you get the features of a typical bank account, including the ability to write checks, use a debit card, and pay bills online.
However, the account does come with some fees, including a $13.95 monthly service charge, a $3 per-transaction fee when you use an out-of-network ATM, and a $10 charge for ordering a debit card. After one year of responsible account use, you can upgrade to a more standard account.
Chime, which is an online-only banking platform, stands out from the competition in that it charges no overdraft fees, no monthly service fees, and the ability to use over 32,000 ATMs without paying any transaction fees. With a Chime account, you can also make cash deposits at more than 90,000 retailers.
The primary drawback with Chime is that there is no paper check option, however, Chime will send paper checks for you. Chime doesn't use ChexSystems, so a negative banking history won't stop you from opening an account.
Another potential downside to keep in mind is that online transfers initiated from Chime are capped at $200 per day. If you need to move larger amounts around on a daily basis, you might have to look for other options.
Radius offers a second chance checking account in the form of its Essential Checking account. With this account, you can write paper checks, pay bills online, and connect a debit card to your checking account.
Customers can also use 20,000 ATMs in the Radius network without paying any fees. After one year of good banking, you can upgrade to the Radius Rewards Checking account.
However, the Radius Essential Checking account has some drawbacks to be aware of. There is a $10 minimum deposit required to open an account, mobile check deposits are limited to $1,000 per day, and the account comes with a $9 monthly maintenance fee.
Varo is an online-only bank that offers a second chance checking account with no ChexSystems check, no monthly fees, and no minimum balance requirements. One of the more attractive features is the option to open a savings account with a 3% annual percentage yield (APY).
Like other online banks, Varo doesn't offer any physical branches, so you can't walk into a branch and talk person-to-person with a bank representative if you need assistance. There is also no option to use paper checks, but Varo will send one on your behalf with no fees.
#5. Wells Fargo
Wells Fargo has 5,400 physical branches and 13,000 ATMs in 37 states, so it's a good option to consider if you want the convenience of in-person banking. With a Wells Fargo Clear Access checking account, you can pay bills online and attach a debit card to your checking account.
#6. Green Dot Bank
Green Dot is an online-only, self-described "branchless bank" that doesn't necessarily offer a second chance banking account. Instead, it offers a prepaid debit card without a credit check or ChexSystems report, which means most people will qualify for a card.
There is no minimum deposit required to get a prepaid card, but there is a $7.95 monthly fee that is waivable if you load at least $1,000 onto your card the previous month.
You can make free cash deposits at Walmart locations, and Green Dot also offers free mobile check deposits with your smartphone. However, there is a $3 per-transaction ATM fee, as well as a $5.95 fee each time you reload your card.
GoBank is part of Green Dot, but it gives customers the option of opening a real checking account rather than a prepaid debit card. While it's an online-only bank, it has a large network of 42,000 ATMs you can use with no fees.
The checking account comes with a monthly fee of $8.95, but this is waivalbe if you sign up for monthly direct deposits totaling $500 or more. Paper checks are available and cost around $6 for 12 checks.
#8. Peoples Bank
Peoples Bank offers a Second Chance Checking account that offers online bill pay, paper checks, and a debit card attached to your checking account. There are two physical branch locations in Paris, Texas, so the majority of Peoples Bank customers are limited to online banking.
While there is no minimum account balance requirement, there is a $30 minimum deposit required to open an account and a $4.95 monthly fee.
GO2bank is part of Green Dot and GObank and bills itself as "the ultimate mobile bank account." There is no minimum deposit to open an account and no credit check required.
While GO2bank is an online-only bank, you can acces over 19,000 ATMs without paying any fees, however, there is a $3 per-transaction fee when you use out-of-network ATMs. The account comes with a $5 monthly maintenance fee that is waivable if you sign up for payroll or government benefit direct deposit.
#10. Woodforest National Bank
Woodforest National Bank, which has physical branch locations in 17 states, offers a Second Chance Checking account with a $25 minimum deposit and a one-time $9 account setup fee. There is also an $11.95 monthly maintenance fee, which is lowered to $9.95 a month of you sign up for direct deposit.
The account also comes with other fees, including a $15 fee to setup your debit card and a $32 per-transaction fee for overdrafts. In-network ATMs are free to use, but you'll pay $2.50 per transaction for out-of-network ATMs.
#11. Washington Savings Bank
Washington Savings Bank offers several checking accounts, including its Online Rewards account that functions as a second chance checking account. You must enroll in direct deposit to qualify for an account, and there is a $14.96 monthly service fee.
The account also requires a minimum $10 deposit to open an account, however, you get a free debit card and free identity theft monitoring.
#12. GTE Financial
GTE Financial is a credit union that offers a second chance checking account in the form of its Go Further account. There is a $9.95 monthly maintenance fee, but it's waivable when you sign up for eStatements, make at least 15 transactions per month, and make a total of $500 direct deposits each month.
#13. Corporate America Family Credit Union
Corporate America Family Credit Union offers a Fresh Start Checking account for people with a negative banking history. To open an account, you must be employed by a sponsor company, a family member of a current member, live within 25 miles of a physical branch, or be a member of The Hope Group, which is a scholarship fund.
The Fresh Start Checking account requires customers to keep at least $100 in a savings account, but there is no minimum balance requirement for the checking account itself. In addition, you'll pay a $10 monthly maintenance fee.
#14. Bank of America
Bank of America doesn't really offer a second chance checking account. Instead, it offers three different checking account tiers, with its SafeBalance account aimed toward college students who are just starting out with a bank account.
There is a $4.95 monthly maintenance fee, which is waivable for college students under age 24 or account holders enrolled in the Preferred Rewards program.
OneUnitedBank offers second chance checking through its U2 checking account, which requires you to open a holiday club savings account at the same time. There is also a $12 monthly maintenance fee and a $50 minimum deposit required to open your account.
With a U2 account, you can bank at over 25,000 ATMs without paying any transaction fees. You'll also receive a free Visa debit card that is linked to your checking account.
Reasons You Were Rejected for a Bank Account
Generally, there are just a couple of reasons banks decline a customer for a checking account: either the person doesn't meet the criteria for opening an account or they have a bad banking history.
If you got turned down because you don't meet the requirements, you're either too young to open an account on your own or you fail to satisfy some other criteria, such as being a U.S. citizen or permanent resident. If you are under the age of 18 or 21, depending on your state, you can open a custodial banking account with a parent or guardian's supervision.
The other common reason people get rejected for a checking account is a negative banking history. Many banks use ChexSystems, which is like a credit report for your banking history.
Similarly, some banks use TeleCheck, which is another reporting system that keeps track of a person's negative banking history. However, about 80 percent of banks use ChexSystems, making it far more popular than TeleCheck.
If a bad banking score is holding you back from opening a bank account, you can check your ChexSystems for free by requesting your ChexSystems report. This allows you to review the negative items in your report and dispute any inaccurate items.
What Is Second Chance Banking?
Second chance banking offers people with a negative banking history a way to get a new checking account and rebuild their negative banking score. Like the name says, it's a second chance and an opportunity to correct past financial mistakes.
While some second chance bank accounts come with fees and restrictions you won't find with regular checking accounts, not all banks charge fees. In addition, many banks give an option to upgrade to a regular checking account after you've proven you can handle your checking account responsibly.
Second Chance Banking vs. No ChexSystems Bank Account vs. TeleCheck
If you have a negative banking history, a second chance bank account isn't necessarily your only option. There are some banks that don't use ChexSystems or TeleCheck, which means you're more likely to get approved for an account.
However, these accounts tend to come with higher fees and some restrictions, so it's important to thoroughly review the terms and conditions before you apply. No matter what kind of banking history you have or what kind of account you're looking for, it's always wise to shop around and review your options.
Pros and Cons of Second Chance Bank Accounts
Second chance bank accounts can be a great way to bounce back from a bad banking history, but they have some drawbacks. Before you open a second chance account, it's important to review the pros and cons.
- Access to normal banking features - In most cases, banks that offer second chance checking accounts give second chance customers access to all the same features as customers with regular checking accounts. For example, you'll probably still get to use online bill pay, make mobile deposits, and get a debit card that's linked to your checking account.
- Direct deposit - Having a checking account means your employer can deposit your paycheck directly into your bank account. This is more convenient than getting a paper check, and in most cases having direct deposit means you can access your money faster.
- Send money and pay bills online - Without a bank account, you're stuck using cash or paying for money orders, which can be inconvenient and expensive. With a second chance checking account, you can send money and pay bills online.
- Option to transition to a regular account - Most banks that offer second chance accounts give customers the option to upgrade to a standard checking account after a certain period of responsible account use.
- Limited banking choices - Not all banks offer second chance checking accounts, so you'll have a smaller menu of options to choose from. However, there are plenty of well-known banks that offer these accounts, so chances are you'll find one that meets your needs.
- Possibility of fees - Banks that offer second chance checking accounts take on customers with a history of poor financial decisions, so there is a risk involved in offering a second chance account. To offset this risk, some banks charge higher fees for second chance checking accounts.
- Possibility of restrictions - Depending on where you bank, your second chance checking account may come with some restrictions. For example, some banks put daily limits on debit card transactions, while others don't offer paper checks.
Considerations for Choosing a Second Chance Checking Account
If you're in the market for a second chance checking account, there are a few things to consider as you look at various banks and their offerings. Knowing the ins and outs of each account can help you make a good decision that helps you rebuild your finances.
- Check the fees - Not every bank with a second chance checking account options charges fees, but many do, so it's important to review all the fees before you sign up. Look for monthly service fees, as well as per-transaction charges and compare these to the cost of fees associated with money orders and cashier's checks.
- Look at the ATM network - If you need access to cash on a regular basis, take a look at the bank's network of ATMs. Many banks with second chance account options have limited branches or no physical branches at all, so you'll want to make sure you can access an ATM when you need to make cash deposits or withdrawals.
- Consider account restrictions - Keep in mind that second chance accounts are designed for people with a negative banking history, so you can usually expect some restrictions on these types of accounts. For example, you might be unable to use paper checks, or the bank might place a limit on how often you can use your debit card.
- Check out the tech offerings - Does the bank offer mobile banking or an app that lets you keep track of your account on the go? These features can be important when you're rebuilding your banking history and want to stay on top of your daily account balance and online payments.
Second Chance Bank Account Alternatives
If you don't want to open a second chance bank account, there are other options out there. Here are three alternatives to keep in mind.
- Prepaid debit cards - With a prepaid debit card, you don't have a bank account. Rather, you purchase a card in advance and preload it with money. Once the card is loaded, you then use it make purchases like you would any other debit card. Some cards even give you the option to load your paycheck onto the card.The biggest drawback with prepaid debit cards is that they typically come with fees you won't encounter with a regular checking account. In addition, they generally don't report your activity to the credit bureaus or ChexSystems, so you won't get credit for responsible use.
- Find a bank that doesn't use ChexSystems - You can also look for a bank that doesn't use ChexSystems. About 20 percent of banks don't run ChexSystems reports, so there are definitely options out there.
- Use a mobile banking app - In recent years, a number of banking apps like Chime have sprung up as an alternative to traditional banking. While these are not actually banks, they still offer FDIC protection, so the money in your account is protected just as it would be in a regular checking account.
Best Second Chance Banking Practices
You can get the most benefits from your second chance checking account by using your account responsibly, which can help you rebuild your banking history and possibly qualify for a better checking account in the future. To get the most out of your account, keep the following best banking practices in mind.
- Pay all monthly fees - Some second chance checking accounts come with a monthly fee, so you'll want to make sure you pay yours on time every month. Keep in mind that unpaid account fees are a top item reported to ChexSystems, which is why you want to avoid any late fees or unpaid charges.
- Don't overdraft your account - Avoid overdrafting your account, as this is another negative item that can stop you from qualifying for a traditional checking account. You can minimize your risk by looking for a bank that offers overdraft protection or no fees for overdrafts.
- Bank within your ATM network - Sidestep ATM transaction fees by sticking to your banks network of ATMs. These keeps more money in your account and helps you stay within your budget.
If a bad banking history is stopping you from opening a regular checking account, a second chance checking account can be an important stepping stone on the way to a better financial future. As long as you shop around for the best deal and keep an eye on monthly maintenance fees and other costs, you have a good chance of finding an account that suits your goals.
About the Author
Mike is a recognized credit expert and founder of Credit Takeoff. His credit advice has been featured in CNBC, Investopedia, CreditCards.com, Bankrate, Huffpost, The Simple Dollar, Reader's Digest, LendingTree, and Quickbooks. Read more.