The so-called Great Recession is hitting everyone hard. More and more people who were financially comfortable just two or three years ago have seen their financial landscape change rapidly and their credit scores deteriorate. Those financial difficulties may have resulted in bounced checks for insufficient funds and subsequently a Chexsystems record, adding insult to injury.
If you are in any of these situations, opening a standard checking account can be a very difficult task. Having bad credit and/or a Chexsystems negative list will follow you for 5 years, and during that period, most banks in the United States will turn you down if you try to open an account with them.
Your best bet in that situation, if you want to have a normal financial life, is to look for a second chance checking account. These accounts are offered by more and more financial institutions to provide financial services to people who have mismanaged their accounts in the past or who have poor credit that makes them ineligible for standard checking accounts. Since they’re designed for people in financial difficulty, you don’t have to worry about being denied unless you’ve been reported for fraud.
Even if you are skeptical, there is at least one feature of these types of accounts that makes them worth considering. Most offer what they call a trial period, which can last anywhere from six to twelve months. After this period ends, you can request to have your account reviewed to determine whether or not you may qualify for a standard checking account. That alone is worth the price of admission, so to speak, because you can basically use these accounts as a way to restore your banking history to good standing.
Consider the following things when purchasing a second chance account:
Compare financial institutions. These accounts come in all shapes and sizes, and from many different institutions. Some companies specialize in them, while other times you can get them from regular banks or credit unions that offer them but don’t go out and advertise the fact. Where possible, obtain brochures and flyers for comparison purposes.
Compare the features and options offered. Here’s what you should expect to get: ATM withdrawals, direct deposit, online banking, online bill pay, and personal checks. Some companies may offer more, some may offer less, but this is what you should focus on getting.
Keep track of restrictions. While you’ll get most of the features offered in standard checking accounts, be aware that there will be restrictions. For example, you may have limited check-writing privileges and will almost always be denied overdraft protection.
Calculate balance requirements and fees. Many of the institutions that offer second chance accounts will require an initial deposit in the range of $100. Sometimes, they will also require you to have a minimum available balance in the account. Lastly, there will always be monthly service fees.
Compare all the offers and choose the company that offers the combination of options that best suits your financial needs and requirements.