Second-chance banking

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In a Nutshell

Your past checking account errors or misuse can be a roadblock to getting a new checking account. But that doesn’t mean you have no options. Second-chance banking can offer you a shot at rebuilding your banking records and qualifying for a standard account.
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Second-chance banking gives people with negative banking history a chance to get things back on track.

Not all checking accounts come with the same features. Standard checking accounts tend to be more user-friendly, typically offering unrestricted check-writing privileges, fewer fees and other perks.

But a standard checking account may be unavailable to you if you have negative information on your ChexSystems report or another report on checking account history. If past trouble with checking is preventing you from opening up a traditional account, consider an alternative: second-chance banking.

What is second-chance banking?

Second-chance banking accounts give people with less-than-perfect banking history a secure place to keep their cash. These accounts offer access to a limited set of benefits associated with regular checking, but also allow you to rebuild positive checking-account history, so that you can eventually get a standard account.


How can I see my checking-account reports?

You’re entitled to one free copy of your checking-account reports from the nationwide checking account reporting companies once every 12 months, which you can request by contacting reporting agencies directly and submitting your request.

You can also get a free copy of your checking-account report any time it’s been used to deny your application for a new account. When this happens, you’ll receive an “adverse action” notice with information on the reporting company and how to contact it.

Second-chance accounts are sometimes called “low risk” because they can have built-in restrictions that prevent you from spending money you don’t have. This can include products like prepaid debit cards and various accounts where overdrafting is not allowed.

A checking account with limited functions can be inconvenient, but it can also can help you manage your spending and avoid overdraft issues or account closures that would result from misuse.

Who should use second-chance banking?

If you have any of the following negative marks on your checking reports, or you’ve been denied a standard banking account for another reason, second-chance banking may be for you.

  • Overdrafts
  • Unpaid negative balances
  • Involuntarily closed accounts
  • Fraud-related activities

What should I look for?

Before you choose a second-chance banking account, make sure you’re familiar with its features and you understand which activities could result in fees or further damage to your checking reports.

Some banks don’t advertise their low-risk products, so you might have to ask about what’s available and make sure to carefully review the account features. Here are the features to review before choosing an account.

  • Overdraft restrictions – You may be limited to spending only what you have available in your account or subject to hefty nonsufficient funds fees.
  • Fees – Monthly maintenance fees are common, though they’re sometimes waived if you set up a recurring direct deposit. There may be also be fees for purchases, account inactivity, deposits and more.
  • Minimum balance – This could include a minimum deposit required to open your account, and/or a set amount you have to keep in your account at all times in order to avoid fees.
  • Checking privileges – Second-chance accounts may lack checking privileges, charge a fee for ordering checks or limit the number of checks you can write.
  • Online banking – This option may not be available, or it may come at a price.

Second-chance banking accounts to consider

United Bank Gateway Checking

This account is United Bank’s “gateway” account to standard banking. United Bank makes the account available to qualifying customers with little or no credit, and those with negative marks on their checking records, for a fee of $10 a month. After a minimum of six months of positive history with the account, you may be able to upgrade to a standard United Bank account.

Other features of United Bank Gateway Checking are mobile check deposit and a smartphone app. Checks and online bill pay, on the other hand, are only available for a monthly fee.

BancorpSouth Second Chance Checking

Unlike the United Bank Gateway Checking account, this account comes with online banking and a debit card, at no additional cost. But it may take longer, one year or more to be specific, to work your way up to a standard checking account. BancorpSouth also relies on some of your ChexSystems information to determine if you’re eligible for this second-chance account, which comes with a $10 monthly fee.

Wells Fargo Opportunity Checking

Like Bancorp’s second-chance account, this checking account also comes with a $10 monthly fee. But you can have that fee waived if you meet any of the following requirements in a given billing period.

  • Make 10 or more combined debit purchases/payments
  • Receive $500 or more in qualified direct deposits
  • Keep a daily balance of at least $1,500

Wells Fargo Opportunity Checking comes with a debit card, online bill pay and free access to more than 13,000 ATMs, but you can’t actually apply for this account directly. You’ll first have to apply for a standard checking account, like Everyday Checking. If denied for that account, then you may qualify for an Opportunity Checking account.

Bottom line

If you’ve been denied for a new checking account, a second-chance banking account can be a great way to get back into banking. But it’s not the only option.

Before shopping around for a low-risk account, ask your banking representative what you can do to qualify for a standard checking account. In some cases, you may simply have to pay off old fees or balances in order to have your standard banking application approved.

About the author: Sarah C. Brady is a San Francisco–based financial consultant, workshop facilitator and writer. In addition to writing for Credit Karma, Sarah writes for Experian, LendingTree, Magnify Mo… Read more.