What is a Second Chance Bank Account?

second chance banking

By Janet Berry-Johnson, CPA
Reviewed by Lauren Bringle, AFC®

Are you trying to turn your financial life around?

If you’ve had some money problems or bad credit in the past, you might have trouble finding a bank that’s willing to let you open a checking account or savings account.

But you don’t have to resign yourself to the inconvenience of paying for things with cash. A second chance bank account might be just what you need.

What is a second chance banking account?

Second chance banking programs are designed for people who have been denied services at other banks and financial institutions. Most people who open a second chance banking account are not eligible for traditional banking or credit union accounts due to their record with one of the four major companies that track checking account-related information:

  • ChexSystems
  • Early Warning System
  • Telecheck
  • Certegy

These companies work like credit rating bureaus, but they don’t track your use of credit cards and loans, or track your credit score. They monitor and report on things like overdrawn accounts and bounced checks.

If your checking account consumer report reveals several negative items, your application for a traditional checking or savings account may be denied from a financial institution. That's when a second chance account may be a good alternative.

2nd chance bank accounts have less restrictive approval requirements than a regular checking account. They help people get back into the banking system and rebuild their banking history. While checking accounts are the most common type of second chance account, some financial institutions offer second chance savings accounts as well.

What are the pros and cons of a second chance checking account?

The approval requirements for a second chance checking account aren't as stringent as those for a standard checking account, but these accounts often come with limitations and rarely offer perks.

Pros of second chance checking accounts:

  • Available to consumers who’ve been turned down by other banks
  • More convenient than paying with cash or prepaid debit cards
  • Less costly than relying on check cashing services
  • You may be able to upgrade to a standard checking account within six months to a year
  • Allow users to monitor their account online or on a mobile device and set up alerts to notify you when your balance is running low

Cons of second chance checking accounts:

  • Often come with monthly fees that can’t be waived instead of offering a free checking account
  • May require account holders to take a course on money management
  • Some don’t offer overdraft protection, checks or direct deposit
  • Some banks charge account or debit card setup fees
  • Like traditional bank accounts, many require a minimum deposit

What banks offer second chance accounts?

Many banks and credit unions offer second chance bank accounts, so it's a good idea to shop around to find one that will give you more features at a lower cost. Here are a few nationwide options for you to compare before opening your next bank account.

Wells Fargo Opportunity Checking Account

  • Open with a $25 minimum initial deposit
  • Avoid the $10 monthly service fee if you maintain a $1,500 minimum daily balance or have qualifying direct deposits totaling $500 or more
  • Offers standard banking features such as checks, debit cards, and online bill pay

Chime Bank Second Chance Banking

  • No minimum deposit to open an account
  • No monthly maintenance charges, minimum balance fees or overdraft charges
  • Offers a mobile banking app and debit card, but no paper checks
  • Rounds up debit card transactions to the nearest dollar and transfers the remainder into a savings account

Radius Essential Checking

  • Open with $10 minimum opening deposit
  • $9 monthly service charge
  • Daily debit card transactions limit of $500
  • Mobile check deposit limit of $1,000 per day, limit of $2,000 per 10 days

BBVA Easy Checking

  • Open with $25 minimum initial deposit
  • Monthly service charge of $13.95
  • Unlimited check writing
  • $10 fee for issuing a debit card

United Bank Gateway Checking

  • Online banking included. Online bill pay available for $4.94 per month
  • $10 monthly maintenance fee
  • Check writing privileges, but no debit card offered with the account
  • No overdraft protection

BancorpSouth Second Chance Checking

  • Open with $50 minimum initial deposit
  • Unlimited check writing privileges
  • $10 monthly service fee
  • Online bill pay not available

If you have trouble finding a 2nd chance banking account from a nationwide bank, you might find better options at local banks or credit unions in your area. Ask your local financial institution for details.

Alternatives to second chance checking accounts

Keep in mind, some banks and financial institutions will deny an account application from someone with a history of bank or checking fraud on their record. If you have trouble getting approved for a second chance checking account, here are a few alternatives.

Try Chime Bank. Chime is one of many online-only banks and one of the few accounts that doesn’t run a ChexSystems report as part of its approval process, so that might be a good option if you’re having trouble getting approved elsewhere.

Give it time. Information is typically removed from your ChexSystems report after five years. If you can’t get approved for a second chance bank account due to fraud, wait until the negative information falls off of your report and try again.

Use a prepaid debit card. A prepaid debit card isn’t linked to a bank account. It allows you to load money onto a card and use it to pay just as you would make regular debit card purchases.

You can typically buy prepaid debit cards at most grocery stores, warehouse stores, and pharmacies. Before you purchase one, check out the fees, which should be disclosed on the outside of the packaging. Prepaid cards may charge a monthly fee or service fee, a per-purchase fee, and a fee to reload the card.

Bottom line

Second chance bank accounts are just what they sound like: a second chance to demonstrate that you can use a checking or savings account responsibly, even if you had financial troubles in the past.

If you’re approved for one of these accounts, take advantage of the opportunity. Keep a close eye on your balance and avoid overdrafts. If you do it right, eventually, your bank will be willing to upgrade your account to one with lower fees and better features.

About the author

Janet Berry-Johnson is a Certified Public Accountant and freelance writer with a background in accounting and insurance. Her writing has appeared in Forbes, Freshbooks, The Penny Hoarder, and several other major outlets. See Janet on Linkedin and Twitter.

About the reviewer

Lauren Bringle is an Accredited Financial Counselor® and Content Marketing Manager with Self Financial – a financial technology company with a mission to help people build credit and savings. See Lauren on Linkedin and Twitter.

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Written on February 20, 2020
Self is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at hello@self.inc.

Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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