So while a checking account is a hub for day-to-day money management, it may not be easy to open for everyone. You can use it to deposit income, purchase things online and in-person with your debit card, and pay bills electronically or by check. But some banks are reluctant to open checking accounts for people who have experienced financial problems in the past. However, there is still hope. If you’re facing challenges getting approved for a bank account, a second-chance account may offer the opportunity you need to get back on track.
What Is a Second-Chance Bank Account?
A second-chance bank account is an account for people who have difficulty opening a checking account at a bank or credit union. You might be unable to open an account due to a history of overdrafts, fraud, or other problems. Second-chance accounts provide the opportunity to use a bank account, although these accounts may limit certain features like how much you can spend each day and check writing. However, you usually can get a debit card, pay bills online, and receive direct deposits.
Examples of Second-Chance Bank Accounts
You can find second-chance bank accounts at online banks and brick-and-mortar institutions. As you compare offerings, examine monthly fees and any limitations on how you can spend money from your account. The accounts and banking platforms below are available nationwide, but it’s smart to inquire with local banks and credit unions as you search for a solution.
Chime
Chime is an online-only banking platform that keeps fees to a minimum. Its “Spending” account functions like a checking account and doesn’t require a credit check. When compared to most brick-and-mortar banks, Chime’s lack of a monthly service charge is unique. You can’t write your own checks, but you can have Chime print and mail a check from your account on your behalf. Account features include:
No monthly feeNo minimum to openNo ongoing minimum balance requirementNo overdraft chargesMore than 60,000 fee-free in network ATMs available for Chime members$2,500 daily debit-card spending limit
Wells Fargo Clear Access Banking
Wells Fargo’s Clear Access checking account allows you to open an account with access to a broad brick-and-mortar branch network. The account is a good fit for customers looking for a second-chance account because of the following features:
$5 monthly fee (waived for customers between 13 and 24 years old)$25 minimum to openNo overdraft or insufficient-funds feesNo paper checksNationwide availabilityAccess to around 5,400 branches and more than 13,000 ATMs
LendingClub Essential Checking Account
LendingClub is an online bank that promises you a fresh financial start. Its Essential Checking second-chance account limits how much you can spend and deposit, but you can use a debit card, pay bills online, and write checks. You’re eligible for this account if LendingClub does not approve you for its two other checking accounts first. Account features include:
$9 monthly fee$10 minimum to openNo ongoing balance requirementMay be able to upgrade to a better checking account after 12 monthsAvailable nationwideMore than 20,000 fee-free ATMs available
Pros and Cons of Second-Chance Bank Accounts
Pros Explained
Convenience and (sometimes) cost savings: A bank account might be the safest, most convenient, and least-expensive tool for managing your day-to-day finances. Instead of going to a check-cashing outlet every pay period (which typically costs money and takes time out of your day), your employer can deposit your wages directly to your account. Likewise, making payments from your bank account may be easier and less costly than getting money orders or in-person payments, and you don’t need to carry cash. Get established with a bank: A second-chance account opens the door to banking with financial institutions. After establishing a problem-free history with a bank (often a year or so), you may be able to transition to less-expensive and more flexible bank accounts. The bank has direct access to your earning and spending history, which may improve your chances with other bank services, including loans.
Cons Explained
Potential fees: Second-chance bank accounts may charge monthly maintenance fees. While banks often provide opportunities to get those fees waived, those waivers might not be available on second-chance accounts. Monthly fees are costly and discouraging, especially when you’re getting back on your financial feet.Limited functionality: With a second-chance bank account, you may not be able to use all of the features you’ll find in a checking account. For example, you might not be able to write checks, and the bank may limit how much you can spend (for example, LendingClub starts you out with a daily debit card limit of $250 for the first 30 days). Plus, not all banks offer second-chance accounts, so you have fewer options to choose from.
Alternatives to Second-Chance Bank Accounts
If you don’t want to (or can’t) open a second-chance bank account, you may have other options. Prepaid debit cards are probably the closest substitute to a checking account, and they may not require you to pass a credit check. Like second-chance bank accounts, prepaid cards can prevent you from spending money you don’t have (you must “load” money on your card before you can spend). You can often pay bills online, spend with a card, and deposit checks into your prepaid account. If you don’t use a prepaid account, you may need to cobble together services from different providers. Check-cashing stores and supermarkets may be able to help you convert your paycheck into spending money, but beware of fees. For situations where you can’t pay with cash, money orders and cashier’s checks may suffice, although you’ll also pay a per-item fee with those instruments.
