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What Is a Second Chance Bank Account? And Do You Need One?

5 minute read

Rebecca Henderson

By Rebecca Henderson

It’s not often in life that we get second chances. When we do though, it’s typically in our best interest to take them. Whether you’re able to make anything of that second chance is often left up to fate. However, there are certain instances where the power to change your future lies square in your hands.

Second chance bank accounts are a prime example of this type of opportunity. These accounts are meant for those who need another go-round in order to show they’ve changed their bad habits. Specifically, those poor financial habits that can make or break credit scores.

In this article, we’ll talk about the benefits of second choice bank accounts. We’ll also show you exactly how you can use them to your advantage. While there might be a few drawbacks to obtaining a second chance bank account, the rewards far outweigh the cost. That is, if you can make the most of the opportunity that a second chance bank account can offer.

Second Chance Bank Accounts and ChexSystems

To understand what a second chance bank account offers, you should first know a few things about ChexSystems. This financial services company “maintains records of consumers’ banking histories.” In short, if you end up with too many blemishes in your ChexSystems profile, banks may end up denying you a new bank account. Those blemishes could include constantly being overdrawn, instances of fraud, or not paying your banking fees in a timely manner.

Much like a credit report for your banking activity, ChexSystems keeps tabs on consumers to help banks gauge individual risk. And similarly to your credit report, you are entitled to a free copy of your ChexSystems report once every 12 months.

According to DoughRoller, “approximately 80% of all [American] banks and credit unions participate in the ChexSystems program.” That means that if you can’t open an account at one bank because of a bad ChexSystems report, you’ll probably be hard-pressed to find another bank that will take you. That is, unless you know about second chance banking accounts.

Interestingly enough, there are second chance savings accounts too. However, they don’t necessarily work in the same way that second chance banking accounts, also known as “probationary accounts,” do. These accounts allow you to write checks, pay bills online, transfer money, and use your debit card at the ATM and for online and in-person purchases. However, overdrafting is not typically allowed. We’ll go further in-depth about the constraints of a second chance banking account in a bit. However, you need to know that if you’ve been turned down for a traditional checking account, a second chance banking account might be the opportunity you’ve been looking for.

Benefits of a Second Chance Banking Account

Here is a summary of the ways a second chance banking account can help your financial situation.

As with all things financial, with freedom come rules. A second chance banking account does have some constraints you’ll want to review before you get too excited.

Caveats to Having a Second Chance Banking Account

The following caveats serve mainly to show you that financial responsibility can be a good thing, when you consider each monetary choice carefully.

  • You may need to complete a money management class or demonstrate taking financial responsibility into your own hands.
  • Second chance bank accounts typically charge monthly fees. Also, you “may not get access to all the same services you would with a traditional bank account,” according to Experian. That includes things like overdraft protection or access to checks or direct deposit.
  • Fees may also include “account setup fees, overdraft fees, foreign transaction fees, and fees if a minimum balance isn’t kept.”
  • It’s still possible to misuse second chance bank accounts. That will further hurt your financial reputation with ChexSystems.

Satisfied with the rules of engagement? Next up we’ll show you how you can move your name from the naughty list back to the nice list — and back in the good graces of banks nationwide.

How to Get the Most Out of Your Second Chance Banking Account

Just because you’ve been offered a second chance doesn’t mean you should have to pay dearly for it. You can still expect to have some say in what your second chance bank account looks like.

For example, the best second chance banking accounts have low monthly fees. They may also have no minimum balance requirements, few limits in terms of transaction amounts, and give you the ability to write checks, pay bills online, and use your debit card. Mobile banking is another great feature many banks offer.

Chat with representatives of the following banks that offer second chance accounts to see what terms and conditions they offer:

  • BBVA
  • Chime
  • Peoples Bank
  • Radius Bank
  • Wells Fargo
  • Stash
  • Green Dot
  • MemoryBank
  • Capital One 360
  • TD Ameritrade
  • Varo

You can also do a quick Google search on “second chance banking accounts” to see what other offers you can find. Your second chance awaits!

Alternatives to Second Chance Banking Accounts

Sometimes a second chance banking account isn’t quite the answer you might be looking for. In that case, there are a few alternatives you might consider. However, you should note that they come with their own sets of pros and cons as well.

  • Prepaid debit cards: As the name entails, prepaid debit cards are pre-loaded with an amount of money. However, these types of cards won’t show up on your credit report or ChexSystems.
  • Check-cashing services: Many companies offering these services charge hefty fees to turn your check into cash. But convenience is a factor too, if you need fast cash in your hands.
  • Cash: Many people say cash is king. However, having lots of cash lying around can make most folks nervous. Then again, it is much easier to hand over dollar bills, especially if you’re working off a budget. In a new age of digital payments, though, cash isn’t quite as convenient as it used to be.
  • Secured credit card: Like prepaid debit cards, secured credit cards are backed by a fixed amount that you pre-pay to your lender. This deposit typically comes back to you after a year’s time. However, the credit card terms probably won’t be the most attractive — we’re talking high interest rates and little-to-no rewards.

Pat yourself on the back. You’ve done a lot of financial research so far. Now it’s time to put that knowledge into action.

This is Your Financial Moment

We’ve talked a lot about the constraints of second chance bank accounts in this article, but don’t let that discourage you. A second chance is just another opportunity. This time, you’ve got the knowledge necessary to make it your moment to shine. Take advantage of your second chance bank account today in order to effect the financial future you want.

Man Checking His Bank Account on TabletShutterstock
Rebecca Henderson

Freelance Writer

Rebecca Henderson has a Master's in German and a Bachelor's in Creative Writing. She alternates her time between writing and working on a variety of motorized projects. Most recently, she and her boyfriend have been building a custom drift trike. Rebecca believes that language, love, and a life worth living are only the first ingredients to happiness.


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