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Second chance banking makes it possible for people who can't qualify for a traditional bank account to access basic banking services. Consumers may turn to second chance banking if they've had a history of account overdrafts, bounced checks, account closures or other events that prohibit them from opening an account at a mainstream bank.
The approval requirements for these accounts are typically less stringent compared to traditional checking accounts, but some of them can also come with some limitations. Here's what you need to know.
What Is a Second Chance Bank Account?
A second chance bank account is an account with a bank or credit union that either doesn't check your ChexSystems report or is willing to look past your previous missteps.
A ChexSystems report can show negative bank account actions and activities, such as an involuntary account closure and unpaid negative balances. If the bank or credit union deems you're too much of a risk based on information in your ChexSystems report, it can deny your application.
Second chance bank accounts give you an opportunity to access basic banking services without needing to rely on inconvenient and high-cost money services, such as check cashing and money orders.
While some key features may be missing, you can use a second chance bank account to rebuild your banking history and get back in the good graces of other banks and credit unions.
Pros and Cons of Second Chance Bank Accounts
Although second chance bank accounts offer key services for unbanked and underbanked households, there are some drawbacks to consider. Here's what you need to know.
Pros
- Easy approval: With no ChexSystems check involved in the application process, second chance bank accounts may be easier to obtain than traditional bank accounts.
- Access to basic banking needs: You may not get all the features of a traditional bank account, but you'll typically get the most important services, such as direct deposit, a debit card and ATM access. What's more, many second chance bank accounts offer all of the same features you can get with a standard option.
- Can help you rebuild your banking history: While second chance banks typically won't review your ChexSystems report when you apply, they'll typically still report your banking activity after your account is opened. This can help you build a positive banking history and improve your odds of getting approved for a traditional account in the future.
Cons
- Some accounts offer limited services: Depending on which bank you choose, you may not have access to certain features, such as overdraft protection or check-writing privileges. Additionally, you may not have the option to open a savings account along with your checking account.
- Monthly fees: Despite offering limited services, some second chance bank accounts come with a monthly fee, which may or may not be waivable.
- Limited accessibility: Not all banks and credit unions offer second chance bank accounts, so you may not be able to go with your preferred financial institution.
Is a Second Chance Checking Account Right for You?
A second chance bank account can be a good fit if you're having trouble getting approved for a traditional checking account. While some of these accounts limit what you can do, others offer full banking services and little to no fees.
Most important, these accounts can give you access to critical services, such as mobile deposits, bill pay and more. Just keep in mind that many of these financial institutions are online only, so if you need to cash checks, check the bank's physical branch footprint to determine whether it's a good fit.
Nationwide Second Chance Bank Accounts
Many major banks and other financial institutions offer second chance bank accounts. Here is just a handful of nationwide examples:
| Experian Smart Money™ Digital Checking Account & Debit Card | Monthly fee¶: $0 Minimum to open: $0 Minimum balance: None Overdraft fees: None |
|---|---|
| Capital One 360 Checking Account | Monthly fee: $0 Minimum to open: $0 Minimum balance: None Overdraft fees: None |
| Chase Secure Banking | Monthly fee: $4.95; waivable with qualifying direct deposits of $250 or more Minimum to open: $0 Minimum balance: None Overdraft fees: None |
| Chime Second Chance Banking | Monthly fee: $0 Minimum to open: $0 Minimum balance: None Overdraft fees: None |
| GTE Financial Go Further Checking | Monthly fee: $9.95; waivable if you enroll in e-statements, make $500 in aggregate deposits per month and make a combination of 15 monthly debit and/or credit card transactions Minimum to open: $5 Minimum balance: None Overdraft fees: $7 |
| LendingClub Rewards Checking | Monthly fee: $0 Minimum to open: $0 Minimum balance: None Overdraft fees: None |
| SoFi Checking | Monthly fee: $0 Minimum to open: $0 Minimum balance: None Overdraft fees: None (for transactions up to $50) |
| Varo Bank Account | Monthly fee: $0 Minimum to open: $0 Minimum balance: None Overdraft fees: None |
| Wells Fargo Clear Access Banking | Monthly fee: $5; waivable if the primary account owner is between ages 13 and 24, has a Wells Fargo Campus ATM Card or Campus Debit Card linked to the account or receives a qualifying monthly non-civilian military direct deposit with the Wells Fargo Worldwide Military Banking program Minimum to open: $25 Minimum balance: None Overdraft fees: None |
Second Chance Banks by State
- Azalea City Credit Union Opportunity Draft
- Family Security Credit Union
- Gulf Winds Credit Union
- United Bank Gateway
- True North Federal Credit Union
- Banner Federal Credit Union
- Tucson Old Pueblo Credit Union
- Diamond Bank
- Red River Credit Union
- River Valley Community Federal Credit Union
- Unify Federal Credit Union
- North County Credit Union
- Premier America Credit Union
- Priority One Credit Union
- Liberty Savings Bank
- NuVista Federal Credit Union
- Unify Federal Credit Union
- Finex Credit Union
- Hartford Federal Credit Union
- Tobacco Valley Teachers Federal Credit Union
- Compass Financial Federal Credit Union
- First Florida Credit Union
- Gold Coast Federal Credit Union
- South Florida Federal Credit Union
- Georgia's Own Credit Union
- Peach State Federal Credit Union
- Hawaii USA Federal Credit Union
- Latah Credit Union
- Catholic & Community Credit Union
- First American Bank
- First National Bank and Trust Company
- Marquette Bank
- Centra Credit Union
- Heritage Federal Credit Union
- Horizon Bank
- Liberty Federal Credit Union
- Collins Community Credit Union
- Federation Bank
- Greater Iowa Credit Union
- North Iowa Community Credit Union
- Central National Bank
- United Consumers Credit Union
- Central Bank
- FNB Bank
- Hearthside Bank
- Liberty Federal Credit Union
- Neighbors Federal Credit Union
- Pelican State Credit Union
- Southwest Louisiana Credit Union
- Central Credit Union of Maryland
- Clear Mountain Bank
- Market USA Federal Credit Union
- SecurityPlus Federal Credit Union
- Alden Credit Union
- Athol Credit Union
- Credit Union One
- Horizon Bank
- Marshall Community Credit Union
- Michigan State University Federal Credit Union
- Citizens National Bank
- Gulf Coast Community Federal Credit Union
- Liberty Federal Credit Union
- MUNA Federal Credit Union
- First State Community Bank
- Montgomery Bank
- St. Louis Community Credit Union
- United Consumers Credit Union
- Clearwater Credit Union
- Central National Bank
- Clark County Credit Union
- WestStar Credit Union
- GFA Federal Credit Union
- Credit Union of New Jersey
- Jersey Shore Federal Credit Union
- United Teletech Financial Federal Credit Union
- First American Bank
- Lea County State Bank
- Adirondack Regional Federal Credit Union
- Alternatives Federal Credit Union
- Centra Credit Union
- Financial Trust Federal Credit Union
- Centra Credit Union
- Excite Credit Union
- Skyla Credit Union
- Eaton Family Credit Union Inc.
- Hopewell Federal Credit Union
- KEMBA Federal Credit Union
- Allegiance Credit Union
- Oklahoma Educators Credit Union
- Western Sun Federal Credit Union
- Heritage Grove Federal Credit Union
- Point West Credit Union
- Centra Credit Union
- Utilities Employees Credit Union
- West Branch Valley Federal Credit Union
- Caro
- Carolina Trust Federal Credit Union
- Market USA Federal Credit Union
- Skyla Credit Union
- Liberty Federal Credit Union
- First National Bank
- Hearthside Bank
- Select Seven Credit Union
- Associated Credit Union of Texas
- Baptist Credit Union
- Kelly Community Federal Credit Union
- Prestige Community Credit Union
- American United Federal Credit Union
- Cyprus Credit Union
- Central Virginia Federal Credit Union
- Healthcare Systems Federal Credit Union
- Member One Federal Credit Union
- MountainCrest Credit Union
- Clear Mountain Bank
- West Virginia Federal Credit Union
- Brewery Credit Union
- Crossbridge Community Bank
- First National Bank and Trust Company
- WESTconsin Credit Union
- Stagepoint Federal Credit Union
How to Open a Second Chance Bank Account
Here are some steps you can take to open a second chance bank account:
- Shop around. Start by researching and comparing top second chance bank accounts like the ones provided above. As you consider your options, look at potential fees, deposit requirements, services and limitations. You can also check to see if the bank will allow you to upgrade your account in the future with responsible use.
- Apply with the bank. You can usually apply online, but if the bank has physical branches, you can also choose to apply in person. You'll likely need to provide some basic information about yourself, including your name, date of birth, Social Security number, address and contact information, as well as a government-issued photo ID.
- Fund your account. Funding a bank account can be difficult if you don't have another bank account from which you can transfer money. Fortunately, many of these accounts don't require opening deposits, so you can deposit a check through the bank's mobile app or set up direct deposit to fund the account.
Frequently Asked Questions
It's possible to be denied a second chance bank account, especially if the financial institution uses other consumer reports, such as your credit report, to evaluate your eligibility.
That said, most second chance bank accounts make it easy to get approved, so you shouldn't have too many problems, especially if you choose a nationwide bank.
Depending on your situation and needs, there are a few alternatives to a second chance bank account you could consider:
- Prepaid debit card: Prepaid cards allow you to spend money that you load onto your card. You can generally only spend what you add to the account, though some may offer overdraft protection. To add money to your account, you can typically set up direct deposit, add checks via mobile deposit or load cash at a participating retailer. That said, a prepaid debit card typically won't help you improve your ChexSystems report.
- Money services: Many retailers offer various money services, including check cashing as well as money orders or cashier's checks, to pay bills. That said, you'll typically pay a fee for each service, which likely won't be an issue with second chance bank accounts.
As with traditional bank accounts, the deposit requirements for a second chance bank account will depend on which financial institution you choose. While some require a minimum deposit to open your account, others don't.
The Bottom Line
Second chance banking isn't always ideal, but it's a solid option if you've been denied a traditional checking account. As you work to get back on the right track with your banking, also consider getting a free copy of your credit report.
While your credit history doesn't have a lot of influence on whether you can get a better bank account in the future, building your credit can help you improve your overall financial standing. Doing so can prevent some of the issues that may have caused your current predicament from happening again.