What Banks Offer Second Chance Accounts?

You may run into roadblocks opening a traditional checking account if you have a few bumps in your banking history like accounts closed due to unpaid overdraft fees, bounced checks, and other negative information. A second chance checking account, also referred to as a  fresh start account, can be an option for your banking needs. 

Although second chance accounts can get your banking back on track, there are limitations to consider. In addition, they aren’t available at all financial institutions. So, what banks offer second chance accounts? This post will help you learn more.

What Is a Second Chance Account?

When you apply for a checking account, the financial institution will check your banking history with ChexSystems. ChexSystems is a consumer reporting agency that houses information on mishandled checking and savings accounts. The report includes five years of data. ChexSystems provides this information to members to determine the risk of approving your checking account. In the United States, about 80% of all banks and credit unions participate in the ChexSystems program. 

If you have an adverse account history, one option is second chance checking accounts. These accounts provide a banking alternative if you have a complex banking history. These accounts can help improve banking history, but they don’t rebuild credit. And if you avoid negative balances, you can typically upgrade to a regular checking account within six months to a year. 

Benefits of Second Chance Accounts

A second chance bank account allows you to demonstrate you’ve turned over a new leaf and are getting your finances in order. 

Benefits of second chance accounts include: 

  • Standard Banking Services. You can access standard banking services like online bill pay and direct and mobile deposits, and link a debit card to your checking account. 
  • Easily Get Your Paycheck. Access to direct deposits, so funds are directed to your account. 
  • Avoid the Alternatives. Second chance checking accounts allow you to avoid the alternatives, such as prepaid debit cards or check-cashing services. These can come with costly transaction fees and balance requirements.

Limitations of Second Chance Accounts

Although second chance accounts provide you with banking options, there are limitations you’ll want to weigh. 

Limitations of second chance accounts include: 

  • Fewer Choices. Instead of picking a bank, you may have to start with a shortlist of what banks offer second chance accounts. You have fewer options. 
  • Higher Fees. Banks and credit unions may charge monthly account fees. 
  • Limited Features. You may be limited in what you can do. Some institutions restrict your ability to write checks, send money electronically, or spend on your debit card each day. And you typically can’t enroll in an overdraft program.
  • Stricter Requirements. Accounts typically carry more requirements than standard checking accounts, such as setting up direct deposit or completing a money management class. 
  • Account Restrictions. Certain banks will allow you to write checks, while others limit your daily spending and withdrawals.                       

What Banks Offer Second Chance Accounts?

Not all banks and credit unions offer second chance checking accounts. Banks offering second chance checking accounts either don’t use reports from ChexSystems or weigh past banking mistakes less. Call or check out the financial institution’s website to see if it’s an option. Comparison shop and understand what terms and conditions apply before opening an account. 

Although you may have limited options, consider:

  • Fee Structure. Second chance accounts often come with lots of add-on costs like maintenance fees. Some banks will waive fees for customers who set up a direct deposit or maintain a minimum account balance. 
  • Balance Requirements. Understand balance requirements. A minimum opening deposit of $25 is standard. Certain financial institutions require more. 
  • Overdraft Protection. Second chance accounts often prohibit overdrafts or charge high overdraft fees.
  • Savings Account Requirement. Some financial institutions require a savings account with them for a few months before opening a second chance checking account.
  • ATM Access. Check for convenient fee-free ATM locations.  
  • Other Requirements. Some banks will mandate you attend free financial management classes or impose other requirements.  
  • Access to Technology. Investigate the tools the bank’s app and online accounts provide. Look for features like mobile deposit, online bill pay, budgeting help, automatic savings programs, and person-to-person payments. 

Contact FFCU to Open a Fresh Start Account 

A checking account is vital to managing your finances, but if you’re having trouble getting one, second chance accounts can offer you another shot at banking. A Focus Federal Credit Union Fresh Start Account offers you banking opportunities.