Wondering why you were denied a new banking account? There are two possible reasons: (1) you failed to meet basic account requirements, and (2) you have a bad banking history. If you are experiencing the latter situation, you may have been blacklisted by ChexSystems. This is a reporting agency that banks work with when checking consumers’ banking activities.
You do not have to sulk over a negative banking record; this occurrence isn’t the end of the world for you. You may still bank with a fresh start with second chance banking. This is a practical lifeline that can save you from a rough financial situation. Learn more about second chance banking here and see how it answers well to your banking needs.
Second Chance Banking: An Overview
Second chance banking is a condensed version of a regular bank account with lower spending limits and fewer features. A second chance bank account is an alternative for consumers like you who have a negative credit score. It can also help when a ChexSystems record prohibits you from opening a regular account.
Starting over with a new bank can be more challenging when you still account for unpaid obligations or negative balances. Lucky for you, second chance bank accounts offer you an opportunity to clear off negative items from your banking record. You may know more about second chance banking here: https://www.crediful.com/second-chance-banking/.
When to Consider Second Chance Banking?
Mistakes such as failure to pay an account fee may cause consumers like you to have a written bad check called overdraft. When the bank notices this item from your account, they will then report this to ChexSystems.
This consumer reporting agency collects consumer records based upon their respective banking history. Having repeated errors listed on the ChexSystems’ record may cause banks to deny you a bank account.
Another instance that may help you consider second chance banking is a low credit score. Most banks require consumers to have a certain number of credit scores. So when you don’t meet their requirements, they will most likely deny you an account. Though credit score is more relevant to credit cards and loans, in some cases, it can still affect your banking habits.
If you are experiencing either of the two situations, it is advisable to seek the ways of second chance banking. Not all banks may provide consumers bank accounts such as this, but those few that recognize the need for second chances won’t be looking for the best scores from you. Therefore, opening second chance bank accounts is relatively more straightforward.
How Second Chance Banking Works?
You might be thinking now of second chance banking as a more conditional version of standard banking. Banks that offer this opportunity design these accounts with only the essential features. This is to control and discipline a consumer’s attitude towards spending. You can find the following conditions when opening a second chance bank account:
- No check writing
- No overdrafts or overdraft transfers
- Debit limits and lower withdrawal
- Lower monthly fees
Second chance banking charges lower monthly maintenance fees to consumers when compared to a regular checking account. But there’s a catch: there are no more fee waiver options available for you. This is so your obligations will not pile up, to the point that it is so big that you can no longer pay for it.
Most banks that offer second chance banking prohibit overdrafts. They will automatically reject transactions that exceed the consumer’s balance, with no overdraft fee or overdraft transfers. This is done to protect you from spending past your financial ability.
And, by limiting the amount you can withdraw from your ATM card or spend on your debit card, you can now avoid circumstances where you accidentally empty your account. It also limits the consumers’ ability to write checks that get people into trouble by losing track of their spending.
Why Do You Need Second Chance Banking?
A lot of Americans do not own a bank account. Almost twenty-five percent of U.S. households are unbanked until now. If you are among this percentage because of adverse banking history, you definitely need second chance banking.
This process may help you ultimately avoid check-cashing services, prepaid cards, or any other non-bank financial provider. Listed below are the advantages of opening a second chance bank account:
- It provides safety for your money. Through the FDIC, second chance banking can safeguard your money against any bank failure, offering up to $250,000 for every depositor that qualifies in the ownership category.
- Check-cashing services charge higher fees. You may always have to pay a percentage of the total amount of the check anywhere you cash in. That is the money you’re losing from paycheck to paycheck even before paying for bills. But with second chance banking, you now only need to pay for lower fees.
- Using prepaid debit cards never helps in building credit scores. At one point, you may have thought of getting debit cards instead when you can’t qualify for a bank account. But these cards never help build your credit at all. If you are determined to fix your credit score, second chance banking is the way for you.
Where to Find Banks That Offer Second Chance Banking?
Most national banks may carry basic accounts, but most of the time, they are never clear whether the accounts they’re offering are easier to open for consumers who have negative banking histories. Among these known nationwide banks, only Wells Fargo advertises their second chance checking account, Opportunity Checking.
If working with larger banks isn’t a suitable option for you, you may look for better choices at regional or community banks near your location. They offer a small-batch approach to consumers that shows their willingness to work with you even without offering an official second chance condition. Working with credit unions may work to your advantage, too.
For consumers like you who are put in an undesirable situation, second chance banking may be the answer to your never-ending financial problems.
Fix your financial situation with second chance banking, and redeem yourself once again. Use the guide above when you have other queries when opening a second chance bank account.