With the worsening financial crisis, I think it’s high time the banks actually took notice of the way consumers spend, and what they can do to help their customers get out of the Chexsystems trap. Chexsystems is an independent service that lists consumers who have bad banking records. Being on the list means not being able to open a regular checking account in banks.
There are so many people already in Chexsystems. Some are there because of simple things like bounced checks and overdrafts. Some are on the list for much graver cases like bank fraud and scams. Much as we don’t want to admit it, the economic crisis caught everyone off guard. With breadwinners getting laid off left and right, most people have relied on bank overdrafts to meet their emergency spending needs.
If you’re on Chexsystems, you may be worried that you cannot get out of the trap even if you try your best to pay off your debt. But there’s hope for individuals who landed on Chexsystems. This hope comes in the form of second chance banking accounts.
It is about time that some banks are responding to what the public really needs. Second chance checking account banks are the banks that offer checking accounts to people who are listed on Chexsystems.
Chexsystems is what banks use to weed out “problem” customers from their systems. It is a bit like a risk assessment system for consumers, as well as an early warning system for banks that don’t want to deal with credit risks and debt process complications. There’s no actual scoring system for evaluation. It’s just based on reports from banks. This means your name could appear at any time if you so much as overdraft an account, or if you bounce a check.
One of the main disadvantages of being on Chexsystems is not being able to open a checking account when your name appears there. If your account gets approved prior to checking, your account may be suspended.
This “banking risk database” is made for banks, but some customers end up there even with a pretty good banking history. Why this happens is a mystery, but the point is that the system is hardly perfect.
If you happen to land yourself a spot on Chexsystems’ list of shame, you can start looking into second chance checking accounts offered by non-Chexsystems banks.
How Second Chance Checking Works
Second chance checking banks are those that don’t check Chexsystems before considering a new checking account application. These banks won’t see your name on Chexsystems because they have different standards for approval.
Here are some more reminders if you want to open a second chance checking account…
Make a list of non-Chexsystems banks near you. Call them to inquire or better yet, drive by their physical location to investigate if it is indeed a legitimate bank. Don’t put too much trust on online web pages of banks.
However, you can perform an online search for second chance checking banks all you want.
Investigate the facts. When you’ve come up with a shortlist , check if the bank has FDIC insurance coverage. Also, note how much they charge for overdraft fees.