Second chance bank accounts are provided by banks to people who may have been listed on Chexsystem or who may be unable to open an account with another bank because of bad financial history. If you’ve overdrafted your bank account in the past and have made mistakes that the banks consider a financial misdemeanor, you are at risk of getting rejected by banks when you apply for a new bank account.
Financial problems are common nowadays and banks know this. That’s why some banks, particularly those not associated with Chexsystems are offering people with bad credit another shot at a new and more prosperous life by offering second chance checking accounts.
The type of financial mismanagement that could land you on Chexsystem’s black list can be anything from recurring overdrafts to banking scams. Usually, people who try to game the banking system by opening several bank accounts and overdrafting them without paying the fees are subjected to account termination as well as blacklisting.
Banks can report these cases to Chexsystems and the cases get recorded. For a five-year duration, anyone on the list who tries to apply for an account with a Chexsystems bank will not be approved.
Approximately 80% of the banks in the USA use ChexSystems to check whether or not a new customer is a credit risk. The consumer reporting agency simply collects data from banks and stores them. These data are available to anyone who wishes to check a particular person’s banking history. This is the fastest way for banks to monitor their potential customers.
The bad news is that you may have been listed on chexsystems because of a slight glitch in your account. You may also have been listed for doing something that you have already corrected. For instance, in six months you were able to reach the status of ‘good standing’ but your bank has already entered your details in the Chexsystems list. If this happens, you will have to do something to correct the situation and to make sure your name gets erased from the list.
This service records information about a consumer when a check bounces or when an overdraft limit is exceeded. During the financial crisis, these cases are common, and so many people have been listed on Chexsystems because of these cases.
Should you just make do with paying in cash or money order? Of course not. But it seems that these are the only options you can avail of because of the way banks handle ‘suspicious’ accounts.
You can use a second chance bank account to prove that you have indeed learned your lesson and you’re just about ready to correct all the errors in your financial handling. These accounts are like regular bank accounts in terms of spending power. You can pay your bills using this account, and you can accept money from your employer.
There are banks that are not under the Chexsystems umbrella and they are willing to give you another shot, as long as you abide by the stringent rules. A bank may impose restrictions before they allow you to avail of a second chance account.
Before you go for this option, it is recommended that you check your Chexsystems report. You may not be listed yet, and for all you know, you can still open a regular checking account with your bank of choice.