by David Thompson
Second-chance checking accounts give people a "second chance" to open an account again, after they've had a bank account closed or been refused an account because they're listed in TeleCheck or Chexsystems. Most banks report problems like bad checks to at least one of those two agencies, which share the information with other banks, and there are some other similar companies that keep reports also. If you've been reported to Chexsystems or TeleCheck and have been turned down for a checking account, a second-chance checking account may be the solution.
If you think you're listed in Chexsystems or TeleCheck due to an error, such as identity theft, contact Chexsystems or TeleCheck to request a free copy of your report and dispute the incorrect information.
Otherwise, you have two options: look for a second-chance checking account or search for a bank which doesn't use Chexsystems or TeleCheck.
Local Banks and Credit Unions
Over 80% of banks in the U.S. check your Chexsystems or TeleCheck report when you apply for a checking account. You might get lucky and find a small local bank or credit union that doesn't. But even if you're listed and the new bank finds out, you may be able to open an account. If your former bank reported the incident to Chexsystems or TeleCheck over two years ago, or you no longer owe any money in connection with the incident, some local credit unions or banks may be willing to offer you a regular checking account anyway.
If you're accepted for an account but know that you have something negative, some people have reported that setting up a direct deposit of your paycheck into the account may make the bank more willing to overlook the negative report and keep your account open, if they discover it later.
Local credit unions or banks also may provide second-chance checking accounts specially designed for people in Chexsystems. Like all second-chance accounts, the fees will be higher and there may be other restrictions. The advantage to dealing with a bank in your area is that you can talk to employees directly to explain your situation with Chexsystems and discuss options. The disadvantage, of course, is that you do have to talk face-to-face about things that you maybe rather wouldn't.
You can do the same thing, more privately, by searching for an online bank that either doesn't look at your reports, or offers checking accounts to people in Chexsystems. Search for "bank no chexsystems" (without the quotes) or something similar, to find banks that don't look at your report, or "second chance checking" for banks that offer accounts to people in Chexsystems.
Read closely to find out exactly what a site is offering. Some places may be selling lists of banks who will give second-chance checking accounts, rather than an actual account.
Other places may be offering a pre-paid debit card, rather than a checking account. That may be just what you want, but make sure the services and fees fit your needs.
Other websites may send your application to several banks and match you with one that will offer an account. While one-stop shopping is convenient, if there's a fee, you may prefer to save the money and try different banks yourself, so you can choose the best deal directly. If you want to use a site that submits to several banks for you, at least make sure that you'll be able to find out the fees and fine print before you have to open the account.
Because banks and credit unions consider second-chance checking accounts to be higher risk, they charge higher fees and place more restrictions. Still, your options will vary, so decide what things you can't do without and look for the best overall package. Decide how important various options are and how much you'd be willing to pay to have them, such as using an ATM card, direct deposit of your paycheck, online bill-paying, a smaller minimum balance, etc.
Don't forget to consider customer service and the safety of your money, also. Look on the company's website to make sure it's FDIC insured if it's a bank, or NCUA insured if it's a credit union. Search for the name of the company online, along with words like reviews, complaints, rip-off, or scam, to see what customers are saying.
Once you're satisfied that you've found the right second-chance checking account for you, apply in person or online and fund it with your opening deposit. Follow the instructions to provide a signature card, order checks, or receive a debit card.
More information: If You've Been Denied a Checking Account...