Credit reports have a way of hanging over borrowers like a black cloud after they’ve overextended themselves or made late payments. Suddenly, getting another loan or credit line becomes a lot tougher—and more expensive.

What many consumers don’t realize is that banks have access to a similar database for checking accounts. More often than not, they get your information from a company called ChexSystems, which keeps negative reports on file for five years. If you’ve written enough bounced checks or left overdraft fees unpaid within that time frame, opening an account at another bank can be a challenge.

Key Takeaways

Banks that offer "second chance" checking accounts either don't use reports from ChexSystems or weigh past mistakes less.

Few national banks offer accounts for customers with poor credit, although some credit unions and regional banks do.

Most second chance accounts have monthly maintenance fees, although they're sometimes reduced for customers who set up a direct deposit or maintain certain account balances.

A Lifeline When You Need It

Banks do offer a lifeline for people in this tough spot: so-called “second chance” checking accounts. Providers don’t use your ChexSystems file or credit report—another risk-assessment tool used by some banks—to weed out customers with a spotty history.

Many of these products have certain restrictions, like the inability to set up overdraft protection—a feature that got a lot of customers blacklisted in the first place. And you’ll likely have to pay a monthly fee unless you maintain a minimum balance or set up direct deposits into your account. However, those are becoming standard at a lot of banks anyway.

Once you get past the name, most of these accounts start to look pretty similar to standard checking accounts. Many offer online banking capabilities and provide you with a debit card. And once you’ve used your account responsibly for a certain period of time—sometimes as little as 12 months—some banks allow you to upgrade to a regular account.

Accounts at National Banks

Most major banks don’t offer checking accounts for bad credit, which makes Wells Fargo’s Opportunity Checking account the exception. You’ll have to pay a $5 monthly fee unless you meet the criteria to have it waived, but you do get access to handy features such as mobile banking and a debit card.

Wells Fargo Clear Access Banking

  • $25 minimum deposit to open account
  • $5 monthly service fee
  • Mobile banking
  • Debit card

You can also go to some online banks like LendingClub, which offer specialty products geared toward customers with a less-than-perfect banking history.

LendingClub Essential Checking

  • $10 minimum deposit to open account
  • $9 monthly service fee
  • Online banking
  • Debit card ($500 daily limit on purchases and ATM withdrawals)
  • Ability to upgrade account after 12 months of responsible banking

Accounts at Regional Banks

A number of regional banks and credit unions also have accounts for customers with a blemished ChexSystems report, though the fact that they go by a variety of names sometimes makes them harder to spot. Here are a few examples:

Axiom Bank Opportunity Checking

  • $25 minimum balance to open account
  • $12.95 monthly fee (reduced to $8.95 if setting up direct deposit)
  • Unlimited check-writing
  • Online banking, bill pay, and e-statements
  • Mobile banking and mobile deposit
  • Locations throughout Florida

BancorpSouth Budget Smart Checking

  • $25 minimum deposit to open account
  • $5 monthly service fee
  • Online banking
  • Mastercard debit card
  • Unlimited check-writing
  • BudgetWise feature lets you view account balances and track budgets
  • 300 branches locations throughout the South

BBVA Easy Checking

  • $25 minimum deposit to open account
  • $13.95 monthly service charge
  • Online banking and mobile banking
  • Visa debit card
  • Cash back rewards program for debit card purchases
  • Unlimited check writing
  • More than 600 branches in Alabama, Arizona, California, Colorado, Florida, New Mexico, and Texas

OneUnited Bank U2 Checking

  • $50 minimum deposit to open account
  • $12 monthly fee
  • Free online and mobile banking
  • Surcharge-free transactions at more than 30,000 ATMs
  • Branches in California, Massachusetts and Florida

United Bank Gateway Checking

  • $100 minimum deposit to open account
  • Online banking included, plus online bill pay for $4.95 a month
  • $10 monthly maintenance fee
  • Available app with mobile check deposit functionality
  • Does NOT include a debit card
  • Branches throughout Alabama and the western Florida panhandle

Woodforest National Bank Second Chance Checking

  • $25 minimum deposit to open account
  • $9 one-time account setup fee
  • $9.95 fee with monthly direct deposit ($11.95 without monthly direct deposit)
  • $3.00 monthly paper statement fee (e-statements available for free)
  • More than 700 locations in 17 states

Another good way to find an account close to home: Hop on the website of Bank On, a program that helps connect consumers with low-cost bank and credit union accounts. You can click on the “Coalitions & Accounts” tab to find approved products in your state.

An Alternative: Prepaid Cards

If your main reason for getting a checking account is the ability to make online payments and other cash-free transactions, a prepaid debit card might fit your needs just as well as a checking account.

Prepaid cards typically charge a monthly fee, although it's usually smaller than that of a second chance checking account.

Many prepaid cards allow you to reload the card as often as you like at no additional cost. Plus, you can use the card to withdraw cash from a network of ATMs. The U.S. Bank Safe Debit Account costs $4.95 a month. In addition to providing a Visa debit card with online banking and bill pay, customers get access to their VantageScore credit ranking and discounted money orders. As long as check-writing isn’t a must-have feature, it’s a compelling alternative.

What Is Second Chance Checking?

A second chance checking account is designed for people who have a negative banking history. It offers them a chance to open an account and get back on track. This stripped down account usually offers the basics but not all the features of a checking account. For example, it may not offer overdraft protection and may require a minimum deposit and monthly maintenance fees to be paid. These accounts either don’t require ChexSystems reports or overlook them if there are negative results.

Who Needs a Second Chance Checking Account?

You may need a second chance checking account if your bank closed your previous account because of unpaid overdraft fees. Or you may need one if you bounced a few checks or have unpaid fees or negative balances on current or former bank accounts. Most negative banking history shows up in something called ChexSystems which is used to determine if you can open a new bank account or not. 

What Fees Do Second Chance Checking Accounts Charge?

Second chance checking accounts typically charge more fees than regular checking accounts. These fees are often thought to mitigate the risks of having someone with a less than stellar banking history be an account holder again. Common fees include monthly maintenance charges, account setup fees, overdraft fees, foreign transaction fees, and fees if a minimum balance isn’t kept. These fees vary by bank.

Are Second Chance Checking Accounts Worth the Costs?

Having a checking account is really a necessity in the modern world. It has so many uses and is much more convenient than not having one so the fees are typically worth it. Once you re-establish a good banking history and/or pay off any old bank related debt, you may be able to avoid some of the fees and open up a regular checking account. 

The Bottom Line

Don’t fret if you’ve made a few banking mistakes in the past and need a new checking account. A number of national and regional banks market products that ignore your past mistakes. Will you pay a monthly fee? Perhaps. But many will let you upgrade within a year, ensuring that the pain is only temporary.

How We Chose the Best Second Chance Checking Accounts

We researched dozens of second chance checking accounts. After reviewing them, we decided on the best ones. We chose these top contenders based on the types of accounts offered, if they overlooked past banking indiscretions, account fees, features, and more.