Your Second Chance at Checking

September 19, 2018 — 6:00 AM EDT

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. (See When Good People Write Bad Checks.)

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 second chance accounts, which makes Wells Fargo’s Opportunity Checking account the exception. You’ll have to pay a $10 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 Opportunity Checking

  • $25 minimum deposit to open account
  • $10 monthly service fee (unless you have 10 or more debit card purchases, direct deposits totaling at least $500 or a $1,500 minimum daily balance)
  • mobile banking
  • debit card

You can also get checking accounts through some online banks, like Radius Bank and Memory Bank. Both offer products geared toward customers with a less-than-perfect banking history.

Radius Bank Essential Checking

  • $10 minimum deposit to open account
  • $9 monthly service fee
  • online banking
  • debit card
  • ability to upgrade account after 12 months of responsible banking

Memory Bank Memory Builder Checking

  • $50 minimum deposit to open account
  • $8.95 monthly service fee ($6.95 if your account meets select criteria)
  • debit card
  • 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:

BBVA Compass Easy Checking

  • $25 minimum deposit to open account
  • $13.95 monthly fee
  • online banking and mobile banking
  • Visa debit card
  • cash back rewards program for debit card purchases
  • unlimited check writing
  • branches in Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas

Woodforest National Bank Second Chance Checking

  • $25 minimum deposit to open account
  • $9.95 fee with monthly direct deposit ($11.95 without monthly direct deposit)
  • $3.00 monthly paper statement fee
  • debit card (with $15 setup fee)
  • more than 700 locations in 17 states

Axiom Bank Opportunity Checking

  • $25 minimum deposit to open account
  • $12.95 monthly fee
  • unlimited check writing
  • online banking, bill pay and e-statements
  • mobile banking and mobile deposit
  • locations throughout Florida

OneUnited Bank U2 E-Checking 

  • $100 minimum deposit to open account
  • $12 monthly fee
  • free online and mobile banking
  • surcharge-free transactions at more than 25,000 ATMs
  • branches in California, Massachusetts and Florida

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. You may have to pay a small monthly fee, but it’s usually less than the one you’re assessed for a second chance account. (See How to Find the Right Prepaid Debit Card and 8 Ways to Avoid Getting Burned by Prepaid Debit Cards.)

Many of them, like the Chase Liquid Visa ($4.95 monthly fee), 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 16,000 bank-owned ATMs around the country and either direct-deposit your paychecks or deposit checks using the mobile app.

The U.S. Bank Safe Debit Account, which also costs $4.95 a month, offers a similar range of benefits. 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.

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.