American Hope Resources - Help & Assistance Programs

The Second Chance Checking Account

A checking account may seem like a basic right, yet people are constantly denied access to this service due to overdrafts, bounced checks, and unpaid fees.

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Reporting agencies such as ChexSystems keep track of these items in a comprehensive database which banks and credit unions use to find out how responsible a potential customer has been.

Banks are aware that even the most responsible customers can make a mistake. As a result, they give people with an underwhelming bank history the chance to improve their standing, as well as gain access to the basic banking services, through what is known as second chance checking.

Second chance checking accounts are similar to standard accounts, but with some limitations. They are a popular option for people who have been previously rejected a standard checking account and would like to improve their banking history.

What Is a Second Chance Checking Account?

Second chance checking is a type of checking account offered by some financial institutions to customers that are unable to get a standard checking account. Second chance accounts have several limitations and unique features that are usually not present in standard checking accounts, such as monthly fees, no access to overdraft programs, or online banking.

Banks and credit unions that operate second chance checking platforms usually allow account holders to upgrade to standard checking after six months if they have stayed away from repeating previous mistakes. This offers them a roadmap to improve their bank history and gain access to the full list of banking services.

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Features of Second Chance Checking

Second chance checking accounts operate under special rules. They are created to limit what account holders can do with the purpose to help them avoid falling into undesirable practices. In general, most second chance checking accounts have the following features:

  • A periodic service fee that goes from $5 to $20. Some banks allow these fees to be waived if the account holder reaches certain milestones such as having a minimum amount of debit card payments or purchases, always keeping a positive balance in their accounts, or receiving more than a certain amount of money as direct deposits. A couple banks nationwide offer second chance checking without monthly fees to help struggling families get access to the banking system.
  • Limits for how much money can be withdrawn from ATMs, as well as how many transactions can be performed with debit cards or other forms of payment. The objective is to restrict the customer spending levels and reduce the delinquency risk.
  • Limited access to overdraft and overdraft protection.
  • These restrictions are set in place to keep customers from spending more money than they have. However, this type of account will likely not have a positive impact on a credit score. If you were denied a standard checking account due to bad credit, please read other avenues to improve their credit score.

Best Second Chance Options

Looking for a second chance checking account is not a simple task. Each option comes with different benefits and disadvantages. In this section, we talk about the best second chance checking platforms which customers can take into consideration.

  • Wells Fargo’s Opportunity Checking and Savings Account is one of the best second chance checking alternatives in the market. It gives customers access to most of the banking features, such as overdraft protection, while still helping them improve their banking history. However, Wells Fargo charges a $10 operational fee with additional fees for stop payments and money orders.
  • BBVA Compass is worth taking a look if you live in Alabama, Arizona, California, Colorado, Florida, Texas and New Mexico. This spanish-owned bank operates three different second chance accounts in their platform: Compass ClearChoice Free Checking, ClearChoice Savings, and Easy Checking. Unlike Well Fargo’s Opportunity Checking, ClearChoice Free Checking accounts lack an operational fee. Easy Checking is an additional route for customers who are unable to qualify for a standard ClearChoice account, though at the cost of monthly operational fees and other limitations.

Other small banks and credit unions across the country offer high-quality alternatives to the ones we mentioned above. Financial institutions such as the Woodforest National Bank, PNC Bank and the First National Bank and Trust Company are considered among the best second chance options after Well Fargo’s Opportunity Checking. In some cases, looking for second chance accounts in your local community may give you a much better deal than sticking to a national bank.

Eric Tomasso