It can be challenging to find your way in today’s world without having a checking account. Paying your bills and cashing in or depositing paychecks can be more expensive. What more getting denied a checking account? Not only does it make life much harder, but it also makes keeping money less secure.
So, if you’ve been denied a checking account recently, second chance banking might be a good option for you. It has fewer approval requirements than traditional checking accounts. Though it may come with limitations, it is still an alternative you should consider. Learn more about second chance banking below:
How Does Second Chance Banking Work?
If you’ve had a bad banking history, second chance banking may be the best option you have. There are banks and credit unions that give consumers access to checking accounts and also helps in repairing bad credits.
But you should know that second chance banking doesn’t offer the same services as traditional checking accounts. It will also collect obligatory monthly fees and conditions, and you are expected to adhere to them. These limitations are made to prevent you from going back to your bad banking habits.
Some of these requirements include low debit limits and withdrawal, no check writing, no overdraft coverage, attending a money management class, and required direct deposit. You can check Crediful to see which banks offer second chance banking.
Why You Need a Second Chance Credit Account
Banks have denied you a checking account as they consider your banking history as a bad risk. If you ever deliberately wrote bad checks or accidentally had bouncing checks, you really need to apply for a second chance credit account.
It is also possible that you’ve had a low credit score, transferred money in between accounts frequently, or exceeded your daily ATM withdrawal limit. Any of these instances can tarnish your banking record, making it harder for you to open a new account.
To begin with a clean slate, you might consider switching banks, but most banks work with reporting agencies such as ChexSystems that collect consumer data. Agencies like this are what’s keeping you from starting over again. That is why you need a second chance checking account; you have to make sure your banking history is all cleaned up.
What You Need to Look For in a Second Chance Checking Account
Although you don’t get the same advantages that traditional banks offer, second chance banking is still an excellent option for you. But you still need to shop wisely when looking for banks or credit unions to transact with. It would be best if you go around looking for things like the following:
- Low or no monthly fees
- No minimum maintaining balance required
- Online banking
- Ability to write and issue checks
- Access to a debit card
How to Choose the Right Second Chance Checking Account?
After deciding to apply for a second chance checking account, you have to make sure you don’t waste your time visiting banks that don’t offer one. Here are smart tips on how you can compare and assess one second chance bank account from the other:
- Review Their Banking Fees
Most second chance checking accounts will require either monthly or annual fees. Make sure you find a bank that offers little to no cost accounts to save on expenses. However, before jumping on the lowest fee offered, you need to compare all available features to ensure you’ll get everything you need from a bank.
You also need to know how much money is required before opening a second chance checking account. Ask if there are any requirements or minimum maintaining balance you need to be aware of before finishing the transaction.
- Ask for Any Restrictions
When applying for a second chance checking account, you need to look out for any limits or restrictions that your chosen bank issues to its users. These might include a minimum debit card or check spending and withdrawals. If you are a heavy bank user, you have to prioritize this need before deciding which account to sign up to.
Another restriction you might encounter from second chance checking accounts is the ability to write checks. Users often overlook this feature, so make sure to check all your options with your bank before it’s too late for you to sign out.
- Ask What Features Do They Offer
Even though banks couldn’t offer all necessary services expected from a traditional checking account, there might still be some that won’t benefit you at all. As others prefer a feature where they can access various ATMs and bank users who prefer doing all their business transactions online, it is essential to know what features your account has.
You might also want to ask your bank or credit union regarding policies for upgrading to a traditional account after exhibiting good banking habits for a couple of months. This might motivate you to strive harder in improving your banking history.
Getting denied a checking account doesn’t always mean the end of the world for you. Options like second chance checking accounts give you hope in redeeming yourself after being in a financial crisis. You may use this guide when you are out and shopping for banks that offer second chance banking.