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What Is a Second-Chance Checking Account?

If you have a poor banking history, a second-chance checking account can help turn your finances around.

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We all know that credit scores are critical to getting approved for the best credit cards and to applying for low-interest loans. But did you know that banks and credit unions use separate customer scores to determine if you can open a new account? ChexSystems is the banks’ version of the three credit bureaus, but instead of tracking your creditworthiness, it monitors your banking history.

If you’ve experienced bounced checks, overdrafts, unpaid fees or bank account closures in the past, they’ll likely show up on your ChexSystems report, making it difficult to open a regular checking account. A second-chance checking account can help you rebuild your banking history while you wait for negative marks to fall off your ChexSystems report.

Learn the upsides and downsides of second-chance checking accounts to decide if they might work for you. For more, learn why multiple savings accounts can be a good idea and how Federal Reserve rate hikes impact savings accounts and CDs.

Read more: Best Online Checking Accounts

What is a second-chance checking account?

As the name suggests, a second-chance checking account gives customers with poor banking histories another opportunity at having a checking account at a bank or credit union. Because of your risk level to the bank, these accounts usually come with fees or restrictions.

Second-chance checking accounts are also called “opportunity checking,” “fresh start checking,” “clean slate checking” or “rebound” accounts. Most major banks don’t offer second-chance checking accounts, but Wells Fargo’s Clear Access Banking is one exception. You’ll have better luck finding second-chance checking accounts at local and community banks or credit unions.

How do second-chance checking accounts work?

Second-chance checking accounts provide customers banking access without requiring approval from the ChexSystems reporting agency. Though the bank won’t use ChexSystems when you apply for an account, it will report your activity to the agency after you open an account, allowing you to repair your banking history. After about six to 12 months without problems, the bank may offer to upgrade you to a standard checking account.

Second-chance checking accounts may charge a monthly maintenance fee, require direct deposit or restrict usage of the account. They also don’t always offer overdraft protection, since the aim of these accounts is to encourage and develop good banking behavior.

What are the pros and cons of second-chance checking accounts?

The biggest benefit of second-chance checking accounts is that they’ll let you continue to access banking services despite having a poor banking history. You won’t have to pay exorbitant fees or charges at check-cashing outlets, but banking access will likely come with a monthly maintenance fee.

Because you can’t spend more than what’s in your account, you probably won’t have to worry about overdraft fees. Second-chance checking accounts may also not offer traditional checking account features like paper checks or debit cards, and likely won’t earn any (or much) interest.

With a second-chance checking account at a bank or a credit union, your money is still insured up to $250,000 per account, per bank.

How can I find a second-chance checking account?

You have two choices for second-chance checking: 1) bank accounts specifically designed to help repair banking history or 2) bank accounts that don’t use ChexSystems. There are plenty of accounts in both categories. Keep in mind that banks that don’t use ChexSystems may run a soft pull on your credit history.

Chime, Varo and Sofi are three big neobanks known for not requiring ChexSystems or credit checks for new account holders. Along with Wells Fargo Clear Access, Capital One 360 is another major US checking account that doesn’t require ChexSystems -- it stopped using the reporting agency back in 2014.

US Bank’s Safe Debit account and the PNC Foundation Checking account are two more second-chance checking accounts from major banks. The country’s biggest credit union -- Navy Federal Credit Union -- also does not use ChexSystems, but you’ll need to be a member of the US Armed Forces or have a close relative who is a service member to sign up.

To find more second-chance checking accounts in your area, search Google using your nearest metropolitan area plus the term “checking” and one of the terms “second chance,” “opportunity,” “clean slate” or “fresh start.”

Editors’ note: An earlier version of this article was assisted by an AI engine. This version has been substantially updated by a staff writer.

Peter is a writer and editor for the CNET How-To team. He has been covering technology, software, finance, sports and video games since working for @Home Network and Excite in the 1990s. Peter managed reviews and listings for during the 2000s, and is passionate about software and no-nonsense advice for creators, consumers and investors.
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