Second Chance Checking Accounts

Second chance checking accounts are intended for people who might experience difficulties when opening new bank accounts due to various banking mishaps. For example, when someone takes a bank overdraft and fails to repay the owed money when due, their account might be closed with a negative balance. Due to this, the account holder has their name recorded with such agencies as, Telecheck or ChexSystems. These agencies give full customer banking information to other members of financial institutions when requested or queried.

Actually, it is quite common for banks nationwide to screen potential new customers with such systems before allowing them to open new bank accounts. If a customer’s name is negatively listed on Telecheck or ChexSystems, it becomes quite difficult for them to open a new bank account in any financial institution countrywide. Once on the said system, the prospective customer’s name remains there for 5 years, meaning they can’t operate a normal banking account for that duration of time. Nevertheless, the banking system saw fit to introduce some form of a banking solution to such people by offering them such facilities as second chance checking accounts.

What are ChexSystems or Telecheck?
ChexSytems or Telecheck is a network of credit unions and banks that share information with member institutions about customers and their banking practices. Actually, ChexSystems could be considered a credit bureau and the information logged onto the system about the consumer is shared amongst the financial institution members. This information lets the member financial institution know about the potential customer’s banking deals, or their banking history, thus assisting the bank to decide if they are good or risky. Although the majority of people stuck in ChexSystems have bad credit ratings, it is possible for them to improve on their credit score whilst still being listed in the ChexSystems. This is by properly opening and operating a legitimate banking account going by the name, second chance checking account which caters for their diverse banking needs.

Are second chance checking accounts necessary?
Despite lots of people welcoming the opportunity to have a second chance to open a bank account, some find these accounts restrictive and their fees outrageous. Whilst most of these accounts are legitimate, some are rip-offs and the legitimate opportunities are borderline rip-offs and are best left alone.

Those consumers who have been listed negatively in ChexSystems need to realize that this type of an account opening opportunity comes with restrictions and is not necessarily as convenient as a conventional bank account, they once held. Such banking conveniences as debit cards are not offered to those who hold these types of accounts and their deposits may be held by the financial institutions for as long as 14 days before being credited to their second chance accounts.

Principally, the said banking restrictions mean that the customers must watch their account very closely and need to monitor every kind of transaction keenly, so to ensure that their deposits have been cleared before initiating any business deal, for example, writing a check to pay utility bills. Whilst this could be a daunting task, it must be done religiously. Second chance checking account holders must be encouraged to keep their bank account in good. These restrictive practices ensure the account holder complies with the banking rules. Failure to do so is indeed costly and for sure will earn them another ChexSystems alert.

Good risk consumers
There are some traditional financial institutions that have some sort of second chance checking accounts that aren’t advertised. In reality, these are normal checking accounts that are offered to “good risk customers” as they call them. These are operated like an ordinary bank’s checking accounts and are not restrictive, nor costly to those who hold them. Typically, the bank will commonly not pull a ChexSystems report on the good risk consumers and, if they do, they are more lenient on them.

However, even with the opportunity being there, there are no guarantees of approval and most of the time, customers must have all previous banking obligations settled in full. This means that they have to pay what they owe to the bank first before being allowed to operate their accounts again. In the long run, it will be expensive to operate such accounts due to the additional fees this kind of account normally attracts.

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