How To Get A Bank Account With Bad Credit
How To Get A Bank Account With Bad Credit
Bad Credit Bank Accounts
There are a few situations where you can find yourself looking for a financial institution (whether it be a bank or credit union) that is offering bad credit bank accounts. For example, this financial product can be very useful for people who have a poor credit history, have filed for bankruptcy, or have a County Court judgment registered against them. In either of those cases, it becomes very difficult to get a checking account at any one of the major banks.
Everyone knows that nowadays you can hardly function if you don’t have a bank account. Getting a bad credit bank account can be the first step that you need in order to re-establish yourself as a desirable customer for banks. Honestly, opening a bad credit bank account is not going to be easy. Check systems is very aggressive in its marketing to banks so that they can use its services and it’s estimated that roughly 80% of them do so. Your best bet is to check the policies of the banks where you would like to open accounts because different banks have different policies regarding checking accounts for people with bad credit.
Actually a lot of the people looking this type of account may feel some type of shame because this is not something that they would have ever thought could happen to them. But the recent economic downturn has spared nobody, and it has become easier than ever to face a bad spell and then be reported to ChexSystems, where your information remains for five years unless you’re the determined type and decide that you want to get out of Chexsystems and take the necessary action.
Opening a bad credit bank account will at least get you back into the financial world. You will once again have check writing privileges, the ability to pay your bills online, access to ATM transactions, debit cards, and so on. And let’s not forget not having to stand at the check cashing store every week or every other week and carrying large amounts of money around. So with that in mind, financial institutions have created specific products for people who need a “fresh start”, as they call it.
The first thing you need to do when looking for second chance checking accounts is to make sure that the accounts are FDIC-insured. Just in case you’re wondering what we’re talking about, the FDIC insures every bank account for up to $250,000 (actually you can get even more coverage, so it could prove useful for you to check out the FDIC’s website if you want more details about that). What that means for you, in real terms, is that any amount of money that you have in that bank (up to $250,000) is fully insured: you can’t lose it.
The second thing you need to be looking out for is whether or not this second chance checking account that you’re thinking of opening comes with a Visa or MasterCard branded debit card. This is very important. Having one of those pretty much allows you to do business everywhere those cards are accepted. That includes online shopping, ATMs, and most businesses worldwide.
Thirdly, you want to compare what the different financial institutions are offering. Specifically:
- Is there a minimum opening balance?
- Is there a minimum balance requirement?
- Are there any monthly maintenance fees?
- How much is the card reload fee?
- How much is the ATM access fee?
- How long before you can apply for a regular bank account?
- Do you get any check writing privileges?
Well, you get the idea.
Repairing Your Credit
What we’ve discussed earlier was just the short term fix. Now let’s look at the long term fix. And that, of course, is repairing your credit so that you don’t have to settle for second chance credit accounts. With a bit of planning, you can make your credit history look a lot better in a matter of months (How long does credit repair take?). Obviously, credit repair is beyond the scope of this article (or even this site) but common sense suggests the following:
- Know how much you owe and who you owe. This can be done by getting copies of your credit report from the three major credit bureaus: Equifax, Experian, and TransUnion.
- Check the accuracy of those reports. If you spot any mistakes, take the necessary steps to have them corrected.
- Put in place some type of monitoring system so that you can a) keep track of how your credit is going and b) prevent identity theft.
- Pay your bills on time.