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.

How To Get A Bank Account With Bad Credit

Fresh Start Checking Accounts

If we’re talking about Fresh Start Checking Accounts, then there has to be a negative record at one of the companies that track people’s checking activities. Maybe you’re been reported to Chexsystems, or maybe you have a record with Telecheck, it doesn’t even matter. What matters is that you’re going to have to find banks that don’t use Chexsystems in order for you to get what is also known in the industry as a second chance checking account. Chexsystems is kind of the banking system’s watchdog, in that it keeps tabs on your bank related history and will keep on putting notes against your name you have amounts overdue against your name or if you have the fraud against your name.

What that means is that a negative ChexSystem record will prevent from qualifying for a checking account at roughly 80% of the banks in the country. Until people are victims of it, they have no idea how bad it is to not be able to have a checking account: to make a long story short, no access to checking services like ATM transactions, no telephone banking, no online banking, no direct deposit, and you have to carry cash to conduct all your transactions: without a bank account cash is your only option. Not only is it impractical to carry huge amounts of cash in your pocket, it’s also very risky.

The fresh start checking account helps solve this predicament. Of course, it comes at a cost (most banks charge a monthly fee of $5 to $10 to open a fresh start checking account under your name), but consider it as a small price to pay for your convenience

Upgrading from Fresh Start Checking Account to Regular Checking Account

Plus, it’s good to keep in mind that many of those banks also make it a policy to upgrade your fresh start checking account to regular checking account status within 6 to 12 months, provided that you’ve kept your account in good standing and incident free over the specified period. By incident free, they mostly mean that you’ve had no NSF fees.

Banks That Do Not Use ChexSystems & Offer Fresh Start Checking Accounts

There are a number of banks that are now offering those second chance checking accounts, because they either don’t really worry about it, or they realize that a lot of people end up with a negative Chexsystems record or a Telecheck report unintentionally or because of something they didn’t know. Those people deserve a second chance and they get to have a checking account and a debit card with either the Visa or Mastercard logo.

Of course, it’s best if you don’t end up getting in trouble with either Chexsystems or Telecheck, because it can really be a nightmare. But in case you do end up being reported to one of them, it’s always good to know that you can still open a checking account. It’s not going to be free, and you’ll have a lot more restrictions compared to regular checking accounts, but at least you’ll be able to access basic banking services.

Fresh Start Checking Account: Banking For People With A Negative Chexsystems or Telecheck Record