There’s one thing that everybody knows by now: we’re in the middle of the deepest financial crisis since the Great Depression. The current crisis has even been dubbed “The Great Recession”. The crisis has brought financial hardship to millions of American families who have had to deal with all sorts of unfavorable circumstances.

But there’s no such thing as a totally negative situation. The fact that so many people have had (or are having) financial problems means that some situations that weren’t so widespread have become increasingly common. More and more people have seen their bank accounts get closed and/or their credit go bad because of money problems.

Usually, and especially back in the days, that would mean that you could walk into every bank you see and continuously get rejected for just about every single bank account you apply for. In a lot of cases, people who are denied a checking account have no idea why they can’t open an account, nor do they know how to solve the problem.

Why You Are Being Denied A Checking Account

There are a couple reasons that can come into play here, but it mostly revolves around a number of things:

1. You have abused the overdraft on your checking account
2. You have cashed one or more bad checks
3. You have bad credit
4. You have been found guilty of trying to cash fraudulent checks

In the last case, there’s not much that can be done for you, since even companies that issue prepaid debit cards won’t want to deal with you. Sad to say, but you’re basically on your own on this one.

Now in the other cases, you do have a few options to kind of work around your problem. See, the reason why you can’t open a bank account is that banks have a system set up to protect themselves against people that they deem they don’t want to have as clients, for the reasons we’re specified above. This system works by keeping a record of the people who commit those infractions and making this record available to all banks who subscribe to Chexsystems (this is the company responsible for the compiling the data).

Since 80% of the banks out there subscribe to Chexsystems, that leaves only 20% of them for you to work with. Well actually it might be a little more than that, since a lot of banks do subscribe to Chexsystems, but give themselves a little leeway when it comes to making the decision to open the account or not. This is because Chexsystems only supplies the information; it doesn’t make the decision for hte banks.

How To Open A Bad Credit Checking Account

As you can see, you can’t really escape your bad credit if you’re trying to open a new bank account. It will come back to haunt you. But the good news is that you can still open a checking account even if you’re been reported to Chexsystems. You can get one either from a brick-and-mortar bank or from an online bank.

If you find out that you’re on Chexsystems’ database, you can take some measures to have your name removed. But be aware of the fact that you’re not going to be paid attention to just by either calling or writing them. Since it’s the banks that report you, they’re also the ones that can have your name taken off the database. That usually requires the bank(s) that reported you to send Chexsystems a letter stating that for such and such reason, you’re clear and all issues have been resolved. So you can imagine that it can easily be a very lengthy process. In the meantime, you’re still out of a checking account.

What you can do is look for a bank that does not use Chexsystems. Most large banks won’t even look at you. You have a better chance trying some of the local non-Chexsystems banks in your area. Now don’t walk in there and act like you don’t know that anything is wrong. Be upfront about it and if possible ask to talk to a manager. In any case he’s the one who’s going to be making the decision whether or not to open an account in your favor. Be ready to provide all the basic information that can be required of you. In many cases, before agreeing to open a new account for you, if you have outstanding overdrafts in other banks you will be asked to provide proof that you’ve paid them off. Once that is done, you’ll get your checking account.

If you’re unable to find a local bank to do that, you can look online. Many online banks cater to people who have trouble with Chexsystems. An online search will return lots of results. Just be ready to prepare to sift through lots of offers so you can compare and make an educated decision on which one will suit you best.

Yet another option is to get a second chance checking account. These can come in several flavors. They’re accounts that are designed for people who have poor credit or are otherwise in trouble with Chexsystems. But beware that these types of accounts do come with some restrictions. One restriction could be that it will take more time for a cashed check to be fully deposited into your account. The banks know that they are taking on a higher risk when they are opening an account for someone with bad credit. In order to decrease the amount of risk, they will impose a certain number of limits on what you can do with the account. But as a rule, you will have access to ATM transactions, online banking and online bill pay, as well as direct deposit. Not all financial institutions have the same rules for their second chance checking accounts. So it’s your responsibility to shop around and compare different banks to make sure you are getting the best deal.

Forget about free checking, you will most likely have to pay a monthly fee. You will also have to be ready to pay certain other fees. This is because the banks view you as a risk and will charge you in order to be compensated for taking that risk.

But even if you do get to open a bad credit checking account, don’t rest on your laurels and do what it takes to get your name off the Chexsystems database and/or repair your credit so that you are able, in the near future, to open a regular checking account.

How To Open A Bank Account With Bad Credit

The banking industry relies on a few companies to do its risk management, the most well-known of which is ChexSystems. This company keeps a record of past blemishes in your banking history and if you were to go open a bank account, this information is available to the participating banks and credit unions and will likely result in them refusing to open an account for you. Fresh start checking accounts can be opened, but of course they comes at a certain cost.

Bad Credit’s Impact On Your Banking Options

Now what a lot of people overlook is the fact that a bad credit history is also one of the factors that can put you in a situation where you can’t open a bank account. It’s obvious that being rejected for a bank account is not a pleasant experience, but when the basis of your rejection is bad credit, it’s sort of frustrating. In all honesty, opening a checking account has no connection whatsoever with your credit. But many banks have decided that having bad credit makes you ineligible for a checking account. A bad credit history should not affect your ability to open a checking account, although it does make sense that it would block you from having access to some bank account options like overdraft, personal line of credit, and so on…

Why Banks Turn Down People With Bad Credit

They base their position on the assumption that you will be a poor customer. They expect that you will overdraw your account because you don’t have enough money to pay your bills (as evidenced by your poor bill-paying history on your credit report). Returning your checks will generate fees on your account, which you may not be able to pay. Paying them will overdraw your account and you may not be able to pay back. Either way, they might have to end up closing the account and reporting you to ChexSystems, so they’d rather not open the account to begin with. In the end, many people with bad credit can’t open checking accounts, and that’s not a good position to be in.

Banks That Do Not Use ChexSystems For People With Poor Credit

If you have poor credit and need to have access to a checking account, you need to find those banks that offer second chance checking accounts, also known as fresh start checking accounts. They usually come with their own set of restrictions (you can’t overdraft the accounts and have limited check writing privileges) and costs (minimum opening balance, minimum balance, monthly fee), but it’s such a wide and largely untapped market that competition is picking up. Which means that you can find a bad credit checking account with check writing, no minimum balance, and a reasonable monthly fee of around $5.

Your best bet is to look online. This is such an ever-changing field that no list could realistically be kept 100% accurate. But whatever you decide to do, use the internet to do some comparison shopping, so that you can get a poor credit checking account that works best for you.

Related Resource: Bad Credit Low Income Loans

© Checking Accounts For People With Bad Credit

One of the reasons why I started this website is that I have been meeting with a lot of people who insist that being able to open a checking account once you’ve been reported to Chexsystems is the closest thing there is to mission impossible, whether it be finding a local non-Chexsystems bank or an online bank that doesn’t use the Chexsystems reporting information to open new checking accounts. It’s easy to understand why so many people people would believe that, since the “big” banks typically will not do business with you once you’ve been reported. You’re left with the only option of looking for other, smaller banks, and the information is not readily available. And let’s not forget scammers who will try and sell you outdated lists, that will do nothing to help you in your predicament.

It certainly is frustrating to look for weeks and weeks and just keep getting turned down, so at that point you start thinking that you’re probably fighting a losing battle. You think that you may just have to deal with it and settle for those awkward “solutions” that are touted as alternatives for people who can’t open checking accounts because of Chexsystems. To be totally honest, finding a non-Chexsystems bank is not the easiest thing, but with some useful information in hand, you can already start narrowing down your search and be more productive. In order to improve your chances of success when negotiating with banks, order your chexsystems report to see what information is in it and try and resolve any issues first.

The first thing you need to know is that you should definitely not expect any bank to openly advertise which reporting system they use (if any). If they did, they would be just opening a can of worms. They would be swamped with new people who want to open checking accounts, but they would have to sit there and sort through hundreds, if not thousands, of applications to handpick the ones that look promising. It’s just not cost-effective. What you can do, though, is take your yellow pages and start calling and asking. The trick here is to ask for the branch manager or someone in the branch who ranks high enough to give you the information that you’re looking for. Also, if you can, try to sweeten the deal. If you have a little bit of savings that you an open a CD with, mention it. Stuff like that will make you look more appealing as a customer and they’ll probably be more inclined to cut you a deal.

Of course, whichever banks that do not use Chexsystems that you find in your search, and that you’re considering depositing your money in, absolutely has to be an FDIC-insured bank. There’s simply no way around that. If you fail to take this precaution, and the bank happens to go under, you will lose all the money that you deposited there. On the other hand, with an FDIC-insured bank, your money is insured up to $250,000 per account holder (It has been bumped to that level amid the financial crisis and it has been hinted that it might be reverted back to the previous $100,000 once this is all over). Not a bad safety net.

In your search to open a non-Chexsystems checking account, you have to be on the lookout. You will find a lot of information out there and what we recommend is that you gather as much of it as you can. The trick is to avoid getting scammed for large amounts of money. If you find something that looks promising and is reasonably priced, check to see if you can get a money-back guarantee. This will typically protect you. Also, look around, check online banks if brick and mortar ones keep turning you down. Explore every free option before eventually turning to paid ones.

As a final word of advice, when you’re looking for advertisements, favor specific institutions over list sellers. The reason is that if an institution is advertising to people with bad credit or who have been reported to Chexsystems, it’s probably because at that specific moment, they probably have some kind of product or service that caters to this specific niche. Once they decide not to deal with this segment anymore, they will just stop advertising. A list, on the other hand, would have to be continuously updated to account for companies that enter the segment, as well as those leaving it. We’re not saying that it’s not possible to find a good, legitimate list. What we’re saying is that you’ll probably have better luck with the companies that advertise to you than you will with the list sellers.

Finding A Second Chance Checking Account In Your Local Area