Fresh Start Checking Accounts | Second Chance Checking Accounts
Fresh Start Checking Account
A “fresh start checking account” is a bank account that you can apply for in case you have been banned from opening new checking accounts. This usually happens when your name is reported by a financial institution to Chexsystems, and the consequence is that you can no longer open a standard checking account. Bank accounts have no bearing on your credit score, but banks have their own system to keep track of who is a desirable client and who’s not. In that regard, Chexsystems is the banking industry’s watchdog, in that it compiles a database of people who, for various reasons have been reported by the financial institutions that they’ve had problems with in the past.
You may be reported if you have been identified as someone who is involved in fraud. In the majority of cases, though, people land on that list because of overdraft fees that have been left unpaid at one or more banks and they decided to close your account and report you. It can also happen that you don’t have an unpaid balance, but because you abuse your debit card or checking account (repeated overdrafts), the bank decides that you’re a risky client, closes your account, and reports you as a risky client.
Once your name is on the Chexsystems database, most banks out there won’t agree to open a checking account for you, and your name remains on the list for five years. We say “most” because there are banks that don’t stop at the Chexsystems report and will consider opening an account for you even with a negative Chexsystems record. They realize that everyone makes mistakes and give you a fresh start, so to speak, hence the name “fresh start checking account”. In reality, this is just a fancier name for “second chance checking accounts”; some people also call them “no credit check bank accounts”.
These banks that do not use Chexsystems will forgive past mistakes in your banking history and will allow you to open second chance checking accounts. These accounts vary in terms of what they offer and what restrictions you have to deal with, but in all likelihood you’ll get mostly everything you would have with a regular checking account. As you would expect, most banks that offer fresh start checking accounts place a certain number of restrictions on the features of said account.
Second Chance Checking Accounts
The good news is that most of the basic features of a checking account, such as ATM withdrawals, online bill payments and direct deposits are also applicable to second chance checking accounts. A good second chance checking account will come with a debit card with the Visa or Mastercard logo on it, online bill payment, direct payroll deposit, and in some cases even check writing privileges. You will most likely have to put up with a monthly service fee, but that’s a small price to pay when compared to the inconvenience of not having a checking account.
There are plenty of banks that offer second chance checking accounts, both in actual branches and online. You can get accepted very quickly, especially in the online ones. It’s even possible to find a local bank in your area where you can open a second chance checking account. Those banks are usually referred to as “non-Chexsystems banks” and they’re not that easy to find. Most of the time they don’t advertise it, out of fear that they’d get way more applications that they could handle. Be prepared to have to sit down and explain the origin of your banking problems with someone in the branch, very often the branch manager. In the event that you have unpaid balances at other institutions, they will almost certainly ask that you pay them off and come back with proof that you did so.
Before opening your second checking account, ask whether or not there’s a trial program: some banks can offer to put you on a trial, and after a set amount of months of good history (usually 12 months, sometimes less, but 6 at a minimum), you’ll be eligible for a regular checking account. Banks that offer fresh start checking accounts are important because for many people with bad credit, it’s the only way for them to have access to basic financial services at a reasonable cost.