Second Chance Checking Account: The Complete Guide

Bank account denials are common, and there are official steps to minimize your chances of getting your account rejected. Not all of these steps are suitable for everybody. However, there is an alternative that professionals can still choose.  It is called a second chance checking account.

These accounts can be your way out of a problem if your accounts get denied despite your best efforts. It is important for you to fully understand the second chance checking accounts to manage your finances.

Thus, we are going to talk about all there is to know about these accounts, and what you can do to get them.  Let us begin by brushing some basics about the second chance accounts.

What is a Second Chance Checking Account?

The second chance checking account is an alternative for account holders who get rejected for a new account because of bad banking history.

 These accounts are available throughout the U.S. and thousands of people opt for them each year.  Even simple issues like account closure due to unpaid overdraft fees can impact you.

Bounced checks, bad credit history, slow payments are some common problems, which may decrease your chance of getting account approval.

 However, some banking unions offer “second chance” accounts for these users.  These second chance accounts can help user rebuild their credit history, financial independence, and stature again. However, second chance checking account users may not get all the features of a standard bank account.

Do you need a Bank Account?

A common concern for most people with a bad banking history is closing down all their bank accounts, and managing finances otherwise. While this may be possible a few decades ago, it is not anymore.  People need bank accounts for almost everything in their lives. It doesn’t matter if you are making an online payment, paying a bill, or purchasing a shirt at a shop, you’ll need a bank account.

You need an option to process your finances quickly. You still need a way to pay your bills even if you are okay with running the rest of the transactions on paper. While debit cards are a good option (more on this ahead), it usually has some drawbacks to it.

 Moreover, your existing poor banking relations have an impact on other areas including your insurance, or mortgage. What’s worse is that some people will not even consider your application without a bank account.

Second Chance Checking Account: Pros and Cons

Choosing a second chance checking account can be a wise decision considering its wide benefits, but it is important to assess its drawbacks too. Let us talk about the pros and cons of these bank accounts before making a final decision.

Advantages

• Improved Banking History
• Avoid Excessive Fee
• Relationship Rebuilding

Disadvantages

• Higher Maintenance Fee
• No Overdraft Protection
• Doesn’t Assist with Bad Credit

Pros

Following are some pros that choosing a second chance checking account can help users enjoy.

Improved Banking History

A poor banking history has an impact on the overall perks of an account holder, much like a poor credit score.  It is not always the bank account holder’s fault, and some people just need another chance. The second chance checking accounts are the perfect options for these individuals. 

However, you need to learn about money management before you can sign up for these second chance accounts. You wouldn’t want to repeat the same mistakes, and land in the same situation because there is no going back after that.

Avoid Excessive Fee

Several factors like debit cards, money orders, etc, can pile up and cost the bank account owners a lot in the long run. Moreover, the check-cashing services also have a particular fee charge that account holders pay otherwise.

 Fortunately, choosing the second chance accounts is a great way to ensure you avoid all kinds of extra payments and only spend money on what you truly use.

Relationship Rebuilding

Poor bank history can often scar the bank-client relationship. Several bank account holders also get listed down as notorious on banks because of recurrent poor bank history performance.

 However, many of these people damage their reputations because they do not fully understand the banking system.

Thus, these individuals need to have a second chance. Signing up for the second chance checking account is the ideal way to do this.

It allows account holders to rebuild their trust towards the bank, and show a responsible attitude. Banks can be very considerate with account holders who mend their ways. The banks may even wave off your remaining credit amount in some rare cases.

 You stand at a much better chance of getting a loan once you show responsibility towards your second chance account, and prove that you can repay a loan. You can also advance to other financial products like mortgage, insurance, and much more.

Cons

Second chance checking accounts have their benefits, but like other financial management options, it has their drawbacks. Here are some cons that you should watch out for.

Higher Maintenance Fee

Banks do not fully trust you when you sign up for the second chance checking accounts. It is because you have a long, disappointing credit history, and banks need proof that you can repay the loans in the future.

This maintenance fee can pile up with time. Note that the banks will waive off these extra charges only if you make on-time deposits, or maintain a certain balance amount.

No Overdraft Protection

No responsible bank account owner plans to overdraft their account. However, it is still a good option to know that you can overdraw your account limits temporarily.  This can also help account owners pay for emergency expenses, and maintain financial stability.

 Unfortunately, the second chance checking accounts do not come with overdraft protection. It is nearly impossible to find a bank that offers over drafting privileges to users with a bad banking history. Thus, this is something they need to compromise on.

Doesn’t Assist with Bad Credit

Most people think that a second chance account can help them restore their poor credit scores. However, this isn’t true. It has no impact on one’s credit score, and you need to take different steps to improve your credit score.

So, a user with a bad score will need to manage their existing bank account, and second chance checking account simultaneously, which is quite hectic for most bank account holders.

Choosing a Second Chance Checking Account: Things to Consider

Picking out the right second chance account is a fundamental step towards better financial management. It helps account owners run their accounts better, rebuild relationships with their banks, and improve banking reputation.

 However, most account holders do not know how to choose the right second-hand account.  Here are a few things you should consider to make an informed decision.

Low or No Maintenance Fee

Maintenance fees can accumulate to one of the biggest expenses for bank account holders. While these fee amounts are quite high, most account holders can’t pay them off. Thus, they need a bank that will provide a second chance checking account without little, to no fee.

Note that some banks may also mention the fee as a “service fee”, but several banks do offer second chance accounts without any maintenance fee.

 Similarly, other banks can keep waiving off the service fee as long as you keep your bank credit higher than a designated amount.

No Minimum Balance Requirements

Having stumbling blocks on your journey to restore your existing bank accounts is a huge problem. You need to keep your finances as streamlined as possible.

Opening a second chance checking account with a minimum balance requirement can be a huge problem in the long run. It is because the bank account owners will get dinged each time they are below the least balance amount.

You never know for sure that you will have the minimum balance amount in your hands. Thus, it is best to steer away from such conditions from the get-go. It is best to search for banks that do not have any minimum balance compulsions.

Your second chance checking account can keep running, even if you run out of balance this way. It will also answer your concerns regarding negative strikes on your account over time.

Free Services

The banking industry is highly competitive as every banking service wants to stay on top. It is why they offer perks like the second chance accounts for potential customers.

 These banking services usually have several free services to keep the customers engaged, and attract new ones to their business. Choosing a bank with free services can help you save hundreds of dollars each year.

Most of these banking services offer the following free benefits.

• Electronic bank statements
• debit card tied to your account
• free online bill pay
• unlimited check writing
• Mobile check deposits.

Mobile Banking

The U.S. has over 81% of mobile device users, making mobile banking one of the biggest perks that banking can provide. Fortunately, recent banking app developments allow users to do almost anything with a few taps on their mobile devices.

For example, these applications can allow users to check their account details in real-time, transfer funds, add payees, and much more.  It is a big help if you have frequent banking use. It also helps people who are trying to deal with poor banking history and want to keep a closer on their banking transactions.

Physical Bank Branches

Digital banking applications may have all the features in the world, but nothing beats traditional banking options. Moreover, several people are still not tech-savvy enough to run these mobile banking applications, making it harder for account holders to manage their funds.

Having the convenience of visiting your local bank branch is a great option, especially for a second chance of checking account holders. These account owners are already at a risk, and cannot afford to make any offenses knowingly or unknowingly.

Moreover, these physical branches can come in handy if you want a loan, or start working on a new business. It is probably why most people prefer making payments with banks in their physical branches.

Prepaid Debit Cards: An Alternative to a Second Chance Bank Account

Some people need all the features of a standard bank account, without all the hassle that comes with it. Fortunately, popular alternatives like prepaid debit cards are an ideal choice for a second chance checking account.  

As the name suggests, prepaid cards allow users to pay upfront in advance.  Users can then use prepaid debit cards to make purchases how they usually would. However, you can only shop or purchase according to the amount you have already paid. It puts a limit on your transactions once you meet your prepaid amount limit.

The best part is, that like second chance checking accounts, the prepaid debit cards do not need a credit check. Thus, you won’t have to wait for meeting the eligibility criteria for this. It also allows users to pay more money in their prepaid debit card account as they progress. Let us have a look at some of the top pros of these cards.

Safer than Cash

Cash transactions are riskier as there’s always a chance that you may get mugged, or lose the money. The prepaid debit cards, like the second chance checking accounts, have all your finances secured .

Easy to Load and Use

Prepaid debit cards are quite simple to load up with money and use for monetary payments. It allows users to load up in the following ways

• Bank account transfers
• Cash
• Direct deposit

Secure Payment Alternative

The prepaid debit cards allow owners to have a good option for alternative payments. It doesn’t have the risk of human error and allows streamlined financing.

Wrapping Up

The second chance checking account is a great way to rebuild your relationship with your bank. Account-holders need to choose the right bank to open these accounts.

Consider our suggestions like looking for low maintenance fees, mobile banking, etc, in mind while making a decision. You can also reach out to our professionals at Credit Follows to get more information, advice, consultation, and information on these second chance checking accounts. We will help you get the best account for your financial management in no time.