Money Advice - Second Chance Banking

Second chance banking accounts are checking accounts, offered by banks, to those listed on any consumer checking history database like ChexSystems or Telecheck. As an alternative to check cashing, second chance banks provide the opportunity to open a bank account, but without the full privileges of a regular checking account.

Requirements of Second Chance Banks

Although most banks will open an account as long as valid identification can be furnished, some banks restrict accounts to consumers with reports of fraud on their checking history. Other banks require applicants to complete a checking management course prior to opening an account. The methods and procedures for opening an account differ from bank to bank.

Pros of Second Chance Banking

The advantages of a second chance bank account can be appealing to people unable to open a regular checking account. Second chance accounts allow most of the privileges associated with a regular checking account such as direct deposit and online bill pay. Also, depending on the company, account holders are issued a debit or prepaid credit card to be used for money withdraws and purchasing goods or services. However, check writing is usually not allowed with second chance accounts. With a second chance account, the hassle of carrying around large amounts of money from check cashing is eliminated.

Some second chance banks offer additional services, such as checking management courses, to further help second chance bankers develop useful skills for responsibly managing their finances. Also, some banks use second chance banking as a stepping stone for those hoping to transition into credit cards and regular checking accounts.

Cons of Second Chance Banking

Although second chance banking provide an alternative to those unable to obtain a regular checking account, it may come at a cost. One of the disadvantages of having a second chance account is the fees. Some companies require a fee for opening a second chance account, which can sometimes reach as high as $75. However, with competition arising among companies, most charge a reasonable fee.

In addition to fees for opening an account, some companies may charge a small monthly fee or a fee for each deposit. Most second chance banks allow their consumers to use direct deposit as a way of avoiding deposit fees. Unfortunately for some, not all employers offer direct deposit to their employees.

How to Find Second Chance Banks

Second chance bank accounts are offered by a number of different companies and are usually easy to locate. Most mainstream banks offer second chance accounts as an alternative to their regular checking accounts. To locate other banks offering second chance accounts, check a banking directory or the local yellow pages. The internet can also be of use for finding companies offering second chance accounts. Online directories can be used to locate such providers, while other companies offer second chance accounts as a completely online service.

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