‘Bank-less’ individuals are those who are not included in the banking community, usually due to bad credit and low credit rating. Thanks to second-chance checking account, they can have a bank account easily.
A second-chance checking account is a bank account that offers services of a normal bank account to bank-less individuals. A second chance checking account gives those individuals a second chance to re-enter the banking community. However the risks involved in this process can be eliminated to a certain extent by the use of financial education and monitoring.
Any individual, above the age of 18, having a government picture ID, is allowed to have second chance checking account. Credit check, initial deposit or banker interview is NOT required for almost all cases. You can create an individual or joint account for a set-up fee, which differs bank to bank. Another criterion is that the person must be listed in the ChexSystems list. So long as a person fulfils the above terms and conditions he/she can have a second chance checking account unless otherwise involved in some outright fraud cases.
Second chance checking systems do have a few limitations. Even though they function very similarly to a normal bank account, in most cases there are some restrictions on the account activities. For instance, in most cases checkbooks are not available. But still most other activities like direct deposits, online transactions, ATM withdrawals, are facilitated.
What is this ‘ChexSystems’?
Most banking and financial intuitions use ChexSystems to minimize the risk factor as a person once enrolled in its database cannot get off of it for at least 5 years. ChexSystems is a check verification service and consumer credit reporting agency that has a database storing the ways a consumer has handled deposit accounts at banking institutions. It reports only negative cases and has often been criticized for alleged unfair reporting practices. It has also been criticized for the fact that it cannot properly assess the degree of threat that a consumer might pose and thus contains a considerable number of individuals in its database who do not deserve to be there.
Benefits of a Second Chance Checking Account
People often mess up their credits and get expelled from financial institutions and banks. Thus their names get listed in databases like that of ChexSystems and it becomes virtually impossible for them to re-open a full-fledged normal bank account. Fortunately, such individuals with credit problems can win back the trust of financial institutions and credit bureaus with the aid of second chance checking accounts.
Opening second chance checking account is very simple. It just requires careful observation of various options made available to you by the banks. Visit the websites of various banks and compare the facilities provided by each. Always be aware of the restrictions that are being imposed on your second chance checking account. Needless to say, it is always wise to choose a restriction that does not affect you to a great extent. Aim for banks that provide financial advice and customer care, as they genuinely want their customers to get back on track.
Image by The urban snapper.