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Sometimes in life, we all need a second chance. What if you could get a fresh start at rebuilding your banking history?
If you’ve ever had trouble getting a bank account due to your negative banking record, consider starting fresh with a second chance bank account. “Second chance” banking can help put your financial life back on the right track.
What Is Second Chance Banking?
Second chance bank accounts are individual accounts offered at some banks and credit unions to help people who have a troubled banking history. These may be individuals who have a prior record of their bank accounts being closed, perhaps due to excessive overdrafts, unpaid fees or other issues.
Indeed, as a bank customer, if you don’t manage your account responsibly, you could end up in a situation where the bank decides to close your account. Having an account closed due to banking mistakes (excessive overdrafts and unpaid fees, for example) can put you on a list at ChexSystems. ChexSystems is a bank account screening consumer reporting agency (CRA) that keeps your name on file for up to five years as a high-risk bank customer.
If you’ve had an application for a new bank account declined because of some lousy history on your ChexSystems report, you may want to consider opening a second chance bank account.
How Does Second Chance Banking Work?
Second chance bank accounts are typically checking accounts, although some banks also may offer second chance savings accounts. These accounts provide many of the same features as regular checking accounts—direct deposit, debit cards, ATM access, mobile apps and check-writing privileges—but with different fees, account rules and limits on how you can use them.
Second chance accounts serve as probationary accounts, helping people rebuild banking history and restore their reputation as a good, low-risk customer, in the same way that a secured credit card can help people rebuild their credit history.
Why Should People Use Second Chance Bank Accounts?
Millions of Americans do not have a bank account. According to the latest data from the Federal Deposit Insurance Corporation (FDIC), as of 2017, 6.5% of U.S. households (8.4 million households) were “unbanked.” Suppose you’re currently unbanked or underserved by the banking system. In that case, a second chance banking account can help move away from relying on check-cashing services, prepaid cards or other nonbank financial services.
Opening a second chance bank account is a good move for several reasons:
- It offers safety for your money. The FDIC protects your money against bank failure, up to $250,000 per depositor…
Read More: Making A Fresh Start – Forbes Advisor