Times are tough, the economy is slow, you lost your job, mistakes are made or your life situation has changed. There are many reasons you may have ended up with bad credit and/or negative checking account history. These records could prevent you from opening a checking account with your local bank. Luckily, more banks are now offering Second Chance Checking Accounts.

Many banks subscribe to the services of ChexSystems, Inc. or TeleCheck. These organizations are national databases of checking account history. They verify an individual, or business, past account history for their subscribing members. These members include most financial institutions such as banks or credit unions. The databases predominantly store negative financial history such as a pattern of bounced checks, unpaid fees and accounts "closed for cause". Once your name has been submitted to these databases it takes five years to be removed from the list. In order to minimize credit risk and the potential for unpaid fees and balances, many institutions will not open a traditional checking account for anyone on the database list.

However, you may have an opportunity to open an account as a Second Chance Checking Account. These accounts enable you to establish a positive banking relationship, improve your credit and enjoy many of the conveniences of a standard checking account. The regulations, and benefits, surrounding these accounts vary by institution. Most require that your ChexSystem or TeleCheck records do not indicate fraud. They usually require that all checking funds have been paid back to the reporting institutions. Many require you to complete a formal check management class. Second Chance Checking accounts carry many of the same benefits as a standard account. They may come with options for on-line bill payment, direct deposit and even a debit or prepaid credit card. They may, or may not, be offered by FDIC insured banks. Establishment fees, monthly fees and minimum opening deposits vary from bank to bank.

There is an inconvenience, and expense, to not having a checking account. Check cashing fees are high. Money orders are expensive. It is inconvenient to not be able to write a check and drop it in the mail to pay a bill. Investigate whether a Second Chance Checking account is right for you. Talk to your local bank to see if they offer the accounts and investigate other options on the Internet. With a new checking account, and good account management, you should soon be on your way to a good banking relationship and better credit.

Learn more about this author, Bridie Cavanaugh.
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