Second chance checking accounts are bank accounts for customers who are listed in, or have been reported to, any recognized consumer checking history database like ChexSystems. By using methods like financial education and monitoring, financial institutions are able to lower their exposure to risks.
Almost all second chance checking accounts have some kind of restrictions on various account activities as well as the transactions that can be performed. One example of a restriction applied to these accounts is the denial of checkbooks.
However, most of the other features of normal checking accounts such as ATM withdrawals, online bill payments, and direct deposits are included.
Most of the banks, thrifts and credit unions use ChexSystems for the simple reason that its database is a great way for financial institutions to minimize risks. Once a person is placed in ChexSystems’ database, he stays there for 5 years. It’s almost impossible for anyone to get off their list.
Since ChexSystems does a poor job of assessing the quality of risk a customer might pose, the database contains many individuals who shouldn’t be there in the first place. There are also wide disparities in the way banks use ChexSystems. Each bank sets its own parameters and criteria for defaulting customers.
A new program called Get Checking offers customers who can’t get bank accounts the opportunity to open a checking account once again. Once the customer has passed the test, they’ll be given a “parole” from ChexSystems’ database and allowed to open an account once again.
The eligibility to open a second chance checking account differs from bank to bank. Some banks may require hefty opening deposits while others may require only token amounts.
A lot of banks have now relaxed their guidelines as far as opening second chance checking accounts are concerned. This is due to the realization that most customers have problems with their checking accounts due to lack of knowledge.
Some major banks have offered to provide second chance checking accounts to anyone found in the ChexSystems’ list so long as the person has not committed any major, outright fraud.
