Written By: Tiffany Grant, MBA, AFC®, SHRM-CP
As a financial counselor, I have seen firsthand the impact second-chance accounts can have on individuals who have been denied access to traditional banking products due to their poor credit history. Second-chance accounts allow those with financial hardships to build their credit, learn how to manage their money, and gain access to many of the same products and services available to everyone else.
The Case Study
One of my most memorable clients was a single mother struggling to keep up with her bills and needing help getting back on track financially. She strictly used cash, and when I asked her about her experience with banking, she told me that she could not get an account. Unfortunately, her ex-husband had mismanaged accounts with both of their names on them due to addiction, and she was stuck with the consequences. This was my first time hearing about this issue, so I researched further.
Upon further investigation, I learned that a financial institution could deny customers an account if they are flagged in ChexSystems. ChexSystems is a system financial institutions use to decide if they should open a new account for someone based on the individual’s experience managing other accounts. If the financial institution finds any adverse reports, such as accounts closed due to unpaid balances or fees or accounts with fraudulent activity, the application may be denied.
That was the case for this particular client. She had been part of some financial mistakes in the past that resulted in being flagged in ChexSystems, making it impossible to open a traditional bank account with any banks or credit unions. I started looking into second-chance accounts as I knew she needed help.
Second-Chance Accounts are unique products designed for people with difficulty accessing traditional banking services. They are intended to help get back on track financially. They are invaluable for those who can’t open a bank account otherwise.
What are the Pros and Cons of Second-Chance Accounts?
Of course, there are pros and cons to every option we can suggest to our clients.
- Provide people with access to banking services who may have difficulty opening an account at a traditional bank(Some of the bullet points have periods at the end and some of them do not.)
- May be opened without checking ChexSystems
- Typically upgrades to a regular checking account after responsible use for a while
- Can be challenging to find
- Often have fees than standard checking accounts
- Limited features or access to certain services
Overall, a second-chance account can be a great way to get back on track financially for those who have been denied access to traditional banking products. It provides access to essential banking services. However, it is crucial to research and understand the terms and fees associated with the account before signing up.
The particular account I found for my client offered no minimum balance, free online and mobile banking, and a debit card she could use anywhere Visa is accepted. She was ecstatic to have a chance to get back into the financial system. She has been with the same bank for years and is doing much better financially.
What are Some Banks That Offer Second-Chance Accounts?
Many banks offer second-chance accounts, although they may have different terms and fees associated with them. Here is a list of some of the most well-known banks that offer second-chance accounts:
- Wells Fargo Second Chance Accounts
- Bank of America Keep The Change Savings Accounts
- USAA Fresh Start Checking Accounts
- Chase Second Chance Checking Accounts
- Regions Ready Advance Checking Accounts
- SunTrust Fresh Start Checking Accounts
- TD Bank Second Chance Checking Account
- BBVA Second Chance Account
- Chime Bank
It is crucial to remember that not all of these banks offer the same services or terms. It’s essential to encourage your clients to do additional research to see what best fits their needs.
Telling my client’s story reminds me of how important it is for people to access second-chance banking products. Without them, flagged individuals would be stuck in a financial rut that is hard to get out of. With access to these products, individuals can take the steps necessary to start on the path to financial security.
If you are counseling a client denied access to a traditional checking account, I highly recommend looking into second-chance accounts as an alternative option. They offer much-needed financial access to those who otherwise would not have it; it could be the key to helping your client get back on track financially and regain economic confidence.