Second Chance Banking

Second chance banking is a great way to get another opportunity to manage your finances.  It takes a couple of forms, and I'll cover most of those in this Hub so you know what your options are.

The biggest issue that leads to people needing second chance bank accounts is that they've been "blacklisted" by regular banks.  This means that you've been put onto the list by a company called Chexsystem.  In order for traditional banks to reduce their risk when approving bank account applications, and to protect their own credit score, they reference this system to check if you're on it.

People end up in Chexsystem when they've defaulted on a bank account, "blank enveloped" the ATM, or any other reason their account was shut down on them.

Know that you aren't alone, and tons of people use second chance banking every day!

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The most common style of second chance banking is through what I like to call "alternative banks."  In this situation, you go through a company like Vision Prepaid to get an account.  To get a second chance bank account like this, all you need is to be a legal citizen.  There is no credit check, no Chexsystem check, or employment verification.  The entire application process takes only about three minutes to get approved, and all of your banking materials come in the mail in a few days.

Each alternative bank is going to have their own set of features that comes with the accounts that they offer.  Many of the important ones are standard amongst most of them.  These include:

• Direct deposit
• Visa or Mastercard
• Online banking
• Overdraft protection
• Some offer the ability to borrow money
  

Along with these features, you also gain the ability to do all of the things you can't if you don't have a bank card.  These are things like:

• Shop online
• Pay bills online
• Reserve hotel rooms
• Rent a car
• Have an open bar tab :P

If alternative banks didn't do a good job of protecting your money, they wouldn't stay open for very long! For example, the Vision Prepaid Visa card offers with a zero liability protection against fraudulent charges.  Other alternative banks offer very similar protection for your money as well.

What about expensive? Second chance banking is more expensive than traditional bank accounts, but not by much. Most companies offer no monthly fees to those who participate in direct deposit, which only leaves a couple small fees. Be sure to read through the company's terms to figure out what their charges are like, and what you can do to avoid them!

In the end, second chance banking is cheaper than check cashing and a hell of a lot safer than carrying cash around!

Keep in mind that you're not going to be blacklisted from regular banks forever, so your second chance bank account is only going to tide you over until then.  People are usually cleared from Chexsystem in 3-5 years, so use second chance banking until then as a safe and reliable way to manage your money.