4 Ways Second-Chance Banking Can Give You a Fresh Start

Published on Aug. 12, 2022

By: Dana George

Writer

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures that our product ratings are not influenced by compensation. APY = Annual Percentage Yield.

KEY POINTS

Banks and credit unions routinely deny customer applications.
Second-chance banking offers customers a way to start over and rebuild their banking reputations.

There's no reason to live without a bank account.

If you've ever been denied a checking account, you're probably well aware of ChexSystems. ChexSystems is like a credit report for banks. Once you apply for an account, most banks and credit unions run your identity through ChexSystems. If you have negative bank activities on your report -- such as unpaid negative balances -- it shows up on ChexSystems. Even if you've been a victim of fraud and done nothing wrong, it's possible for the mess created by the crook to show up under your name on ChexSystems. In either case, a bank or credit union may deny you a new account.

That's where second-chance banking comes in. With second-chance banking, you have the opportunity to rebuild your banking reputation

A fresh start

When you apply for a second-chance checking account, the bank or credit union either opt not to run your name through ChexSystems, or the financial institution is willing to give you a fresh start with a new checking account -- no matter what's happened in the past.

Not all banks or credit unions offer second-chance banking, but those that do understand two things:

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SoFi Checking and Savings Member FDIC. APY up to 3.80%² Rate info Min. to earn $0 Open Account for SoFi Checking and Savings On SoFi's Secure Website. Member FDIC.	up to 3.80%² Rate info	$0	Open Account for SoFi Checking and Savings On SoFi's Secure Website.
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Disclaimers

SoFi disclosure:

¹ New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period) OR $300 (with at least $5,000 total Eligible Direct Deposits received during the Direct Deposit Bonus Period). Cash bonus will be based on the total amount of Eligible Direct Deposit. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your Eligible Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 1/31/2026. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC. SoFi members with Eligible Direct Deposit can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the 3.80% APY for savings (including Vaults). Members without Eligible Direct Deposit will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

² SoFi members who enroll in SoFi Plus with Eligible Direct Deposit or by paying the SoFi Plus Subscription Fee every 30 days or SoFi members with $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. Members without either SoFi Plus or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. If you have satisfied Eligible Direct Deposit requirements for our highest APY but do not see 3.80% APY on your APY Details page the day after your Eligible Direct Deposit arrives, please contact us at 855-456-7634. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. See the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

³ We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

⁴ SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations.

Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

⁵ We’ve partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.

⁶ Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

⁷ Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with Eligible Direct Deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.

You may be at greater risk of overdrafts than the average customer.
You deserve the opportunity to start over.

Finding the right bank or credit union

Because a bank is taking a greater risk with a new customer who has had a negative banking experience in the past, some banks and credit unions charge monthly fees. Some charge no monthly fee. Some offer direct deposit and overdraft protection, while others do not. The point is this: It's important to shop around for a second-chance bank. The fact that you've had negative experiences in the past is no reason to feel as though you don't deserve the best banking experience possible today. The more effort you put into finding the right financial institution for you, the happier you will be.

Fortunately, you have many options. In addition to banks and credit unions near you, some online banks also offer second-chance banking. And if you're squeamish about banking online, there's no need to worry. Online banks have the same FDIC protection as brick-and-mortar banks. As you shop, double-check whether an institution is covered by FDIC (banks) or by NCUA (credit unions).

How it works

Once you've found a bank offering the features you need for free or at a low cost, you're back in business. It's possible you'll have a lower spending limit than before, at least until the bank knows you're on the right path.

According to ChexSystems, it takes up to five years for negative remarks to fall off your report, but that's okay. As you go about your new banking business, you build a positive history with ChexSystems. Think of it as repainting a room. The longer you work at it, the better it looks.

Here are four ways second-chance banking can enhance your life:

1. It makes bill paying easier

Once you have another bank account, there's no reason to waste money on a prepaid debit card or money orders to pay bills. You can sit down and write out a check or set up auto-pay.

2. It helps rebuild your banking reputation

The same people who look at your ChexSystems report and see that you've had trouble in the past will be able to see that you're successfully working with a new bank. The more time that passes, the more confident any financial institution is going to be about your ability to handle an account.

3. It acts as a learning tool

One thing most of us don't learn as kids is how to handle a bank account. We don't learn about overdraft fees, the value of overdraft protection, how to balance a checkbook, or how to manage money responsibly. Even if we take a personal finance or home economics class or two in high school, we learn only the bare minimum about banking.

Now that you've had trouble with a bank account, you're likely to be more aware of how your new bank operates and what's expected of you. One thing about financial institutions that offer second-chance banking is that they want to see you succeed. If you're ever unsure about something, contact the bank and they'll walk you through. When you're successful, they're successful.

4. It allows you to avoid the alternatives

Having a bank account means not having to walk around with cash in your pocket. It means not having to run to buy a money order any time a bill comes due. As long as you're responsible with your account, it means not having to pay unnecessary fees.

How to find a second-chance bank account

Once you've checked with local banks and credit unions (a simple phone call will do), consider online banks. One of our favorites for second-chance banking is Chime. Chime charges no monthly fee, requires no minimum deposit, and is available nationwide.

OneUnited Bank's second-chance banking is called U2. There's a $12 monthly fee and $50 deposit required to open an account, but there's no minimum balance requirement.

Capital One 360 checking is not officially a second-chance account. However, Capital One 360 does not use ChexSystems to screen applicants so you don't have that hurdle to jump. There's no minimum deposit required to open an account, no monthly fee, and Capital One ATMs are scattered across the country.

Another financial institution that does not use ChexSystems is Navy Federal Credit Union. Designed for active-duty and retired members of the military and their families, Navy Federal gives customers access to four free accounts, charges no monthly service fee, requires no minimum balance, and rebates ATM fees up to $20 per statement.

If you've had banking problems in the past, it's time to let them go. Second-chance banking is all about looking forward.

Our Research Expert

Dana George

Dana is a full-time personal finance writer, with more than two decades of experience. Her focus is on helping readers feel less alone as they navigate their personal finances and offering actionable insights.

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