Banks and credit unions that offer second chance accounts

Second chance checking accounts are offered by specific banks and credit unions that are willing to work with people who have banking history problems — usually a prior account closure, unpaid overdrafts, or a record in ChexSystems (the banking industry's shared record of account closures). You cannot walk into any bank and get one; you have to find an institution that explicitly offers them.

The largest banks rarely offer second chance accounts. Instead, look at regional banks, community banks, and credit unions in your area. Chime, LendingClub, Varo, and Axos Bank are online banks known for second chance checking. Some credit unions, particularly those that serve lower-income members or have a community development mission, will open accounts for people with ChexSystems records. Call ahead — do not assume a credit union offers them just because it is local.

The easiest way to find options near you is to call your local credit union directly and ask if they offer second chance checking or accounts for people with prior banking problems. If they say no, ask if they know which institutions in your area do. Many credit union staff can point you to competitors who will take you on.

Key Takeaways

  • Second chance accounts are offered by specific banks and credit unions, not by all institutions — you need to contact them directly to confirm they offer this product.
  • Online banks like Chime, Varo, and Axos Bank often have fewer restrictions than traditional banks and may not check ChexSystems at all.
  • Community banks and credit unions are more likely than large national banks to offer second chance checking, especially if they focus on underserved communities.
  • Before opening an account, ask what fees apply, whether overdraft protection is available, and what the monthly minimum balance requirement is, if any.

What to expect when you apply

When you contact a bank or credit union about a second chance account, be prepared to explain your banking history. Some institutions will ask directly about prior closures or ChexSystems records; others will simply run a check and decide based on what they find. Honesty helps — if you tell them upfront about a prior problem, they are less likely to be surprised and close the account later.

You will need to provide identification (a driver's license or state ID), proof of address (a utility bill or lease), and usually your Social Security number. Some online banks will let you open an account entirely through their app or website; others require you to visit a branch or mail in documents. Ask which method the institution uses before you start the process.

The approval decision usually comes within a few business days. Some institutions approve you on the spot; others send a letter within a week. Once approved, you can begin using the account immediately, though some banks place temporary holds on deposits or limit your initial balance.

Online banks versus brick-and-mortar institutions

Online banks often have lower overhead and fewer restrictions, which means they may be more willing to open accounts for people with banking problems. Chime and Varo, for example, do not use ChexSystems at all — they check your banking history through a different system or not at all. This can make them faster and easier to join if you have a prior closure on your record.

The trade-off is that online banks offer no physical branch. If you need to deposit cash, you will have to use ATMs (which may charge fees) or mobile deposit through your phone. Some online banks partner with retail chains like Walgreens or CVS to allow in-person cash deposits, but not all do. Check the bank's deposit methods before you open an account.

Brick-and-mortar banks and credit unions let you walk in, speak to a person, and deposit cash directly. This can be important if you do not have a smartphone or prefer face-to-face banking. The downside is that local institutions are more likely to check ChexSystems and may have stricter policies about prior account closures.

Fees and account features to compare

Second chance accounts often come with higher fees than standard checking accounts. Monthly maintenance fees range from $5 to $15 at many institutions. Some charge per transaction (for example, $0.50 per debit card use), while others charge for overdrafts even if the overdraft is small. Read the fee schedule carefully before you open an account — a low monthly fee means nothing if you are charged $35 every time you overdraft by $1.

Ask whether the account includes overdraft protection, which links your checking account to a savings account or credit line so that overdrafts are covered automatically. Some second chance accounts do not offer this; others charge a fee for it. If overdraft protection is important to you, confirm it is available and understand what it costs.

Check whether the account has a minimum balance requirement. Some second chance accounts require you to keep $25 or $50 in the account at all times; if your balance drops below that, you may be charged a fee. Others have no minimum. If you are living paycheck to paycheck, a zero-minimum account is usually the better choice.

Credit unions as an alternative

Credit unions are member-owned cooperatives, not for-profit institutions. Many prioritize serving people who have been turned away by traditional banks. If you have a prior banking problem, a credit union may be more willing to work with you than a large bank would be.

To join a credit union, you usually have to meet a membership requirement — you might need to live in a certain county, work for a specific employer, or belong to a particular organization. Some credit unions have very broad membership (for example, anyone in a five-county area), while others are highly specific. Search for credit unions in your area using the CO-OP network locator or the Alliant Credit Union finder to see what is available to you.

Call the credit union and ask directly: "Do you offer second chance checking for people with ChexSystems records or prior account closures?" If they say yes, ask what documentation you need and whether you can open an account by phone, mail, or in person. Many credit unions will waive or reduce fees for members who are rebuilding their banking history.

What to do if you are denied

If a bank or credit union denies you, ask why. They are required to tell you the reason — it may be a ChexSystems record, insufficient income, or an outstanding debt to another bank. If it is a ChexSystems issue, you can request a copy of your ChexSystems report for free at www.chexsystems.com. Review it for errors; if you find any, you can dispute them.

If you are denied because of an outstanding debt (for example, unpaid overdrafts from a prior account), some institutions will reconsider if you pay off the debt first. Call the bank that closed your account and ask what you owe. Paying it off may not immediately remove the record, but it shows good faith and makes you a lower-risk customer to future banks.

If you are repeatedly denied, try online banks next. They often have different approval criteria and may not check ChexSystems at all. If you still cannot open an account, consider a prepaid debit card as a temporary alternative — it is not a checking account, but it lets you receive direct deposits and make purchases while you work on rebuilding your banking history.

Building your way to a standard account

A second chance account is a stepping stone, not a permanent solution. The goal is to use it responsibly for six to twelve months, then move to a standard checking account with lower fees and better features. Keep your balance positive, avoid overdrafts, and use your debit card regularly. After a year of clean history, contact your bank and ask if you can upgrade to a standard account, or apply for one at another institution.

Some banks will upgrade you automatically once you have met certain conditions (usually no overdrafts for six months and a minimum balance). Others require you to ask. Either way, the path is the same: prove you can manage money responsibly, and the doors to better accounts will open.

Frequently Asked Questions

Will opening a second chance account hurt my credit score?

Opening a checking account does not affect your credit score at all — banks do not report checking accounts to credit bureaus. However, if the bank reports unpaid overdrafts to a collection agency, that can hurt your credit. The account itself is safe.

Can I open a second chance account if I still owe money from a closed account?

Some banks will deny you if you have an outstanding debt to them or another institution. Others will open an account anyway. Your best bet is to pay off the old debt first if you can, then apply. If you cannot pay it off immediately, apply anyway — some institutions will still take you on.

How long does a ChexSystems record stay on file?

ChexSystems records typically stay for five years from the date of the closure or incident. After five years, the record is removed automatically. You can request a copy of your report at any time to see what is listed and when it will be removed.

Do online banks check ChexSystems?

Not all of them. Chime, Varo, and some other online banks do not use ChexSystems at all. They may use alternative verification systems or no verification at all. This makes them a good option if you have a ChexSystems record. Check the bank's website or call to confirm their verification method.

What is the difference between a second chance account and a prepaid card?

A second chance checking account is a real bank account with a debit card, check-writing ability, and direct deposit. A prepaid card is not a bank account — it is a stored-value card that you load money onto. Checking accounts build banking history; prepaid cards do not. If you can open a checking account, do that instead of a prepaid card.