What Is a Second-Chance Bank Account?

Your approval odds are higher, but beware of fees.

A young woman looks over her second-chance account options.
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A second-chance bank account is a type of checking account for people who have trouble opening a regular checking account because of their negative banking history. Databases like ChexSystems store information about customers who have a poor banking history. For example, if your bank closes your account due to unpaid fees, that information might prevent you from opening new accounts.

So while a checking account is a hub for day-to-day money management, it may not be easy to open for everyone. You can use it to deposit income, purchase things online and in-person with your debit card, and pay bills electronically or by check. But some banks are reluctant to open checking accounts for people who have experienced financial problems in the past.

However, there is still hope. If you’re facing challenges getting approved for a bank account, a second-chance account may offer the opportunity you need to get back on track.

What Is a Second-Chance Bank Account?

A second-chance bank account is an account for people who have difficulty opening a checking account at a bank or credit union. You might be unable to open an account due to a history of overdrafts, fraud, or other problems.

Second-chance accounts provide the opportunity to use a bank account, although these accounts may limit certain features like how much you can spend each day and check writing. However, you usually can get a debit card, pay bills online, and receive direct deposits.

Examples of Second-Chance Bank Accounts

You can find second-chance bank accounts at online banks and brick-and-mortar institutions. As you compare offerings, examine monthly fees and any limitations on how you can spend money from your account. The accounts and banking platforms below are available nationwide but it’s also smart to inquire with local banks and credit unions as you search for a solution. 

Chime

Chime is an online-only banking platform that keeps fees to a minimum. Its “Spending” account functions like a checking account and doesn’t require a credit check. When compared to most brick-and-mortar banks, Chime’s lack of a monthly service charge is unique. You can’t write your own checks, but you can have Chime print and mail a check from your account on your behalf.

Account features include:

  • No monthly fee
  • No minimum to open
  • No ongoing minimum balance requirement
  • No overdraft charges
  • More than 38,000 fee-free ATMs available across the U.S.
  • $2,500 daily debit-card spending limit 

The only way to deposit cash to your Spending account is via retailers who offer GreenDot money services. Just tell the cashier you want to deposit cash into your Chime account.

Wells Fargo Clear Access Banking

Wells Fargo’s Clear Access checking account allows you to open an account with access to a broad brick-and-mortar branch network. The account is a good fit for customers looking for a second-chance account because of the following features:

  • $5 monthly fee (waived for customers between 13 and 24 years old)
  • $25 minimum to open
  • No overdraft or non-sufficient funds fees
  • No paper checks
  • Nationwide availability
  • Access to around 5,400 branches and more than 13,000 ATMs

You can apply for this account even if you aren't in need of a second-chance account and have positive banking history.

Radius Essential Checking Account

Radius is an online bank that promises you a fresh financial start. Its Essential Checking second-chance account limits how much you can spend and deposit, but you can use a debit card, pay bills online, and write checks. You’re eligible for this account if Radius does not approve you for its two other checking accounts first.

Account features include:

  • $9 monthly fee
  • $10 minimum to open
  • No ongoing balance requirement
  • May be able to upgrade to a better checking account after 12 months
  • Available nationwide
  • More than 20,000 fee-free ATMs available 

Radius limits you to $500 in debit transactions per day ($250 during the first 30 days you have the account), $1,000 in mobile check deposits per day, and $2,000 every 10 days.

Pros and Cons of Second-Chance Bank Accounts

Pros
  • Convenience and (sometimes) cost savings

  • Get established with a bank

Cons
  • Potential fees

  • Limited functionality

Pros Explained

  • Convenience and (sometimes) cost savings: A bank account might be the safest, most convenient, and least expensive tool for managing your day-to-day finances. Instead of going to a check-cashing outlet every pay period (which typically costs money and takes time out of your day), your employer can deposit your wages directly to your account. Likewise, making payments from your bank account may be easier and less costly than getting money orders or in-person payments, and you don’t need to carry cash.
  • Get established with a bank: A second-chance account opens the door to banking with financial institutions. After establishing a problem-free history with a bank (often a year or so), you may be able to transition to less expensive and more flexible bank accounts. The bank has direct access to your earning and spending history, which may improve your chances with other bank services, including loans.

Cons Explained

  • Potential fees: Second-chance bank accounts may charge monthly maintenance fees. While banks often provide opportunities to get those fees waived, those waivers might not be available on second-chance accounts. Monthly fees are costly and discouraging, especially when you’re getting back on your financial feet.
  • Limited functionality: With a second-chance bank account, you may not be able to use all of the features you’ll find in a checking account. For example, you might not be able to write checks, and the bank may limit how much you can spend (for example, Radius bank starts you out with a daily debit card limit of $250 for the first 30 days). Plus, not all banks offer second-chance accounts, so you have fewer options to choose from.

Alternatives to Second-Chance Bank Accounts

If you don’t want to (or can’t) open a second-chance bank account, you may have other options. Prepaid debit cards are probably the closest substitute to a checking account, and they may not require you to pass a credit check. Like second-chance bank accounts, prepaid cards can prevent you from spending money you don’t have (you must “load” money on your card before you can spend). You can often pay bills online, spend with a card, and deposit checks into your prepaid account.

If you don’t use a prepaid account, you may need to cobble together services from different providers. Check-cashing stores and supermarkets may be able to help you convert your paycheck into spending money but beware of fees. For situations where you can’t pay with cash, money orders and cashier’s checks may suffice, although you’ll also pay a per-item fee with those instruments.

Key Takeaways


  • If your financial history includes bounced checks, suspected fraud, or other issues, some banks may be hesitant to open an account for you. Second-chance accounts are a bank’s way of giving you limited checking services rather than denying you an account.
  • Second-chance accounts may have limited features, such as restrictions on how much you can spend or how you can pay from your account. They may also charge monthly service fees with no options for waiving those fees.
  • There are second-chance accounts that are free but even those with fees might be worth it. Alternative service providers may charge higher fees than your bank, and a bank account may be the most user-friendly option available for managing your money.

Article Sources

  1. Chime. "What Are My Spending Limits?" Accessed Sept. 1, 2020.

  2. Chime. "Free Visa Debit Card." Accessed Sept. 1, 2020.

  3. Wells Fargo. "Clear Access Checking Account." Accessed Sept. 1, 2020.

  4. Radius Bank. "Online Checking and Savings Account Rates." Accessed Sept. 1, 2020.

  5. Radius Bank. "Essential Online Personal Checking Account." Accessed Sept. 1, 2020.