Bad Credit Checking Accounts
In this post, we’ll cover the best checking accounts for bad credit in 2021 – and why you should consider getting one. If you have bad credit, you may have faced rejection from banks and other financial institutions. You may have had trouble getting decent interest rates on lines or credit and loans. But even with bad credit, you have options.
“Second chance” or checking accounts for bad credit
Things happen, things that hurt your credit. These things aren’t always in our control… but we still have to face the consequences.
Sometimes called a “second chance” or “Fresh Start” checking account, checking accounts for bad credit are an option for people who can’t get a regular bank account or have been turned down in the past.
There may be many reasons for this, but two of the biggest ones are:
A track record of poor banking history – unpaid overdraft or other fees, bounced checks, a forced account closure, etc.
Poor credit history (bankruptcy, high credit utilization, late payments)
For many people, the idea of getting a bank account may not seem like a challenge. And for many, this is true.
However, there are also millions of American adults who have poor credit or simply have never been able to manage their personal finances. Because of this, they struggle to get approved for a bank account, personal loan, mortgage… you name it.
People who don’t qualify for a bank account often have to rely on prepaid debit cards, money orders or cashier’s checks. In a world of direct deposit, online shopping, and the like, these options may be necessary, but they can also be costly.
Checking accounts for bad credit exist to help individuals with a poor credit or banking history get back on their feet and rebuild.
Luckily, although these accounts do come with certain limitations, they also tend to be the best option for people who are ready to improve their own financial situation – now and for the future.
Can I open a checking or savings account with bad credit?
Of course! “Second chance” checking accounts are designed to help people with bad credit.
While most major banks do not offer traditional checking and savings accounts to individuals with poor credit and banking history, there are many that do. And because of the growing need for them, more and more financial institutions are offering account alternatives throughout the country.
So, if you’ve had trouble moving forward because of your banking or credit history, you have more options than you know.
Will an account repair my credit?
Not directly.
But having a bank account can help in other ways that – in the long run – will help you rebuild your credit! We’ll get into that below.
Pros and cons of “second chance” checking accounts
As mentioned earlier, checking accounts for bad credit come with some limitations. But the good news is they also have their advantages. Let’s take a look at the pros and cons.
Pro: It gives you the opportunity to fix your banking history over time
This is one of the biggest perks of getting a checking account specifically designed for individuals with bad credit.
Rebuilding your banking history – just like repairing credit – comes down to understanding and managing your money well. A second chance checking account can help you start over – even if you’re starting from the bottom.
But it does require that you have – or create – good money management habits. Luckily, some second checking accounts for bad credit users also come with free (sometimes mandatory) financial education.
Banks and other financial institutions want you to succeed, too. After all, your success is theirs. If you’re handling your finances better, then they’re benefiting, too.
With a “second chance” checking account, you can prove to yourself – and to them – that you deserve and can handle more options. Better options.
Why?
Because other banks and potential lenders will see your successful banking history and view you as less of a risk. With solid banking history, you’ll garner more trust and credibility, thus expanding your options.
Pro: Checking accounts for bad credit act similarly to regular checking accounts
Typically, these accounts are offered through financial institutions with easy online or mobile accessibility. Most of them also have local centers as well.
In addition, there is no clear distinction between a debit card or regular check from a “second chance” account and a traditional one.
You can still do direct deposit and pay bills online or via phone for these types of accounts as well.
Plus, after 6-12 months (with good banking history), you may be able to convert to a traditional bank account with more perks and options.
Pro: A “second chance” checking account is also less costly to you than other alternatives – ie. prepaid debit cards, check-cashing services, money orders, and cashier’s checks
Prepaid debit cards often come with their own set of fees and restrictions. And businesses that will cash your checks for you usually charge for the service.
When you have your own bank account, you don’t have to give up part of your hard-earned money… before ever accessing it.
Pro: No credit check
For many, this is a big deal. After all, poor banking history often means poor credit. And when you have poor credit, you may have a harder time getting approved for things like bank accounts and loans.
But with a “second chance” checking account, this is less of a concern as most banks don’t require a credit check to open one.
Pro: Many checking accounts for bad credit offer overdraft protection
While many traditional checking accounts offer the same, “second chance” accounts can also provide overdraft protection.
With the convenience of debit cards, it’s all too easy to overdraw one’s account. In some cases, this simply means having to pay an annoying overdraft fee.
But for many, this can be a costly mistake. People who overdraw from their account and are unable to pay the associated fees are flagged in the system. With too many instances of overdrawing funds and unpaid overdraft fees, the account may be forcibly closed. At the least, it may be reported to the ChexSystems.
Ultimately, having overdraft protection prevents this from happening. With overdraft protection, there are no fees that you may not be able to pay.
Con: Some “second chance” checking accounts don’t offer overdraft protection
Just to get it out of the way, not all checking accounts (in general) provide overdraft protection. But this is the case with traditional bank accounts as well.
Some financial institutions have overdraft programs, but they come with a small monthly fee. On the plus side, this fee is usually more affordable than the alternative.
Even so, if you have a tendency to overdraw your account, a “second chance” account may not protect you by default. Oftentimes, banks want to see that you can handle your finances without overdrawing your account in the first place.
If you can do that, then there’s no problem. And if not, then look for a checking account that does offer overdraft protection.
Con: Checking accounts for bad credit often come with additional fees and limitations
These fees include:
Overdraft fees
Monthly account maintenance or service fees
Account opening fees (or a required minimum account balance)
Early closing fees
Direct deposit of your entire paycheck may be required
For the most part, these fees can be waived or avoided with good money management habits… but not always. It also helps to keep a minimum balance in your account at all times as this can help waive the monthly maintenance fee.
You may also face such limitations as:
Limited check-writing ability
Smaller withdrawal and deposit limits at ATMs
While these can be annoying to deal with, even traditional checking accounts often have limitations. In particular, most checking accounts have a maximum withdrawal limit.
For instance, a “second chance” account may have a limit or $300 or $400 per day. However, a traditional account may have a limit of $500 a day.
Con: These checking accounts do not rebuild credit
They help establish better banking history. They also help you show you are responsible.
But they do not repair credit. For this, you’ll need to show consistent financial habits over time. That said, having a checking account can still set you on the right path to managing your money.
Why you should get a “second chance” checking account
You may be wondering why you should get a bank account at all.
In the modern age, more businesses and systems than ever operate online. Online shopping, direct deposit, etc. Some businesses don’t accept cash at all and require a debit card.
But having a bank account has more benefits than simple convenience.
Better security for your money
Online alerts and tracking of your funds
Online bill pay
Immediate access to funds
Convenient money transfers
Avoid unwanted fees (eg. from cashing checks at a business)
As interconnected as the credit and banking world is, having a solid relationship with a financial institution is an advantage. If you want to one day get a mortgage or auto loan, for instance, having that relationship or reputation can benefit you in getting better rates.
Additionally, some lenders will not work with consumers who don’t have an existing bank account. Or, if they do, they may require additional fees or higher interest rates to insure their money.
What is ChexSystems (and why does it matter)?
ChexSystems is a consumer reporting agency that operates under federal law – the Fair Credit Reporting Act.
In short, it is an agency that takes information related to your banking activity and compiles it all into a report, which other financial institutions (banks, credit unions, etc.) can use. Past banking mistakes such as unpaid fees, forced account closures, frozen accounts, fraud, excessive account withdrawals, and a history of overdrawn accounts all show up in this report.
How does this affect you?
Well, approximately 80% of banks use ChexSystems. Future banks use this report to assess your risk level. The higher the risk (more errors), the higher the chance they’ll reject your application.
Some financial institutions do not use ChexSystems, while others will consider the bigger picture in their decision-making process. Other times, a bank may reject your application to a traditional account or account with higher benefits, but they may offer you an alternative option – such as a “second chance” account.
If you’re worried – or even just curious – about what your report says, check out the official site here.
Banks not requiring a credit check to open a checking account
Everyone from local banks to credit unions to major lenders can require a credit check. Usually, major lenders in particular will require a credit check.
Luckily, there are financial institutions – local, statewide, nationwide – that do not require a credit check. Banks and credit unions that offer checking accounts for bad credit are your best bet if you’re looking to avoid the credit check altogether.
Below is our list of the best checking accounts that either don’t require a credit check or that use other factors in their approval process (updated January 2021).
17 best checking accounts for bad credit
Chime Second Chance Banking Account
No credit check required
No reporting to ChexSystems
Comes with Automatic Savings (every debit card transaction is rounded up to the nearest dollar and transferred to a savings account)
No hidden fees (overdraft, account opening, account maintenance, foreign transaction, etc.)
There is no minimum account balance
Direct deposit
Visa® Debit card (with notifications of use)
Mobile app with digital transfers
32,000+ free in-network ATMs nationwide
Option to access direct deposited funds 2 days early
FDIC-insured
No physical locations (mobile/online only)
BBVA Easy Checking Account
No credit check
Online and in-personal locations nationwide
Automatic option of “second chance” checking if don’t qualify for traditional checking account
Can upgrade to traditional checking account in 12 months with good banking history
$25 account opening fee
~60,000 free in-network ATMS
Online & mobile bill pay and deposit
Online budgeting tools
Mobile purchase tracking and notifications
Free, unlimited check writing
Free Visa® Debit Card ($10 fee for personalized card)
Cashback rewards and rebate for out-of-network ATMs
FDIC-insured
$13.95 monthly maintenance fee for 1st year (non-waivable)
Early account closure fee (if closed within 6 months of opening)
$3 monthly paper statement fee (or free e-statements)
$38 overdraft fee
3% international transaction fee
Radius Bank Essential Checking
Chance to upgrade to Rewards Checking account after 12 months
No minimum account balance
FDIC-insured checking account
Mobile and online payments
24/7 online access
Excellent technology and online services Free check writing
No in-person locations, but nationwide online access
$9 monthly account maintenance fee (may be waived with $500+ monthly deposits)
$500 daily debit card withdrawal and purchasing limit
$1,000 daily mobile check deposit limit (or $2k every 10 days)
$5 overdraft fee (daily) and $25 insufficient funds fee
Varo Checking Account
No ChexSystems or credit check
55,000+ free in-network ATMS nationwide
No minimum balance
No hidden fees (overdraft, transfer, foreign transaction)
Complementary debit card
2 days’ advance funds from direct deposits
Online and mobile access
Option for a Varo Savings Account
Free online tools (ie. account balance alerts)
GoBank Online Checking Account (offered through Green Dot Bank)
No credit check or ChexSystems
Fully online (or app) + free budgeting tools
Online application and account set-up
FDIC-insured Free debit card ($5 replacement fee)
Nationwide with ~42,000 free in-network ATMs
Early access (up to 2 days) to direct deposit funds
Mobile check deposit
No overdraft fees
$20 minimum to open account in-person at participating retailers ($0 online)
No savings account or interest gained
No join accounts or physical branches
$8.95 account maintenance fee (waived with $500+ monthly direct deposit)
$2.95 maximum account opening fee (if in-person)
$4.95 maximum fee for in-person deposit at participating retailers (ie. Walmart)
Maximum cash deposit of $2,500 daily
Paper checks are $5.95 for a dozen
3% foreign transaction fee
Axos Bank’s Essential Checking Account
Fully online/mobile banking and bill pay
Can convert account to traditional checking with solid account history
24/7 online support
No monthly account maintenance fees
Free Visa debit card
Secured account
Overdraft protection
Reimbursement for out-of-network ATMs
Free checks (depending on shipping)
2-day early direct deposit funds access
First American Bank’s Fresh Start Checking Account
Online and mobile banking
No minimum account balance
$9.95 monthly maintenance fee
Free Mastercard debit card, check writing, and online statements
55,000 free in-network ATMs
No interest-bearing account
$10 overdraft fee (funds transferred automatically from another account)
$50 account opening fee
Only located in several states (IL, FL, WI)
Bank of America’s SafeBalance Banking® Account
Online and mobile banking
Same-day direct deposit transfer and funds wiring
No overdraft fees
$4.95 monthly maintenance fee (waived if enrolled in Preferred rewards)
No paper checks
Wide network of ATMs
$25 account opening deposit
Fifth Third Express Banking®
No frills accounts
No credit check
Visa debit card
No overdraft fees
$0 monthly maintenance fee
No account balance
No check writing option and no check deposits at ATMs (can deposit at physical locations or via mobile)
Wells Fargo’s Clear Access Banking Account
Online and mobile bill pay and deposits
Complementary debit card, but no checks
13,000 in-network free ATMs
5,700+ physical branches
Secured transactions and protection against fraud
Budgeting and other tools online
No overdraft fees
Option to open Opportunity Savings account for overdraft protection
Can convert to regular checking account in 12 months
$25 deposit required
$5 monthly maintenance fee
3% foreign transaction fee
Details may vary based on location
Aspire Federal Credit Union’s Fresh Start Checking Account
Online and mobile banking
Debit card
No monthly fees
70,000 in-network free ATMs
Must have no fraud in banking or credit history
Required direct deposit of paycheck
Daily limit on debit card usage and ATM withdrawals
Unify Financial Credit Union
Online or mobile banking
No minimum balance or monthly fees
Overdraft protection (or $30 fee, depending)
$25 initial account opening deposit
Need to be a member
SoFi Money Cash Management Account
No ChexSystems
Online and mobile bill pay and transfers
Sometimes offers rewards
Account interest
Available nationwide
Debit MasterCard
No ATM, overdraft, or minimum balance fees
Woodforest National Bank’s Second Chance Checking Account
Designed for poor credit or poor banking history consumers
No minimum balance
Free in-network ATMs
Monthly maintenance fee
$32 overdraft fee
Available in only 17 states (fewer locations)
$25 deposit to open account
Peoples Cash Solutions’ Second Chance Checking Account
No credit requirement
Online banking, bill pay and transfers
FDIC-insured account
Available nationwide (Texas-based)
Option for joint account
Debit MasterCard and checkbook
Must not have fraudulent activity in the past
$30 deposit to open account
Overdraft and printed statement fees
$20 early account closure fee (within 90 days of opening)
$4.95 monthly maintenance fee
SunTrust Bank Essential Checking Account
Online or mobile banking and bill pay
Easy online application
Secured & insured against unauthorized transactions
2,000 free in-network ATMs + 1,200 physical branches
SunTrust Mastercard® debit card
$100 deposit to open account
$7 account maintenance fee (waived with monthly $500 direct deposits or if student)
10 free starter checks
$3 paper statement fee (or free e-statements)
OneUnited Bank’s U2 Checking Account
Designed for consumers with poor credit
Available in all 50 states with 90,000 locations
Offers secured credit card option (reports to all three credit bureaus)
$50 minimum deposit to open account
$12 monthly maintenance fee
How to choose between checking accounts for bad credit
When it comes to opening an account, always read the terms and conditions to make sure you get the best possible option for you.
Some checking accounts are better than others, while some are simply more accessible. Remember, you don’t have to settle because of poor credit or past mistakes.
When looking for checking accounts for bad credit, keep an eye out for the following key things:
Special account features (upgrade to a traditional account, interest-bearing savings accounts, cashback rewards, ATM fee reimbursement, fee waivers, etc.)
Hidden or service fees (ATM, wiring, direct deposit, foreign transaction, account maintenance, overdraft, etc.)
Physical vs. online or mobile access (some financial institutions do not have an in-person option, while others do but charge a fee for using it)
Limitations related to debit card usage, account balance minimums (and maximums), check writing privileges, etc.
Personal finance education or training that may be offered (sometimes required) by the institution
Ultimately, the best checking account depends on you and your circumstances. “Second chance” accounts are there to help you rebuild your banking history, but not all are created equal.
You may find that your geographical location or state residency matters. In some cases, you’ll need to be a member first (common with credit unions).
What one person might find ideal for them might not be the same for you. That’s why it’s best to educate yourself about your options before deciding.
How to get approved for a checking account with bad credit
Checking accounts for bad credit exist to help consumers who are ready and willing to improve. But there are still certain obstacles involved.
If you’re having trouble getting approved for a regular checking account, a “second chance” option is usually best. But if you either don’t have that option (perhaps you want to stay with your previous institution and they don’t offer this) or if you are having trouble, there are some things you can do.
Negotiate with your bank (or credit union) for reconsideration
Sometimes, all you need to do is ask for a second chance. People are often rejected from an account application based on an automatic process that checks only objective facts. If that’s happened to you, try to dispute the decision and get a manual review.
Common reasons that may get your application a second look include:
A sudden major illness
Unexpected layoff from work that wasn’t your fault
Check your ChexSystems report
Systems make mistakes – shock.
So… the report your bank receives from ChexSystems could be wrong. Check your report for anything that might be wrong.
Negative balances
Insufficient funds or unpaid fees/loans
Overdrawn accounts
Etc.
If you find something that doesn’t look right, you can speak to your bank directly to dispute it.
Bring your accounts up to date
This will help repair your credit and improve your odds of getting approved for a traditional checking account.
Alternatives to “second chance” checking accounts
There are several alternative options for consumers not interested in getting a checking account. Keep in mind that, while qualifying for these options may be easy, they do come with their own fees and limitations.
Prepaid debit cards
Prepaid debit cards are essential debit cards that you load with funds prior to use. Once preloaded, you can use a prepaid debit card just like any other debit card. This is a great option if you’re looking to do online shopping or make in-store purchases.
However, prepaid debit cards can be costly, coming with reloading and ATM withdrawal fees. Additionally, since they rely on the available funds in the card itself, the card will be declined automatically if there is not enough money on it.
Pros of prepaid debit cards:
Can be use for online and in-person transactions
Convenient for storing your cash in one place
No credit check required
Cons of prepaid debit cards:
Do not build or repair credit because, nor do they report to the credit bureaus
Various fees
No banking relationship or history to build up
Cashier’s checks or money orders
Similar to prepaid debit cards, these are decent options if you just need to have easy access to your funds, but not in cash form.
However, they share the same limitations as prepaid debit cards. Additionally, check-cashing services or businesses do charge a nominal fee as well.
Bottom line
Get a “second chance” checking account if you had poor credit or have had trouble qualifying for a bank account in the past. Even with the monthly fees, most checking accounts for bad credit end up being cheaper than relying on check-cashing places and prepaid cards.
Besides, many of the standard fees (service and opening, ATM, etc.) can be waived or avoided with careful use. And even the necessary ones may be worth it if your goal is to repair your banking history and credibility.
Quick tips for repairing your credit
That 3-digit score (usually placed somewhere between 300 and 850) matters. A lot, as it turns out. At least in the credit and banking world.
Unfortunately, many things can hurt that score. Fortunately, even if you have no credit or bad credit, you can take control now and fix it.
Here are some quick tips for repairing your credit score. For a more comprehensive post on rebuilding your credit, check out this post.
Bring your accounts up to date
Start by making payments – even if they’re late. It’s always better to pay back your bills.
Find and dispute negative marks on your credit report
Sometimes an institution will report something wrong. They might catch it, or they might not. So it’s better to get a copy of your report from Equifax, TransUnion, or Experian and check it out yourself.
You can also find a free copy of your credit score here.
Get a secured credit card
If your main purpose is to repair your credit, get a secured credit card. These act like regular credit cards, except you prepay the balance you can use. Every time you make an on-time payment, that activity gets reported to the credit bureaus. Over time, you’ll start to see a positive change.
Pay down debt
As a rule of thumb, always keep your credit utilization below 30%. If you have $9,000 in available funds (lines of credit, loans, etc.), never use more than $3,000 at a time.
Paying down debt – or going debt-free altogether – shows you are able to handle your money, which can lead to a favorable result in your credit score.
Keep open accounts, but avoid getting too many new ones
Opening new accounts can lead to hard inquiries. While they don’t last forever, hard inquiries can temporarily hurt your credit. On the flipside, if you already have a few accounts open, keep them open and in good standing.
Get some financial education
Banks and credit unions often offer free personal finance education to their members. Take advantage of budgeting apps and other financial resources to learn more about your credit and money management habits.
Getting a joint checking account with bad credit
In brief, some financial institutions, such as Peoples Cash Solutions, offer joint checking accounts.
It might help to have someone else on the account to help keep track of your joint finances, while building a good banking history. But make sure your partner is financially responsible and not likely to overdraw the account or go beyond what you expected.
Getting a checking account for bad credit while overseas
With so many expats in the world, it’s not uncommon to find one who needs a bank account… while living overseas.
Luckily, as long as you have a social security number and a domestic address, you can often do the entire application online. Try to find an option with 0 foreign transaction fees if you’re planning on using the account though!
Wrapping up
Many major lenders don’t offer “second chance” checking accounts… but there are still many that do – and in every state. While these accounts do not offer all the same services as regular bank accounts, remember you often have the option of upgrading to one after 6-12 months of active use.
Besides, checking accounts for bad credit come with benefits that individuals with poor credit may not be able to find elsewhere.
When choosing an account, look for an option that has:
Minimal or no monthly fees
No minimum balance (or one you can meet without problem)
Overdraft protection
Online bill pay and transfers
Unlimited/free check writing and debit card access
No ChexSystems or credit verification (note: some banks that use ChexSystems or verify your credit still have the option of a “second chance” checking account)
If you’ve been declined in the past for a bank account because of your history or credit score, you can always get things back on track.
But checking accounts for bad credit – while a great starting point – should not be the final destination. The next steps are to repair your credit and establish a strong banking history.