Second chance checking is a banking practice that allows consumers to open a checking account, sometimes with limited privileges, despite a negative ChexSystems report.
Most banks and now credit unions, run a ChexSystems report when opening checking accounts and some banks will pull a credit report as verification of your identity.
More frequently banks and credit unions are using Early Warning Services (EWS) in addition to ChexSystems. Early Warning Systems exchanges consumer information between organizations to detect deposit, payment and identity fraud in the financial systems. They collaborate with many institutions in exchanging and gathering information.
Finding a Second Chance Bank
Second chance checking allows consumers who are in ChexSystems to open a new checking account. Most often those items in ChexSystems must be paid; or, if they are not paid, they must be a small amount. Inquiring with a bank about second chance checking is the best way to find a new account. They may have a special account especially for consumers in ChexSystems.
Fraud Notation in ChexSystems
When fraud is indicated in ChexSystems, it may be more difficult to open a new checking account until ChexSytems removes the notation either through the dispute process or you reach the end of the 5-year reporting period.
A fraud notation could possibly prohibit you from opening an account. In this case your options may be limited to a prepaid card such as the UPside Prepaid Visa which works like a checking account with a free direct deposit service and the ability to write personal checks.
You can even stop payment on a check just like a traditional checking account. The fees are very low compared with other prepaid cards and they are the only prepaid card with a cash back rewards program.
Despite ChexSystems, a branch manager can always override a negative report and allow you to open an account. The only problem with a system override at the branch level is that once your account is up and running, the loss prevention department may decide to close it at a later date if they determine you are a high risk customer. They will not warn you if they decide to close it.
Banks Sweeps
Banks sometimes perform what is known as “sweeps” where the loss prevention department goes through new accounts, runs ChexSystems and decides to close accounts based upon any negative information contained in the report.
Sweeps are very problematic. This practice is rather unfair and can cause huge headaches. They are unannounced and your bank account is frozen. Debits and credits are returned. If you have a check, automated payment or even a direct deposit coming through it will be returned.
The funds in your account can be put on “freeze” for up to thirty days. If this happens go into your branch and speak with a manager immediately. There is no federal law that says a bank can indiscriminately hold your money for thirty days. When bank managers are pressed on the issue they usually cave.
No ChexSystems Banks
Sweeps are a good reason to always have more than one bank account when you’ve been in ChexSytems or you are currently in ChexSystems. At least have a back-up savings account.
The High Yield Savings with the Capital One 360 Savings Account has no hidden fees or service charges and no minimum deposit. There is no ChexSystems with the Capital One 360 Savings Account; however, they verify your identity by making a small deposit in an existing checking account at another banking institution. Open your online savings account today!
The Capital One 360 Checking Account is not only an above average checking account because it is an Interest Earning Account but for other reasons such as: (1) No ChexSystems; (2) No Overdraft fees; (3) No ATM Surcharge; and (4) No Monthly Fees.
