Banks and credit unions that offer second chance accounts

Second chance checking accounts are offered by specific banks and credit unions that accept customers with negative banking history — people who have overdrafted repeatedly, bounced checks, or been reported to ChexSystems or Early Warning Services. These institutions exist because they see customers the major banks turn away as manageable risk, not no risk.

Chime, LendingClub, and Varo are online banks that market second chance accounts directly and typically have no credit check or ChexSystems review. Axos Bank, Discover Bank, and E-LOAN also accept customers with banking problems. These online options tend to have lower or no monthly fees and no minimum balance requirements, which matters when you are rebuilding.

Local and regional credit unions often have more flexible policies than national banks. Call your nearest credit union and ask whether they accept members with ChexSystems records or previous overdraft issues. Credit unions are member-owned, so they sometimes take a longer view of risk than a chain bank would. Some credit unions will waive the ChexSystems check entirely if you have a local sponsor or if you open a savings account first.

Community banks — smaller independent banks in your area — also tend to be more forgiving than Chase or Bank of America. Ask to speak with a manager rather than a teller; they have discretion that a phone line does not.

Key Takeaways

  • Online banks like Chime and Varo often skip ChexSystems checks entirely and charge no monthly fees, making them the fastest route if you have recent banking problems.
  • Local credit unions and community banks have more flexibility than national chains and may waive background checks if you open a savings account or have a member sponsor.
  • Second chance accounts usually come with lower limits on debit card transactions and daily transfers to protect the bank from loss.
  • You will need a government ID and proof of address; some banks also ask for a phone number and Social Security number to verify your identity.
  • Fees vary widely — some second chance accounts charge $5 to $15 monthly, while others charge nothing, so compare before you open.

What ChexSystems means for your account search

ChexSystems is a database that banks use to check your banking history. If you have unpaid overdraft fees, multiple bounced checks, or fraud reports, you will likely be listed. Being on ChexSystems does not bar you from banking — it just means most large banks will decline you automatically.

You can request your ChexSystems report for free at chexsystems.com. The report shows what banks see when they check you. If there are errors — a closed account still listed as open, or overdrafts you already paid — you can dispute them directly on the site. Disputes usually resolve in 30 days.

Some banks will still open an account for you even if you are on ChexSystems, especially if the negative items are older than two years or if you can show you have resolved the underlying problem. When you call a bank or credit union, be direct: tell them you have a ChexSystems record and ask whether they will consider you anyway. Many will.

How to compare second chance accounts before opening

Monthly fees are the first number to check. Some second chance accounts charge $5 to $15 per month; others charge nothing. Over a year, that difference adds up. Look at what you get for the fee — some banks waive the fee if you set up direct deposit or keep a minimum balance, which may be easier than paying monthly.

Transaction limits matter more with second chance accounts than with regular checking. Many second chance accounts cap debit card purchases at $500 to $1,000 per day or limit you to 6 transfers per month from savings. If you need to move money frequently or make large purchases, these limits will frustrate you. Read the account agreement before you open.

Overdraft policies vary. Some second chance accounts decline transactions that would overdraft you (which protects you from fees). Others allow overdrafts but charge $25 to $35 per overdraft — sometimes multiple times per day. Ask the bank directly what happens if you try to spend more than you have.

ATM access and branch locations matter if you use cash regularly. Online banks have no branches but often reimburse ATM fees. Credit unions and community banks have physical locations but may charge you to use an ATM outside their network. Know which one fits your life.

Documents you will need to open an account

Every bank requires a government-issued photo ID — a driver's license, passport, or state ID card. They also need proof of your current address, which can be a utility bill, lease, or bank statement dated within the last 60 days. Some banks accept a phone bill or insurance statement instead.

You will need your Social Security number. Banks use this to verify your identity and to report account activity to credit bureaus. If you do not have a Social Security number, some credit unions and community banks will open an account using an ITIN (Individual Taxpayer Identification Number) instead, though this is less common.

A phone number is standard. Some banks call to verify your identity before opening the account. Have a working number ready.

Opening an account online versus in person

Online banks like Chime and Varo let you open an account entirely on your phone or computer in 10 to 15 minutes. You upload photos of your ID and proof of address, answer identity verification questions, and the account opens the same day or the next business day. This is the fastest route if you need a checking account quickly.

Credit unions and community banks usually require you to visit a branch in person. Bring your ID, proof of address, and Social Security number. A manager will review your ChexSystems record (if they check it at all) and tell you on the spot whether you are approved. This takes 30 minutes to an hour. The advantage is that you can ask questions and negotiate — some managers will waive fees or overlook older negative items if you explain your situation.

Some credit unions and community banks now offer hybrid opening: you start online and finish in person, or vice versa. Ask when you call.

Building credit while you use a second chance account

A second chance checking account itself does not build credit — banks do not report checking account activity to credit bureaus. But using the account responsibly sets you up to build credit later.

Many second chance accounts come with a linked savings account or offer a secured credit card. A secured credit card requires a cash deposit (usually $200 to $500) that becomes your credit limit. When you use the card and pay the bill on time every month, the card issuer reports to credit bureaus. After 6 to 12 months of on-time payments, you can often graduate to a regular credit card and get your deposit back.

Some credit unions offer credit-builder loans: you borrow a small amount (often $500 to $1,000) that the credit union holds in a savings account while you make monthly payments. When you finish paying, you get the money. The payments are reported to credit bureaus, so this builds your credit score while you save.

What to do if you are denied

If a bank denies you, ask why. The answer matters. If they say you are on ChexSystems, you know the issue and can try a bank that does not check ChexSystems. If they say you have an unpaid overdraft or fee from a previous account, you can sometimes resolve it by paying the bank what you owe — many banks will then reconsider you.

If you were denied because of an error in your ChexSystems report, dispute it immediately at chexsystems.com. Once the error is removed, reapply to the bank that denied you.

If you have been denied by multiple banks, a credit union is your next move. Call several credit unions in your area and ask to speak with a manager. Explain your situation honestly. Credit unions have more discretion than banks and are more likely to work with you if you show you are serious about rebuilding.

Frequently Asked Questions

Will opening a second chance account hurt my credit score?

Opening a checking account does not affect your credit score because banks do not report checking accounts to credit bureaus. However, if the bank does a hard credit pull (which is rare for checking accounts), it may lower your score slightly for a few months. Ask the bank before you open whether they pull your credit.

Can I get a second chance account if I still owe money to my old bank?

Most banks will not open an account for you if you have an unpaid overdraft or fee at another bank, especially if it is still listed in ChexSystems. Your best option is to pay what you owe first, then apply. If you cannot pay the full amount, call the bank and ask whether they will settle for less or set up a payment plan.

How long does it take to open a second chance account?

Online banks approve and open accounts the same day or next business day. Credit unions and community banks usually take 24 to 48 hours after you visit in person. You can usually start using the account (debit card, transfers) within a few days of opening.

Do second chance accounts have overdraft protection?

Some do, some do not. Many second chance accounts decline transactions that would overdraft you, which means you cannot spend money you do not have. Others allow overdrafts but charge high fees ($25 to $35 per overdraft). Read the account agreement or call the bank to ask what their overdraft policy is before you open.

Can I switch to a regular checking account later?

Yes. After 6 to 12 months of using your second chance account responsibly — no overdrafts, no bounced checks, no negative reports — you can usually upgrade to a regular account with the same bank or move to a different bank. Your ChexSystems record will still exist, but older negative items matter less over time.