Best Banks and Bank Accounts for People with Poor Credit
For those with a poor credit, opening a bank account may not be the easiest road to navigate. Before you open an account, banks run a thorough check of your banking and financial history, so if they find any issues with it, your application is automatically rejected. In such cases, bad credit is usually the number one reason why people cannot open bank accounts.
How to open a checking account with poor credit?
However, not all hope is lost. There are some great banks for poor credit which will accept your application even if your credit score is below average. How is this possible? Well, competition between banking institutions are getting fiercer by the day and many major and well-known banks in the country are now offering special bank accounts for bad credit , known as second chance bank accounts.
What is a second chance bank account?
Unlike the opening process for normal checking accounts where ChexSystems is used, opening a special bad credit bank account does not require that banks use ChexSystems. This means that banks do not have access to your banking history, and are not required to check if you have bounced checks, if you’ve had overdrafts, if you’ve had to pay a lot of bank fees, etc. These special bank accounts for poor credit are known as second chance bank accounts.
What makes second chance bank accounts so ideal if you have a low credit score is that applicants are not screened to decide if their application will be accepted or rejected. Instead, as the name suggests, they are specifically meant for those with bad credit, and have to prove to financial institutions that they can manage their finances and account responsibly.
Best second chance bank accounts
Second chance bank accounts for bad credits are designed in such a way that they can help account holders regain their financial footing and hopefully improve their credit score, while still having access to many of the usual benefits of a traditional bank account.
Below, we outline the best banks for people with low credit score, and how opening a second chance bank account with them can help you better manage your finances. In other words, this list will help you understand the benefits of second chance bank accounts provided by each bank.
1. Axiom Bank
Axiom Bank, which is based in Central Florida, offers a special checking account for people with bad credit score. This account is known as Opportunity Checking. Account holders are required to pay a monthly fee of $10, and the minimum deposit at the time of opening the account is just $25.
Just like traditional bank accounts, you also have access to online banking facilities with your Opportunity Checking. You will also be provided an Axiom Debit MasterCard, which you can use like any other debit card. In addition, Axiom Bank has an extensive online library of various resources patrons can refer to for financial education purposes.
BBVA Compass Bank is a well-known name in several states, available in the states of Texas, Alabama, Arizona, Colorado, Florida, California and New Mexico. Even though the bank is committed to helping people with bad credit scores regain their financial footing, they don’t have one special account dedicated for such applicants. Instead, they have various accounts such as the Easy Checking account, the Compass ClearChoice Free Checking and ClearChoice Savings, all of which are considered second chance accounts.
The minimum opening deposit is $25, and the best part is that they do not charge any monthly fee. However, there are certain fees you will have to make sure to avoid, such as a $5 if your account stays dormant for too long (only in Arizona, Alabama and New Mexico), an insufficient funds fee of $38 in California, etc. You will also receive a free debit card when opening your account.
3. Woodforest National Bank
If you live in Georgia, Alabama, Illinois, Texas, Ohio, Maryland, Louisiana, New York, Virginia, West Virginia, Mississippi, Indiana, North Carolina, South Carolina, Pennsylvania, Kentucky or Florida, then you can open a second chance checking account with Woodforest National Bank.
Like many other banks, the minimum opening deposit for your poor credit checking account is $25, and you will also have to pay $9 as a set-up fee. There is a monthly service charge of $11.95. If your account stays dormant for six months, you will have to pay a fee of $15. You will also have to pay $15 for your debit card.
4. Wells Fargo
Wells Fargo is a trusted name in the world of finance and banking, and people with low credit scores can open an Opportunity Checking Account with them. There is a $10 monthly charge, but you won’t have to pay this if you use your debit card to pay for ten or more purchases every month, or if you receive a total amount of $500 or more as direct deposit per month, or if your daily balance is at least $1500.
The minimum opening deposit is $25, and you will have access to mobile and online banking, just like a normal checking account. This is especially great for people with bad credit because you have access to "Spending Report with Budget Watch" so you have a better understanding of your expenses.
Also See: Debit Cards for People with Poor Credit
5. PNC Bank
PNC Bank offers a program known as Foundation Checking, designed specifically for opening checking accounts for bad credit. You are required to first go through Foundations of Money Management course designed by the bank, which is valuable for people who have troubles effectively managing their finances.
You will have to pay a monthly fee of $7, and if you want to receive your monthly paper statement, you will be charged a fee of $2 as well. Once you are back on track and your credit improves, you can even open a regular checking account. In fact, PNC Bank encourages Foundation Checking account holders to inquire about his every six months.
It is important to note that there may be times ChexSystems record inaccurate information regarding your banking and financial history. If you feel that this is the case, you can request a consumer report once every year from ChexSystems for free. This will help you identify if there have been any mistakes.
Things to consider before you open an account?
- How much do you have to deposit to open the account?
- How high are the monthly maintenance fees on the account?
- Is a direct deposit required?
- Will there be auto transfers to a savings account?
- Do you plan to stay with this bank for the foreseeable future?
Why you need a bank account even if you have poor credit
Sooner or later in your life you are going to need an open checking account to account for your money. Banks are a great place to keep all your money in one place and accounted for. All your transactions are available for viewing in case you ever wonder where all your money is going. Also, having a relationship with a bank is a good card to have up your sleeve. When you want to buy a house or a car a quick trip to your local bank might be all you need to get approved.
Next: $500 Loans Poor Credit