Would you like to open a checking account, but you’re worried that your bad credit and past banking history might get in the way? With these issues, it can be difficult to open a new bank account.
18 Best Bank Accounts for Bad Credit
Regardless of your banking history, there are numerous banks and credit unions that offer bad credit checking accounts, all with unique features and benefits.
1. U.S. Bank
- Up to $450 bonus
- Monthly service fee can be waived
- Over 40,000 fee-free ATMs
- $25 minimum deposit
2. SoFi
- Up to $300 sign-up bonus with direct deposit
- No minimum opening deposit
- Earn up to 4.60% APY
- Over 55,000 fee-free ATMs
- Early pay with direct deposit
3. First Tech Federal Credit Union
- 5.00% APY on savings up to $15,000
- ATM rebates up to $15 per month
- No monthly fees or minimum balance requirements
- Over 30,000 fee-free ATMs
4. Current
- Build credit and earn points with every swipe
- No minimum deposit or monthly fee
- Get paid up to two days faster
- Up to 4.00% on savings
6. GO2bank
- 4.50% APY on savings up to $5,000
- No minimum deposit
- Build credit with no annual fees
- Overdraft protection up to $200
7. Walmart MoneyCard
- No monthly fee with direct deposits of $500 or more
- Earn up to 3% cash back on purchases
- Overdraft protection covering up to $200 with eligible direct deposits
- 2% APY on savings
8. Chase
- $100 bonus after 10 purchases in 60 days
- Over 16,000 fee-free ATMs
- $4.95 or $0 monthly fee
- No credit check or ChexSystems
9. Navy Federal Credit Union
- Get up to $500 cash advance in 5 minutes or less
- No minimum balance required
- Earn 4.00% APY
- Get paid up to two days early
10. TD Bank
- $25 monthly fee can be waived
- Free access to over 4,000 ATMs
- Two overdraft fees reversed per year
- Earn interest on your balance
What is a bank account for bad credit?
A bank account for bad credit is tailored for individuals with an unfavorable banking history, often denied by traditional banks due to issues like bounced checks, overdrafts, and unpaid negative balances.
Bad credit bank accounts, provided by some financial institutions, include essential services such as debit cards, online and mobile banking, and check-writing abilities. Key advantages of these accounts are their ease of opening, low fees, and no credit checks or ChexSystems reports.
How Banks Evaluate New Account Applications
When applying for a bank account, banks have specific criteria to decide eligibility and the type of account offered. Your ChexSystems report provides them with an important insight into your banking history. This report contains details of past banking behaviors like unpaid balances, overdrafts, and any fraudulent activities associated with closed accounts.
A negative ChexSystems record can complicate account opening, leading to potential application rejection or restricted account types. Additionally, while some banks may review your credit history from major credit bureaus like Equifax, Experian, and TransUnion, they primarily rely on ChexSystems for bank account applications, unlike credit card issuers and lenders who focus more on your credit report.
What is ChexSystems?
ChexSystems is a consumer reporting agency used by banks to screen customers. It records your past banking activities, including overdrafts, bounced checks, unpaid fees, and negative balances. A negative record in ChexSystems can impact your ability to open a new bank account.
Can you open a bank account with no credit check?
Opening a no-credit-check bank account is easier than ever, with plenty of reliable banking services to choose from. There are two types of bank accounts for bad credit: banks that don’t use ChexSystems and second chance checking accounts.
Banks that Don’t Use ChexSystems
Some banks simply do not use ChexSystems as part of the application process. These banks offer no-credit-check bank accounts for people with bad credit or a negative banking history.
The good news is that these checking and savings accounts come with the same features as regular bank accounts offered to everyone else. You can expect to have access to online banking, debit cards, bill pay, and mobile deposit features, allowing for convenient management of your finances just like any traditional bank account.
Second Chance Bank Account
Second chance bank accounts offer individuals with a problematic banking history an opportunity for financial rebuilding. While these accounts, also known as opportunity checking or fresh start checking accounts, may involve a credit check or ChexSystems review, the focus is on giving the customer a new beginning.
They typically include a monthly maintenance fee. Similar to regular bank accounts, overdraft protection, mobile check deposit, and online bill pay are often available. Responsible use of a second chance checking account can lead to an upgrade to a standard checking account.
What to Look for in a Bad Credit Checking Account
If you’re an individual or a small business owner struggling with poor credit history and seeking a checking account that aligns with your needs while aiding in rebuilding your financial reputation, here are some key factors to consider:
- No credit checks: Look for banks or credit unions that don’t use your credit report or ChexSystems record when opening a checking account. Many also offer “second chance” or “fresh start” checking accounts tailored for individuals with poor credit or past banking issues, providing an opportunity to rebuild your financial standing and potentially upgrade to a traditional checking account later.
- Low or no minimum balance requirement: Look for accounts without minimum balance requirements to avoid fees and maintain more of your funds, which is important when rebuilding credit.
- Reasonable account fees: Pay attention to the fees associated with checking accounts, especially relevant for those with bad credit. Compare monthly fees and other common fees. Many online banks offer accounts with minimal or no monthly fees, sometimes contingent on maintaining a minimum balance or setting up direct deposit.
- Online and mobile banking features: Ensure the account offers features that allow you to check your balance, transfer funds, pay bills, and deposit checks remotely.
- Account alerts and notifications: Opt for accounts with customizable alerts for low balance, large transactions, or unusual activities. This feature helps in tracking spending and avoiding potential overdraft fees.
- Overdraft protection: Seek accounts that offer this feature to minimize the impact of overdraft fees, a significant consideration for people with bad credit. Some banks may offer linked accounts, lines of credit or small-dollar loans as options to cover overdrafts, which can prevent high fees and additional financial strain.
- FDIC or NCUA insurance: Confirm that the account is insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). This insurance protects your deposits up to $250,000 per account holder in the event of bank or credit union failure.
Bottom Line
Having poor credit doesn’t mean you can’t get a bank account. But, it does mean that your selection will be relatively limited. We also show you how to clear your name and remove yourself from ChexSystems so that you can get a bank account anywhere.
Rebuilding your financial standing will take time. Meanwhile, some of the banks we’ve listed above offer bank accounts that are just as good, if not better, than anything currently available on the market. So, it’s a good idea to start with one of those.