Best Second Chance Bank Accounts: A Guide to Rebuilding your Financial Health (2024)

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If a bank previously closed one of your bank accounts due to a negative account history, you might struggle to get a bank account at some financial institutions. Some banks and credit unions, however, provide second chance banking so you can still use banking services, regardless of your financial history.

We've reviewed over a dozen financial institutions. Here are our picks for the best checking accounts for people with a negative banking history. Our guide specifically highlights second chance banking with no monthly fees or low monthly fees.

Best Second Chance Bank Accounts

• Capital One 360 Checking
• Chime® Checking Account and Chime Savings Account
• Varo Bank Account and Varo Savings Account
• SoFi Checking and Savings
• Experian Smart Money
• Dora Financial Everyday Checking Account
• Dave Spending Account
• First Step Checking

All of the financial institutions on our list are protected by FDIC or NCUA insurance. Money is safe at a federally insured financial institution. When a financial institution is federally insured, up to $250,000 per depositor is secure in a bank account.

Compare the Best Second Chance Bank Accounts

Best Second Chance Bank Accounts: FAQs

Second Chance Bank Account Reviews

The best second chance bank accounts will give people with bad credit a chance to open bank accounts and earn interest without charging high monthly maintenance fees. Ideally, banks will avoid ATM fees and other types of fees, as well.

Here are the best second-chance bank accounts as picked by Business Insider editors in 2024.

Capital One 360 Checking

Capital One 360 Checking is notably one of our top picks from the best checking accounts guide. It doesn't charge monthly service fees, foreign transaction fees, or overdraft fees. You'll also have access to 70,000 surcharge-free ATMs through the Capital One, MoneyPass, and AllPoint ATM networks.

Capital One 360 doesn't use ChexSystems to assess your risk as a consumer when opening a bank account.

At Capital One, you'll also be able to open a high-yield savings account and CDs without having to worry about ChexSystems.

Capital One 360 Checking Accounts automatically decline overdrafts if you don't choose an overdraft service. The bank also charges a $2 fee if you use an out-of-network ATM.

Capital One 360 Bank Review

Chime Checking and Savings Account

The Chime® Checking Account and Chime Savings Account do not require a credit check or review by ChexSystems.

Chime also stands out because it doesn't charge monthly service fees, and you may open an online account from anywhere in the US.

Before you open a savings account, you're required to open a checking account. This is also an online-only account, so you'll have to be comfortable with online banks.

Chime Bank Review

Varo Bank and Savings Account

The Varo Bank Account, which is the bank's version of a checking account, is a great choice if you're looking for a second chance bank account with zero monthly service fees. It also offers early direct deposit.

Varo doesn't use ChexSystems to review your bank account history. You also don't need to worry about a credit check.

At Varo, you could also get a high-yield savings account with a competitive interest rate. The Varo Savings Account pays 5.00% APY on up to $5,000 if you receive direct deposits of $1,000 each month and keep a positive balance in the Varo Bank Account and Savings Account.

To qualify for the the Varo Savings Account, you must open the Varo Bank Account first. Varo is also an online-only financial institution so it doesn't have physical branches.

Varo Bank Review

SoFi Checking and Savings

SoFi Checking and Savings doesn't require a review of ChexSystems. You also might like this account if you're comfortable maintaining your checking and savings in one account.

SoFi is offering a cash bonus of up to $300 with qualifying direct deposit for eligible customers (offer expires 12/31/24).

The account works best if you set up a direct deposit. That way, you'll qualify for the cash bonus and the highest-tier interest rate on savings account balances.

SoFi Bank Review

Experian Smart Money

Experian Smart Money doesn't use ChexSystems to review your banking history. You also might like this account if you're looking for ways to build credit. Experian Smart is automatically linked to Experian Boost, which is a financial tool that allows you to build credit for making on-time payments for phone bills, utility bills, rent payments, and more.

The account also offers early direct deposits and a $50 bonus when you set up direct deposit.

You might prefer one of our other top picks if you want overdraft protection. If you make a transaction that would result in a negative account balance, Experian will deny the purchase.

Experian Smart Money Review

Dora Financial Everyday Checking Account

The Dora Financial Everyday Checking Account is Bank On certified, which means it meets the program's requirements of low costs and low fees. It's a great option if you'd like to open an online account with a $0.

Dora Financial may also stand out if you primarily speak Spanish. The platform's mobile app is available in English and Spanish.

Customer support may be limited since it's only available through the platform's mobile app or email. If you prefer telephone customer support, you might consider other accounts.

Doral Financial Review

Dave Spending Account

You might like the Dave Spending Account if you're searching for a banking option with budgeting features, rewards, and a high interest rate. You may set up individual personal finance goals or keep track of how much you spend in a specific category by creating a budget. Dave also has a unique feature called Dave Side Hustle. You can find remote work opportunities by setting up a profile through the app.

Dave is a mobile fintech platform with a bank account that doesn't require a credit check.

There's a $1 monthly service fee to use the Dave mobile app. If you don't want to deal with monthly fees, you might consider choosing one of our other top picks.

Dave Spending Account Review

The First Bank First Step Checking

First Step Checking might be ideal if you'd like to open an account with a brick-and-mortar bank. The First Bank is one of the largest community development financial institutions (CDFIs) to offer a second chance bank account in multiple states.

Compared to other second chance bank accounts at brick-and-mortar financial institutions, it has a low monthly service fee.

The First Bank only serves residents in Alabama, Georgia, Mississippi, Florida, and Louisiana. The account also doesn't include checks. You'll need to upgrade to a traditional checking account after six months to have access to check writing.

The First Bank Review

Bank Trustworthiness and BBB Ratings

The Better Business Bureau assesses businesses based on responses to customer complaints, honesty in advertising, and transparency about business practices.

Below are the BBB ratings of our favorite banking options.

Chime has an NR rating from the BBB because the BBB is reviewing Chime's page.

Varo received an A- rating because it has received a high volume of customer complaints on the BBB website.

Experian received a B- ratingfrom BBB because it has received a high volume of customer complaints, had government actions taken against the company, and has taken a long time to respond to customer complaints.

Dora Financial currently has an NR (No Rating) from the BBB due to insufficient information. Their partner bank, USALLIANCE Financial, received a D- rating because it has failed to respond to several customer complaints.

Dave has a B+ rating from the BBB due to a high volume of customer complaints.

Capital One, Chime, and Experian have been involved in a recent public controversies.

Capital One used to have an account called 360 Savings. In 2019, Capital One launched the new 360 Performance Savings Account, which paid a much a higher interest rate. Many customers thought their old savings accounts would transition into this new one, but in reality, they had to open a new 360 Performance Savings Account to earn the higher rate. So some customers have been earning a significantly lower savings rate for years.

In the lawsuit, the plaintiffs' lawyers allege that Capital One didn't inform 360 Savings customers that these were two distinct accounts, or that 360 Performance Savings paid a higher rate. However,Capital One wants this case dismissedbecause it claims people had every opportunity to learn these facts on their own. This case is still ongoing.

In 2024, the Department of Financial Protection and Innovation entered into a consent order with Chime, which required Chime to pay $2.5 million. DFPI claimed that Chime wasn't properly handling customer complaints. Through the consent order, Chime agreed to make reforms to its customer service procedures.

In 2023, the Consumer Financial Protection Bureau required Chime to pay a total of $3 million, with $1.5 million going to consumers. The CFPB says that Chime misrepresented the time and fees involved in some of its transfers.

In 2023, Experian was required to pay$650,000 in a settlement with the Federal Trade Commission. The FTC claimed that Experian was sending emails marketing additional products to customers without giving them an option to unsubscribe. Experian did not admit wrongdoing by settling.

In November 2022,Experian was required to pay a total of $13.67 million regarding two settlementsover data breaches that occurred in 2012 and 2015. The 2015 breach occurred when an authorized person obtained access to personal information in the Experian network, primarily affecting people who applied for T-Mobile services between September 2013 and September 2015. The 2012 breach involved identity theft.

Understanding Second Chance Banking

We've provided information on what second chance banking is and whether you would qualify for it to help you decide whether opening a second chance bank account is right for you.

A second chance bank account is a type of checking account for people who have a bad enough banking history that they can't open standard accounts. Some second chance bank accounts are savings accounts, although they probably won't offer as high an annual percent interest as the best high-yield savings accounts do. Generally, the banks that offer second chance bank accounts don't use ChexSystems to check your credit history, so you don't need a good credit score to open these accounts.

If someone has a history of overdrafting, not paying fees, or having a negative balance, they might not be able to open a regular bank account. Second chance bank accounts let them have an account they can use to build up a good banking history and, eventually, qualify for standards accounts and products again.

Features of Second Chance Bank Accounts

Basic Account Functions

Second chance bank accounts generally function a lot like regular bank accounts: they provide a place for you to keep the money that you plan on spending, whether that's for regular expenses like rent, mortgages, or utilities or for purchases like groceries.

Some, but not all, second chance bank accounts also allow you to use debit cards and checks for purchases. Depending on the bank you choose, you might also be able to bank online using mobile banking apps.

Monitoring and Restrictions

Some second chance bank accounts don't offer all of the features you'd expect from a checking account. They might not let you use checks or debit cards to make sure you don't accidentally overspend. They also might not let you overdraft. While this means you won't rack up overdraft fees, the best banks for overdrafts offer overdraft protection.

Second chance bank accounts might also come with higher monthly fees. Check with the bank you're planning on using to see what fees and features their second chance bank account comes with.

Benefits of Second Chance Banking

If you can't open a standard checking account, second chance bank accounts can be invaluable when it comes to paying bills and building a strong financial history.

With a checking account, it's much easier to save and spend money. You can easily cash checks you receive, you don't need to keep track of paper bills for everything, and it's easier to keep track of your funds as you're learning how to budget.

Second chance accounts also help you build up a healthier banking history. If you can keep your second chance bank account in good standing for six to 12 months, you'll generally be able to start opening standard accounts with more features and lower fees. You can also start working on savings goals, like saving up to buy a house, which in turn can help your credit history.

How to Find and Open a Second Chance Bank Account

When looking for a second chance bank account, check credit unions and community banks near you. Both of these are more likely to offer second chance bank accounts, as they're more likely to offer programs supporting financial inclusivity. Some larger banks also offer second chance bank accounts, so make sure to read up on several different banks to see which account is right for you.

When deciding which bank to use, keep an eye out for service fees and features. In general, you'll want an account with a lower service fee, especially if you've struggled with paying fees in the past. However, you'll also want to decide which features, like early direct deposit, might be important enough to you to pay a slightly larger fee.

Otherwise, opening a second chance banking account is similar to opening a checking account. The only place where it differs is in identification requirements; depending on the institution, second chance bank accounts are more likely to allow non-standard types of ID, such as foreign IDs or passports.

Tips for Successfully Managing a Second Chance Bank Account

Staying Within Limits

When you have a second chance bank account, it's important to make sure you're practicing good banking habits so you can build up your history. A lot of the tips for how to save money apply here. Make sure you're not overdrafting your account or trying to make purchases you can't pay for. Also make sure to pay any fees that come with your account on time, so you're not building up unpaid fees.

Graduating to a Standard Account

After a certain time period, usually between six to 12 months, you'll be able to switch from a second chance account to a standard account. Check with your bank to see how long that period is, and make sure to switch to a standard account when you can to access better features and a potentially lower fee.

Why You Should Trust Us: Expert Advice on Choosing the Best Bank Account

To learn more about what makes a good bank or credit union and how to choose the best fit, four experts weighed in:

• Tania Brown, certified financial planner and vice president of coaching strategy at OfColor
• Roger Ma, certified financial planner withlifelaidout®and author of"Work Your Money, Not Your Life"
• Sophia Acevedo, certified educator in personal finance, banking editor, Business Insider
• Mykail James, MBA, certified financial education instructor,BoujieBudgets.com

The things you should look for in a second-chance bank account are about the same as any other bank account. Here are a few questions our experts have shared that can help you figure out if a specific bank account is right for you:

• Are you clear on the fees, and whether you can waive them?
• Are you confident in bank security, and how accessible your money is in-person or online?
• Is the bank FDIC-insured?
• How easy is it to get ahold of customer service, and when are they available?
• How easy is it to transfer money in and out of your account?

Methodology: How We Chose the Best Second Chance Bank Accounts

At Business Insider, our goal is to create useful content that helps you make good decisions about your money. We recognize every person has distinct preferences, so we provide ample options to help you find the most suitable financial product or account.

We research extensively to make sure you know the standout features and limitations of a financial institution.

First, we researched to find financial institutions that offered second chance bank accounts. We looked at our Hispanic American-owned banksand credit unions guide, our Black-owned banks and credit unions guide, best banks of 2024, and CDFI reviews to compile a list of institutions to consider.

Then, we reviewed second chance bank accounts to find the most-well rounded banking options. Our top picks have low minimum opening deposits and low monthly services fees. Several of our favorite accounts can be easily opened from anywhere in the U.S.

See our full ratings methodology for checking, business checking, savings, and money market accounts »