If you’ve recently been denied a new bank account, you’re not alone. Around 15% of people applying for new checking accounts are rejected daily.
A common reason for this is a negative ChexSystems listing. However, you can still open a checking account at a bank or credit union that doesn’t use ChexSystems.
Below is a comprehensive list of banks and credit unions that offer checking accounts to anyone, regardless of their banking history. With these banks, you can open a checking account online in less than 5 minutes.
Top 10 Banks That Don’t Use ChexSystems
What is ChexSystems?
If you’ve never heard of ChexSystems before, don’t worry, you’re not the only one. Most people only know about ChexSystems once they find out they’re listed in it.
ChexSystems is a consumer reporting agency that specializes in tracking banking and credit history for checking and savings accounts. It’s a system that banks use to check the history of new account applicants and determine whether to approve them for a bank account.
If you have a history of mishandling bank accounts, such as bounced checks or unpaid fees, it can show up on your ChexSystems report and make it difficult for you to open a new account.
The vast majority of banks and credit unions turn to ChexSystems to help them make decisions about whether to give new customers a checking account.
Consumers listed in ChexSystems may have a negative banking history. It could be something as grievous as check fraud or as innocent as forgetting to pay an overdraft fee.
Either way, it can cause a financial institution to turn you down for a new bank account.
To learn more, see our article, “What is ChexSystems?”
Telecheck & Early Warning Services
Some non-ChexSystems banks may still review other records, such as those maintained by TeleCheck or Early Warning Services (EWS). If you’re listed with either, you may still be rejected for a bank account.
However, there are banks that do not reference any of these. It is also possible to have a record with ChexSystems but not with EWS or TeleCheck.
When applying for a bank account, it’s uncommon, but some banks and credit unions may also review your credit report with one or more of the major credit bureaus, such as Equifax, Experian, or TransUnion.
They may use this information to make a decision on whether to approve the bank account or to set certain conditions such as deposit limits, minimum balance, or fees.
What to Do Now
There aren’t many banks that offer checking or savings accounts to people with bad credit. In fact, eFunds claims that over 9,000 banks in the US turn to ChexSystems to make screening decisions. Those 9,000 banks include over 100,000 branches in all. That’s over 80% of all financial institutions in the US.
While 80% may seem like an overwhelming figure, it should actually give you hope because it means that 20% are banks that don’t use ChexSystems.
So if you’re looking to open a checking or savings account right now, there is still hope.
You just need to choose one that doesn’t look at your ChexSystems records. For that, you have two different banking options: non-ChexSystems banks and second chance banking.
Banks That Don’t Use ChexSystems vs. Second Chance Banking
Here is a quick comparison of a non-ChexSystems bank account vs. a second chance bank account.
Banks That Don’t Use ChexSystems
- Your ChexSystems record will not be checked when you are applying for a bank account.
- Balance requirements should be low or nonexistent.
- Monthly maintenance fees are sometimes required.
- Overdraft protection may be offered.
- You will be able to enjoy the same services you would with a regular bank account, such as online banking and bill pay.
Second Chance Checking Account
- Your ChexSystems record is usually checked when you apply.
- Sometimes you may need to pay maintenance fees.
- You may be able to get overdraft protection.
- After you establish trust, you will be able to get a regular checking account.
- Since second chance banks do check your ChexSystems report, they know a little more about you. This may lead them to impose some other requirements. For example, you might need to take a personal finance class.
Both options offer a chance to resume banking activities like writing checks and using a debit card for purchases. There are not many substantial distinctions between the two.
See also: Credit Unions That Don’t Use ChexSystems
Other Alternatives to Banking Without ChexSystems
Here are a few other alternatives, but in most cases, we don’t recommend them.
- Prepaid debit cards – A prepaid debit card can be loaded with a certain amount of money, and can be used to make purchases or withdraw cash from ATMs. It’s used just like a credit card and the fees are not as high as they once were. Some prepaid cards even come with online bill pay, free ATM withdrawals, and more.
- Secured credit cards – Have some cash you can use as collateral? Use it to get a secured credit card. Be prepared for high interest rates and fees as well as smaller credit limits with these credit cards.
- E-wallet – You can try signing up for an online service like PayPal, Venmo, Zelle, Apple Pay, Google Pay, or Samsung Pay. Some of them offer debit cards if you meet certain criteria.
- Brokerage accounts – Brokerages do not run ChexSystems, so you may be able to qualify for a money market account even if you don’t qualify for a checking account. The balance and deposit requirements are often substantial, however, so you will need to be prepared for that.
- Foreign bank accounts – This option is obviously far from convenient, but it is still something to consider, especially if you live near the Canadian border. There are some Canadian banks that will allow US citizens to open a bank account.
While these options could provide temporary relief, the associated balance requirements, fees, and functional constraints can make it challenging to achieve financial stability in the long run.
Can I dispute items on my ChexSystems report?
If you have concerns about the accuracy of your ChexSystems report, you are entitled to dispute any information it contains. The Fair Credit Reporting Act (FCRA) empowers consumers to challenge inaccurate or incomplete information in their credit reports, including ChexSystems reports.
However, the process of disputing ChexSystems reports can be difficult, especially if the information on your record is correct. For instance, you may have been added to ChexSystems for a minor infraction like failing to pay a small overdraft fee. While it may seem unjust, simply requesting removal of the record may not be enough to get it expunged from your report.
It’s essential to remember that ChexSystems is not concerned with fairness or whether the information it holds is relevant or up to date. If a record is on file, it will stay there for five years from the date of the infraction if your dispute is unsuccessful.
How to Dispute ChexSystems
To initiate a dispute, you should contact ChexSystems and request a free copy of your ChexSystems report. Review the report for any inaccuracies or incomplete information and gather evidence to support your dispute. Then, draft a letter to ChexSystems that outlines your dispute and provides any supporting documentation. Be sure to keep copies of all documents for your records.
ChexSystems must investigate your dispute and respond to you within 30 days, providing a written report of its findings. If ChexSystems determines that the information is incorrect or incomplete, it will correct or delete the record from your report. If it does not agree with your dispute, you can add a statement to your report explaining your side of the story.
Regardless of the outcome of your ChexSystems dispute, we recommend applying for a non-ChexSystems checking account in the meantime. The dispute process can be time-consuming and may take several weeks or even months before your record is cleared.
What to Look for When Choosing a Checking Account
Choosing the right checking account is crucial to managing your finances effectively. Consider these factors when searching for an account that matches your requirements and supports your financial well-being.
- Low or no balance requirements: Look for a checking account that doesn’t impose fees or penalties for not maintaining a minimum account balance. This offers you more flexibility and control over your finances.
- Low or no monthly fee: If possible, choose a checking account with no monthly service charge to avoid unnecessary expenses. Every dollar saved counts when working towards financial stability.
- Free debit card: Opt for a bank that offers a free debit card as part of their account package. This will allow you to make transactions and access free ATM withdrawals within the bank’s network without incurring additional fees. Some banks even provide the option to personalize your debit card, adding a touch of uniqueness to your banking experience.
- Free ATM access: Avoid costly ATM fees by selecting a bank that offers free access to a wide network of ATMs in your area. This convenience can save you both time and money in the long run.
- Option to upgrade: Look for a bank or credit union that offers the possibility of upgrading from a second chance checking account to a traditional checking account after a specific time. This shift can improve your financial situation and provide greater opportunities for managing your money.
- High acceptance rate: Remember that ChexSystems, TeleCheck, and EWS are just a few of the agencies that might have a file on you. Apply at a financial institution with a higher acceptance rate, so your past banking record doesn’t impede your banking future.
- Online banking features: Ensure that your checking account comes with a comprehensive suite of online banking features, such as electronic statements, account balance monitoring, bill payment, fund transfers, and more. Mobile banking capabilities, like remote check deposits, can further streamline your banking experience.
- Additional perks (optional): A bank’s decision not to use ChexSystems doesn’t mean the account should lack extra features. Look for deposit accounts that offer perks like cashback rewards, savings programs, or budgeting tools to enhance your overall banking experience.
- Transparency: – Many customers end up in ChexSystems due to unclear policies and terms from their banks. Choose a financial institution that prioritizes transparency, ensuring you fully understand their rules and fees to avoid potential issues.
- Customer service: – Exceptional customer service is crucial when selecting the right bank. It can make the difference between quickly resolving an issue and inadvertently ending up in ChexSystems again. Research customer reviews and experiences to make an informed decision.
Best Practices for Banking
After successfully opening a new checking account and resuming transactions, you may breathe a sigh of relief. However, it’s crucial to keep in mind that certain risks still exist.
Issues to Lookout For
- The bank could view your ChexSystems record after opening your account. Perhaps they just started using ChexSystems and now they want to screen all customers. This could result in account closure.
- Certain actions, even when performed without ill intentions, could inadvertently lead to a negative entry in ChexSystems, impacting your banking history. For example, something as innocent as ordering checks can cause problems.
- If you do not keep your account in good standing, the bank might decide to close it, just as they would with a regular customer. It might take fewer red flags in your case however for the institution to decide to take action.
Effective Strategies for Safeguarding Your Bank Account
Here are some tips and best practices to help you protect your bank account, maintain a positive relationship with your bank, and avoid ending up in ChexSystems.
- Avoid overdrawing your account: To maintain a healthy account balance and avoid any potential overdraft fees, always keep track of your spending and ensure you have enough funds in your account to cover your transactions.
- Pay fees on time: To maintain a positive relationship with your bank, promptly pay any account maintenance fees and other charges. Timely payments demonstrate your commitment to responsible banking.
- Utilize direct deposit: Direct deposit simplifies your financial life and shows your bank that you have a stable income source. Banks often view customers with direct deposit more favorably.
- Make regular transactions using your debit card: Frequent debit card usage displays an active account and a strong banking relationship, which can be beneficial in the eyes of your bank or credit union.
- Exhibit loyalty and responsible banking habits: Building a long-term relationship with your bank by consistently demonstrating dependable banking behavior can help ensure your account remains in good standing and is less likely to face closure.
- Monitor your account activity: Regularly review your account statements and transaction history to identify any potential errors or unauthorized transactions. Promptly report any discrepancies to your bank.
- Set up account alerts: Most banks offer customizable alerts to help you stay informed about your account balance, large withdrawals, or potential overdraft situations. Use these alerts to manage your account effectively and avoid any negative consequences.
- Maintain a buffer in your account: Keep a small cushion of funds in your account to avoid accidental overdrafts and the risk of ending up in ChexSystems. This safety net can also help you handle unexpected expenses.
- Communicate with your bank: If you’re facing financial difficulties or anticipate a potential issue, proactively reach out to your bank to discuss your options. They may be able to provide assistance, waive fees, or help you avoid getting reported to ChexSystems.
- Consider using a budgeting tool: Utilize personal finance software or apps to help you manage your income, expenses, and savings more effectively, reducing the likelihood of financial mishaps that could lead to a ChexSystems record.
- Review credit and ChexSystems reports: Regularly monitor your credit reports and occasionally review your ChexSystems report to ensure that your financial records remain accurate and free of any negative marks.
While discovering you’re in ChexSystems can be disheartening, it doesn’t have to hinder your financial journey. By exploring the top options and alternatives available to you, you can overcome this setback.
Applying for one of the recommended non-ChexSystems accounts could lead to a smooth approval process. Before you know it, you’ll be equipped with a new checking account and debit card, ready to handle payments and purchases with ease!
Non-ChexSystems Banks by State
Looking for more information and additional options available in your area? Select your state from the list below to explore your options.
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- Washington, DC
- West Virginia
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