If you were denied a new bank account recently, you’re not alone. Around 15% of people applying for new checking accounts are rejected daily.
One of the primary reasons for this is a negative report from ChexSystems. However, there are options available. Some banks do not use ChexSystems, which may make it easier for you to open a new account.
Your first option is to go with a non-ChexSystems bank or credit union. These are financial institutions that don’t use ChexSystems at all when making decisions about new customers.
The next best alternative is a second chance bank account. These are checking accounts aimed at customers who may be in ChexSystems.
If you’re looking to move on from your past, consider the following options. With these banks, you can open a checking account online in as little as 5 minutes, and they either do not use ChexSystems or provide second chance bank accounts.
Top 10 Banks That Don’t Use ChexSystems
Here are some other banks and credit unions to consider:
- Bank OZK – Bank OZK has 240 branches in Alabama, Arkansas, Florida, Georgia, New York, North Carolina, South Carolina, and Texas.
- Cadence Bank – Cadence has branch locations in Alabama, Arkansas, Florida, Georgia, Illinois, Louisiana, Mississippi, Missouri, Tennessee, and Texas.
- Capital One 360 – Capital One 360 is a digital bank offering savings and checking accounts, credit cards, and other financial services to customers via a user-friendly online platform.
- Corporate America Family Federal Credit Union – CAFFCU is a financial institution that serves the employees and families of select companies and organizations. It has locations in Arizona, California, Connecticut, Georgia, Illinois, Kansas, North Carolina, Ohio, Pennsylvania, Texas, and Virginia.
- TD Ameritrade – TD Ameritrade offers a brokerage account and cash management account with a competitive interest rate, no monthly fees and easy access to funds through checks, debit card and online banking.
- GenFed Financial Credit Union – GFCU is a member-owned financial cooperative that provides a variety of banking services to its members including loans, savings accounts, and other financial products. It has branches in Illinois, Indiana, and Ohio.
- HomeStreet Bank – HomeStreet Bank offers a range of financial services including checking and savings accounts. They have locations in California, Hawaii, Oregon, and Washington.
- Liberty Savings Bank – Liberty Savings Bank is a community bank with eight total branches in Colorado, Florida and Ohio.
- MidWest America Federal Credit Union – MAFCU offers checking and savings account options and more to members in Illinois, Indiana, and Kentucky.
- Republic Bank – Republic Bank is a non-ChexSystems bank that operates in Kentucky and Indiana.
- Synovus Bank – Synovus Bank is a regional bank with locations in Alabama, Florida, Georgia, South Carolina, and Tennessee.
- UNIFY Financial Federal Credit Union – UNIFY has locations in Alabama, Arkansas, California, Colorado, Georgia, Indiana, Kentucky, Michigan, Mississippi, New Jersey, Tennessee, Texas, Utah, Virginia, and West Virginia.
- 1st Convenience Bank – 1st Convenience Bank is a retail bank located in New Mexico and Texas.
- Huntington National Bank – Huntington National Bank is a large regional bank that operates in more than 1,000 branches in 11 states. It has most branches in Illinois, Michigan, Minnesota, Ohio, and Pennsylvania.
- GoBank – GoBank is an online bank that allows users to open a checking account, deposit checks, make transactions and manage their money through a mobile app.
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.
Customers who are 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 about ChexSystems in-depth, 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 non-ChexSystems vs. second chance bank accounts.
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.
- 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 Banking
- 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.
You can see how these are not ideal options. They might help you out in a pinch, but the balance requirements, fees, and functional limitations can make it hard to establish financial stability.
Can You Dispute ChexSystems?
You are entitled to dispute any information contained in your ChexSystems report.
The Fair Credit Reporting Act (FCRA) makes it possible for you to dispute your ChexSystems report. However, it’s not easy; especially if the information on your record is accurate.
For example, it might be unfair that you are listed in ChexSystems because you failed to pay a $5 overdraft fee once. However, that doesn’t mean that ChexSystems will delete the record upon request.
ChexSystems is not concerned with fairness. Once you have a record, it will remain for five years since the date of the infraction if you cannot get it expunged.
How to Dispute ChexSystems
If you do want to initiate the process to try to get removed from ChexSystems, we have detailed instructions for disputing ChexSystems.
Either way, we recommend in the meantime that you apply for a non-ChexSystems checking account.
Even a successful dispute can be a lengthy and involved process. You might find that you are weeks or even months away from getting your record cleared.
Opening an account through one of our recommended providers above means you can enjoy all the benefits of a bank account right away.
What to Look for When Choosing a Checking Account
You have probably noticed that features and benefits can vary when it comes to checking accounts. Some accounts have drawbacks as well. What is important to look for when selecting an account?
- Low or no balance requirements – Ideally, you can find a checking account that won’t be charged a fee or penalty for not maintaining a certain balance in your account.
- Low or no monthly fee – The lower the monthly fee, the better. The last thing you need to be doing while you are trying to get back on your financial feet is paying fees.
- Free debit card – Many banks offer a free debit card as a part of their account package, which allows you to make transactions and access free ATM withdrawals within the bank’s network without incurring additional fees. Some banks even allow you to personalize the debit card.
- Free ATM use – You want to avoid being spending $3 or $5 every time you want to withdraw cash from the ATM. Make sure that the bank you apply at offers you free access to a wide network of free ATMs in your area.
- Option to upgrade – If you have a second chance checking account and a bank or credit union lets you upgrade automatically to a traditional checking account after some time, that is a nice benefit.
- Likely to accept you – Remember, ChexSystems is not the only agency that might have a file on you. If you think you could be in TeleCheck or EWS, it makes sense to apply at a financial institution that will not be deterred by those records either.
- Online banking features – You can check your statements electronically, see the funds available in your bank account, pay your bills, transfer money, and so much more. You might even be able to deposit checks. You can expect all of these same fantastic features with a high-quality checking account without ChexSystems.
- Bells and whistles (if you want them) – There is no rule that an account has to be bare-bones just because a bank doesn’t use ChexSystems.
- Transparency – Many customers end up in ChexSystems because of unclear policies and terms from their original banking institutions. Choose a bank that makes its rules and fees clear so that you do not find yourself in the red again.
- Excellent customer service – Finally, customer service is incredibly important when it comes to picking the right bank. It can make the difference between a swift resolution to an issue to inadvertently ending up in ChexSystems again. So be sure to choose wisely.
Best Practices for Banking
Once you’re able to open an account and start making purchases and paying bills again, you will probably heave a sigh of relief.
It is essential to know however that there are still things that can go wrong.
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.
- There are some actions that you can take that might result in receiving a black mark in ChexSystems even though you have done nothing wrong. 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.
Tips to Protect Your Account
- Do not overdraw your account if at all possible, even if there are no overdraft fees.
- If there are fees to maintain your account, pay them all on time every month. Pay any other fees you are charged immediately to stay on good terms with the bank.
- Try to order your checks only from companies that do not report to ChexSystems. Some options include Checkworks, Costco Check Printing, and Harland Clarke.
- Banks often look more favorably on customers who set up direct deposit, regularly make purchases with debit cards, and so on. Even if you are not required to bother with this to get around a balance requirement or maintenance fees, think about doing it anyway. Your account is less likely to be closed if you demonstrate stable, reliable banking habits and demonstrate loyalty to the bank or credit union.
Keep an eye on credit reports, and also consider checking on your own ChexSystems report now and again to make sure that your record is clean.
Having a record in ChexSystems can make it very frustrating to try to open a bank account.
You have things you need to do, such as pay your bills and make purchases. Trying to do those things without a basic checking account is very hard. It can make you feel like you have fallen right between the cracks in life’s financial sidewalk.
Just remember, around 15% of checking account applicants every day have that same frustrating experience. That is why around 20% of banks and credit unions do not use ChexSystems, and even those that do may offer a second chance option.
While it is frustrating to discover you are listed in ChexSystems, it does not need to put a damper on your financial life. You are now familiar with some of the best options in both categories, and some alternatives.
If you apply for any of our recommended non-ChexSystems accounts, you could be approved quickly. Soon, you will have your new checking account and debit card and be ready to receive payments and make purchases!
Non-ChexSystems Banks by State
Looking for more information and additional options available in your area? Select your state from the list below to find out all your options for banking.
- 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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