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Fresh Start / Second Chance

Checking Accounts

What is a 2nd chance checking product?

A 2nd Chance Checking product allows those individuals who have had past checking blemishes to get back into mainstream banking. Some limitations or restrictions are often incorporated into the product to reduce chances that the person will mismanage the account. Most banks and many credit unions use Chexsystems or TeleCheck as a decision maker for opening a checking account for an individual. ChexSystems gathers information from participating financial institutions and subsequently offers information regarding a consumer’s previous account closures, account inquiries, and unpaid NSF checks. A negative record can remain in file for five years.

Who uses a 2nd chance checking product?

  • Those who have had some credit or account management problems in the past that prevent them from opening an account at a bank or credit union
  • Those who have never had a checking account or have had problems managing a checking account (but may not have a record) and prefer some of the safeguards built into a 2nd chance program
  • Those who are using check cashers because they may not have a transaction account
  • Youth 16 – 20 opening their first checking account and prefer the safeguards

Why should credit unions care?

A negative ChexSystems record can generally mean an individual will have great difficulty opening a checking account with another institution, thus joining the 40 million households that are under-banked. By offering a 2nd chance or fresh start checking account to members, credit unions have the opportunity to help individuals save money by moving them out of check cashing stores and into credit union lobbies, where they can become valuable, loyal members. After all, a checking account is often used as a measure of a person’s primary financial institution. A 2nd chance account can help a credit union grow membership and increase services used per member.

What can credit unions do?

Credit unions can use their existing checking product or develop a second product, but with some restrictions built into the product for those with past checking blemishes. For example, some models limit the use of debit cards, while other models offer only a prepaid debit card to prevent overdrafts. Some models charge a monthly fee to cover the costs of monthly monitoring. Users of non-traditional checking accounts are often offered the opportunity to move into the credit union’s traditional account upon demonstrating the ability to manage the account.


Rockford, IL

Non-Traditional Checking - Generations » View details

Generations CU is one of approximately 50 Illinois CUs expected to participate in the “bank on” program that is being pushed by State Treasurer Alexi Giannoulias to promote low-cost or free checking accounts to underserved households. A study by the Pew Charitable Trust found that Rockford, a manufacturing city of 160,000 is home to 4,600 unbanked households. These households rely on check cashers, payday lenders and pawn shops to cash checks, pay bills or borrow money instead of using a traditional financial institution. The average unbanked household in Illinois pays $574 a year to cash payroll checks at check cashers, leaving just $22,376 in remaining income, according to Giannoulias.

St. Louis Community

St Louis, MO

Freedom Checking - St. Louis Community » View details

Freedom Checking allows members to access our entire product and service portfolio, while reducing the major expenses related to alternative financial services.

United Consumers

Independence, MO

2nd Chance Checking – United Consumers » View details

Our Second Chance Checking Account can help you establish a successful banking relationship regardless of past credit problems. Instead of paying payday lenders or check-cashing companies an average of 400% interest (the industry average), you pay just $10 per month for unlimited check writing.

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