What to Do When You Can't Open a Bank Account - NerdWallet (2024)

FAQs

Why are banks not letting me open an account? ›

Why can't I open a bank account? A bank can deny your request to open an account because of past accounts that were closed due to negative balances, a history of overdrafts or problems verifying your identity.

Second-chance checking accounts

A second-chance bank account functions much like a traditional checking account but with some account restrictions. With a second-chance account, you may need to pay a higher monthly fee or maintain a bigger balance, to protect the bank in the event of problems such as overdrafts.

Reasons You Can Be Denied a Checking Account

Excessive overdrafts or nonsufficient funds incidents. Unpaid fees or negative account balances, whether from an active or closed account. Suspected fraud or identity theft. Applying for too many bank accounts over a short period of time.

You can reach out to creditors directly to ask them to remove negative history from your ChexSystems report. The catch here is that you'll typically need to pay any outstanding balances in full or arrange a debt settlement agreement before creditors will agree to this.

Second chance bank accounts are designed for individuals whose banking history prevents them from opening a regular checking account. This may include individuals who have been denied an account due to too many overdrafts or unpaid fees.

You can use a money order to make payments, pay bills, or send money to friends or family. Money orders can be purchased several places like a bank, a post office, or some retail stores. Most of them accept cash, prepaid cards, and debit cards, and some accept credit cards.

While most banks and credit unions use ChexSystems or another consumer reporting agency, there are several that offer what's called second-chance banking. These financial institutions either don't check your ChexSystems report at all, or they're willing to look past some negative items.

How long does ChexSystems last? ›

How long does negative information stay on ChexSystems and/or EWS consumer reports? Generally, negative information remains on ChexSystems and/or Early Warning Services (EWS) consumer reports for five years. Under the Fair Credit Reporting Act, certain negative information may be reported for up to seven years.

When you apply for a new account, many banks use ChexSystems to see if a previous bank has flagged you for unpaid balances such as overdraft fees.

Banks and credit unions want to learn about your financial past before establishing an account with you. They do this by running a bank history report on you. Like a credit check, this report highlights the consumer's financial behavior, but for bank accounts instead of credit cards.

Many financial institutions, including traditional banks, online banks and credit unions, offer accounts with flexible requirements for folks who've had money trouble in the past. Namely, they don't use ChexSystems to screen your banking history.

Opening a new bank account

If your account has been closed, you can try to open a new one with a different bank. However, you may run into a problem if the previous bank reported anything negative on your ChexSystems report. A ChexSystems report is like a credit report for your banking activity.

You can be denied an account if you're in debt to another bank because of an overdrawn account or overdraw your account too often.

Second-chance checking accounts allow those who have been denied a traditional account to open a specialized one to help them build a strong financial foundation. Financial institutions offering second-change checking accounts include Capital One, Chime, GO2bank, GTE Financial, Fifth Third, Varo and Wells Fargo.