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Are You Underbanked? Try Second Chance Checking Accounts

There are at least two versions of the word “underbanked”:

1)   Those who have had a checking account closed by the bank.  This
usually occurs when too many checks bounce, or the account is overdrawn
too many times.  Banks have regulations they must follow, so if you hit
their magical threashhold, they can cancel your checking account without
warning.  Anyone going through tough economic issues may find this to
be true.

So what are your options when this occurs?  Well, you can apply at
another bank…that’s obvious.  However, since banks communicate with one
or more check verification services like ChekSystems, once you get on
their bad list, most banks will not accept your request.  Wow, you
say…how could that happen?  Well it does, to millions of people every
year.  If this is happening to you, you can:

  • have your payroll and other checks cashed at a check cashing service, paying fees to get them to do it for you;
  • hide your cash in your mattress;
  • have relatives hold your funds and dole them out to you.

None of these ideas is very palatable, and costs you more money than banking.  There is no security in these choices.

Another option for you is to open a checking account with a “second
chance checking” bank.  Mostly, these are online banks.  You set up your
checking and savings accounts, with the minimum they require (average
$100), and they require that you have at least one payroll check direct
deposited into the account.  They provide you with a debit card so you
can quickly access your cash, and they offer other services as well for
your convenience like transfers of funds.  You likely will not receive a
checkbook…everything is done online.  So you would have to pay most of
your bills using the debit card.  It is a good idea to choose one of
their services, which automatically transfers money from your savings
account when and if you have an overdraft situation on your checking
account.  They charge for doing it, but it is better than having your
payments bounce…again.  Second Chance Checking is a good option.

Credit Union’s also have this service, so check out the one that you qualify for and go talk to their new accounts people.

Don’t have the attitude going in that you are “less than”, and have
your hat in hand when you ask for an account.  The bank knows that they
will make fees off your accounts, which can include:

  • Monthly Service Fee
  • Non-Sufficient Funds fee (NSF)
  • Overdraft Fee
  • Transfer Fee
  • and many others

2)  New Accounts – for students and immigrants

When you just start out in life, or have just moved to this country, it
is a very intimidating proposition to approach a bank to give you a
checking account.  You have no history, no references…nothing to prove
yourself.  Sometimes it is better to start out with a second chance
checking account, unless your parents or relatives are willing to
co-sign for you.  In this way, you can develop a good history before
trying to get approved by one of the major lenders.  Second Chance
Checking can help you get started.

Make sure that once you have this new second chance checking account,
you manage your money well so you don’t have to find out that a payment
you made was rejected for insufficient funds.  You need to keep this
account clean and running smoothly, so eventually, you can get back to
having a regular checking account once again at one the major banks.
For more information on how Kansas City Credit Services can assist you
with this, click here

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