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The Top 7 Second Chance Bank Accounts

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Some banks don’t like giving second chances to customers who have less-than-stellar financial histories, especially since it could expose them to expensive risks. A record of bounced checks or debit card overdrafts could easily lock you out of the conveniences of modern banking.

Fortunately, banks also like making money, and some offer special “second chance” accounts that minimize their risk while allowing consumers to stay in the banking system. A second chance bank account gives customers with troubled records a fresh opportunity to demonstrate they can bank responsibly.

When it comes to a second chance account, fees are an unfortunate reality. But some accounts offer customers a better deal than others, and we’ve researched our database to find the second chance accounts with the most reasonable fee structures, while also factoring in whether they provide online and mobile banking, and how accessible accounts are throughout the country.

Second chance account basics

With a second chance bank account, customers shut out of traditional bank accounts get the opportunity to win their way back into a bank’s good graces. Similar to credit bureaus, financial services company ChexSystems maintains records of consumers’ banking histories. Bounced checks, overdrawn accounts or instances of fraud can all end up on your ChexSystems record; if you accumulate enough black marks on ChexSystems, banks could deny your application to open a new account.

Because second chance accounts are meant for customers who have demonstrated bad banking behavior, some lack features of traditional accounts, such as overdraft protection. In the eyes of the bank, you represent too much of a risk for them to extend you such courtesies.

Nobody likes paying fees, and we generally advise consumers to avoid needless banking fees due to the many fee-free banking options available. But fees are the price you pay for access to banking when you have a poor record. Plus, the second chance accounts listed below give you access to online and mobile banking, which is always a plus.

The 7 best second chance bank accounts

1. Tie between BBVA Compass ClearConnect Checking and BBVA ClearChoice Free Checking

BBVA Compass

Regional bank BBVA’s Compass ClearChoice Free Checking product is available as a second chance bank account. Keep in mind that it’s only available to residents of the states where BBVA maintains physical branches: Alabama, Arizona, California, Colorado, Florida, New Mexico, and Texas. But if you don’t live in those states, you can still avail yourself of BBVA’s Compass ClearConnect Checking account (unless you live in Alaska and Hawaii, in which case you are out of luck).

ClearChoice Free Checking features:

  • Free online and mobile banking, free customized alerts, free online and paper statements, and a free debit card (with option to personalize)
  • $25 minimum deposit to open
  • No monthly service charge to worry about

Fees to watch out for:

  • BBVA ATMs are free, otherwise a $3 fee will apply
  • $38 insufficient funds fee ($32 in California)
  • $15 deposit item returned fee
  • $32 stop payment fee made over the phone or in person ($30 in California); $25 if made online
  • No fee for closing your account within 180 days of opening

You can get a full list of Compass ClearChoice fees for each state here.

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on BBVA Compass’s secure website

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ClearConnect Checking features:

  • Free online and mobile banking
  • Minimum deposit of $25 needed to open the account
  • No monthly service charge

Fees to watch out for:

  • No fees for using any of the 55,000 BBVA and Allpoint ATMs, but for ATMs outside the network a $3 fee applies
  • $38 insufficient funds fee ($32 in California)
  • $15 deposit item returned fee
  • $32 stop-request fee when made over the phone or in person at a branch ($30 in California); a $25 fee to make the stop-request online
  • $25 account close fee if made within 180 days of opening

You can get a full list of Compass ClearConnect fees broken down by state here.

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on BBVA Compass’s secure website

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2. Wells Fargo Opportunity Checking and Savings Accounts

Wells Fargo Bank

Wells Fargo’s Opportunity Checking and Savings Accounts are tailor-made for folks with a lackluster credit or banking history. With a $25 opening deposit, you’ll get access to a second chance bank account that offers most of the bells and whistles of a traditional bank account. The account does come with a monthly fee, although it’s possible to waive it if you meet a few requirements (see below).

Account features:

  • $25 minimum deposit to open
  • Free transfers are available between Opportunity Checking and Savings accounts
  • You can choose to opt into overdraft protection
  • Free access to bill pay
  • “My Spending Report with Budget Watch” is available if you want to pay extra attention to where your money is going
  • Free debit card with access to more than 13,000 Wells Fargo ATMs throughout the country

Fees to watch out for:

  • $10 monthly service fee, waived if any of the following are true:
    • You make 10 posted debit card purchases or payments
    • You keep a minimum daily balance of $1,500 in the account
    • You receive $500 total in direct deposits each statement cycle
  • $35 overdraft and returned item fee
  • $12.50 overdraft protection transfer fee
  • $15 fee for excess activity (exceeding withdrawals from your savings account)
  • 3% foreign transaction fee with your debit card
  • $5 for money orders
  • $31 for stop payments

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3. Woodforest National Bank Second Chance Checking

Woodforest National Bank

This regional bank has a checking account aptly named Second Chance Checking, to help people rejected by other banks access — provided they live in one of the 17 states where a physical branch exists and can meet the $25 minimum opening deposit requirement. Those states are: Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia.

Fees to watch out for:

  • $9.95 monthly maintenance fee if you use a direct deposit (or $11.95 without a direct deposit), $3.00 monthly paper statement fee (which can be avoided if you sign up for electronic statements)
  • $9 one-time account set-up fee
  • $2.50 ATM withdrawal fee when used at a non-Woodforest network ATM
  • $15 debit card set-up fee
  • $29 overdraft fee (for each charge)

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4. First National Bank and Trust Company Renew Checking

First National Bank and Trust Company (WI)

First National Bank and Trust Company’s second chance bank account offering is called Renew Checking. You’re eligible for a new account if you live near the bank’s Beloit, Wisc. headquarters, in southern Wisconsin and northern Illinois.

Account Features:

  • No monthly minimum balance
  • $25 minimum deposit to open
  • Free online and mobile banking, bill pay, and e-statements
  • Access to 70,000 no-fee ATMs worldwide through Allpoint and MoneyPass
  • Eligible to upgrade account after twelve months in good standing

Fees to watch out for:

  • $9.95 monthly service fee, or $7.95 with direct deposit
  • $30 early account closure fee (if closed within 90 days of opening)
  • $34.50 overdraft fee
  • $34.50 insufficient funds fee
  • $34.50 stop payment fee

The fee schedule for personal accounts at First National Bank and Trust Company is here.

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on First National Bank And Trust Company (WI)’s secure website

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5. Peoples Bank Cash Solutions Second Chance Checking

Peoples Bank Cash Solutions

This Texas-based bank offers a second chance bank account that is available nationwide, and so long as you don’t have a record of bank or checking fraud on your record, you should be approved for this account. You’ll need to deposit at least $30 before the bank activates your account and provides you with checks and a debit card.

Fees to watch out for:

  • $4.95 monthly maintenance fee
  • $27.50 overdraft fee
  • $27.50 nonsufficient funds fee
  • $3.95 printed statement fee (which can be avoided with electronic statements)
  • $2.00 ATM withdrawal fee at machines not owned by Peoples Bank
  • $25 stop payment fee
  • $20 account closure fee (if within 90 days of opening account)

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on Peoples Bank Cash Solutions’s secure website

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6. Radius Essential Checking

Radius Bank

Products from online bank Radius are available to customers nationwide, and accessibility is a strong point in its favor. This second chance bank account only requires customers to deposit $10 to open an Essential Checking account, which is lower than some other accounts on this list.

Account Features:

  • A free debit card
  • 24/7 mobile and online banking
  • Access to Radius’s budgeting and personal finance tracking apps
  • Eligibility to upgrade to Radius’s Reward Checking account after 12 months of positive banking history

Fees to watch out for:

  • $9 monthly maintenance fee
  • $25 per item non-sufficient funds fee (waived on all overdraft items $5 or less)
  • $5 daily overdraft fee

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on Radius Bank’s secure website

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Alternatives to a second chance bank account

Get a prepaid debit card

Tired of the traditional banking experience? You could opt for a prepaid debit card instead. With a prepaid card, you can load money onto it and spend at merchants that accept major credit and debit cards. But if you try and spend more money than what’s on the card, the transaction is declined — although this prevents you from accruing any overdraft or insufficient funds fees. This is useful if you feel you may still have trouble managing your spending and need an extra layer of security to prevent you from getting into trouble.

Some prepaid cards offer extra perks like advance direct deposit and free ATMs so long as you stay in their network.

Open a secured credit card

You may also have better luck applying for a secured credit card if your credit score is in good enough shape. Usually, this requires depositing cash with the lender, who then gives you the credit card for the same amount. Each month that you make on-time payments, the bank will report that good behavior to the credit bureaus, helping you boost your credit score. At the end of the payment period (generally 12 months, though it varies by banks), you’ll get the full deposit back.

Secured cards can come with high interest rates and many don’t feature the enticing rewards other high-end cards do, but they get the basic job done for consumers who don’t need a card with a high credit limit.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

James Ellis
James Ellis |

James Ellis is a writer at MagnifyMoney. You can email James here

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College Students and Recent Grads, Reviews

Review: SunTrust Custom Choice Loan

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

mortar board cash

SunTrust offers students a good option to finance their education with its Custom Choice Loan. Interest rates are fairly low, students may apply with a cosigner, and it comes with several repayment options. As a bonus, SunTrust offers graduates a 2% principal balance reduction as long as students graduate with at least a Bachelor’s degree.

 

Details of SunTrust’s Custom Choice Loan

The minimum amount you can borrow is $1,001 and the maximum amount you can borrow is $65,000. The total amount of Federal and private student loan debt you take out per year can’t exceed $150,000. You can choose a 7- or 10-year repayment term, and a 15-year term is available for borrowers taking out $5,000 or more.

Fixed APRs range from 5.35% to 14.05%, and variable APRs range from 4.25% to 13.25%.

You have four choices of repayment plans:

  • Immediate Payment – There’s no grace period as you begin full payments while in school
  • Interest-only Payment – You pay the interest that accrues on your balance while in school
  • Partial Payment – Available on loans $5,000 or more, you can make payments of $25 per month while in school
  • Full Deferment – You get a grace period of six months when you choose this option, and you’re eligible for deferment as long as you’re enrolled in school part-time at an approved school (this option is the closest to how Federal student loans function)

The interest rate you get approved for is based on your credit history, loan term, amount requested, and other information provided on your application.

A 0.25% interest rate reduction applies if you set your loans to autopay, and SunTrust customers benefit from an additional 0.25% reduction if they pay through their SunTrust bank account.

How Does the Custom Choice Loan Compare to Federal Student Loans?

Before applying for the Custom Choice Loan, you should exhaust all of your federal student loan options first. Make sure your family fills out the FAFSA form to see what you might be eligible for. Federal student loans have lower fixed interest rates, and come with more benefits than private student loans do. These benefits will help in case you hit a rough patch with your money.

For the 2018 – 2019 Academic year, Direct Subsidized and Unsubsidized Loans have a fixed interest rate of 5.05%. That makes the 5.35% fixed APR and 4.25% variable APR of the Custom Choice Loan comparable. However, those are the lowest possible APRs available, and if you don’t have excellent credit, you may not be eligible to receive them. Variable rates are also subject to change, which means they can increase over the life of your loan and become more expensive.

SunTrust doesn’t have an origination fee with its loan, but the Direct Subsidized and Unsubsidized Loan has a 1.062% disbursement fee from October 1, 2018 through September 30, 2019.

SunTrust’s APRs aren’t horrible, though. If you can, apply with a cosigner who has better credit, as you’ll be eligible for lower rates. You want to get as close to Federal interest rates as possible to get the best deal.

[7 Things You Need to Know about Private Student Loans]

Eligibility Requirements

You must be a U.S. citizen or permanent resident to apply. A majority of four-year public or private colleges are eligible – you can check eligibility on the first page of the application.

If your credit history isn’t sufficient enough, you can apply with a cosigner, and there’s a cosigner release option available after 36 consecutive, on-time payments.

You must also be the legal age of majority when completing the application. Applicants residing in Iowa or Wisconsin aren’t eligible for this loan.

[How to Tell if Your Loans are Federal or Private]

Application Process and Documents Needed

You can apply online by yourself or with a cosigner. After your application and credit (a hard credit inquiry is used) are reviewed, you’ll be presented with your loan options. If you choose to move forward with the loan, you’ll be provided with a list of documents you need to upload.

Once you’ve submitted everything, an Approval Disclosure will be sent to you for acceptance. You have 30 days to accept the terms of the loan before they expire.

Upon acceptance, SunTrust will contact your school to request certification of the loan, as you’re only allowed to borrow enough to cover your education expenses. This also ensures you don’t take out more student loan debt than necessary.

Once everything is complete, you (and your cosigner, if you applied with one) have three days to back out of the loan. After that, the loan is finalized, and the funds are sent directly to your school.

Have these documents ready to submit when applying:

  • Proof of income – the student or cosigner must show proof of positive income in the form of a recent W2, paystub, or tax return
  • Photo ID
  • Proof of residency may be required if Photo ID isn’t sufficient

The Fine Print

There are no origination, application, or prepayment fees for this loan. If you’re 10 days past due on a payment, you’ll be charged 5% of the unpaid amount as a late fee.

The minimum loan amount is different in certain states: $5,001 in Alaska, $3,001 in Colorado, $2,501 in New Mexico, $5,101 in Oklahoma, $5,001 in Rhode Island, and $3,701 in South Carolina.

[Student Loan Disbursement 101]

Repayment Assistance Options

American Education Services is the loan servicer for SunTrust. If you experience any difficulty repaying your student loans, you’ll have to contact them for repayment assistance options. You may be able to apply for a deferment, forbearance, or interest-only payment for an extended period of time.

Pros and Cons of the Custom Choice Loan

Pro: If the borrower dies, then the balance of the loan may be forgiven as long as SunTrust is contacted and provided with proof of death. (If the cosigner dies, the student remains responsible for the loan.) Students who become permanently disabled can apply for a loan discharge as well.

Con: The loan isn’t available to those living in Iowa or Wisconsin, and minimum loan amounts differ in six states. Make sure that doesn’t apply to you in case you’re not looking to borrow a large amount.

Pro: The Custom Choice Loan fittingly gives you a few choices when it comes to loan repayment options. Choosing partial payments or interest-only payments can help lessen the amount of interest you’ll pay over the life of your loan, and are easier to manage than going into immediate repayment.

Pro: SunTrust offers a Graduation Reward where 2% of your principal balance will be reduced, provided you graduate with at least a Bachelor’s degree. The principal balance is based off the net total of all disbursements you receive from SunTrust.

SunTrust Bank

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Private Student Loan Alternatives

Not eligible for a loan with SunTrust? There are many other private lenders offering student loans, such as Citizen’s Bank and Sallie Mae.

Citizens Bank: You can borrow up to $90,000 and your combined Federal and private student loan debt can’t exceed $120,000. Fixed APRs range from 6.39% to 11.65%, and variable APRs range from 6.14% to 11.40%. Repayment terms offered are 5, 10, and 15 years.

Citizens Bank (RI)

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on Citizens Bank (RI)’s secure website

Sallie Mae: One of the most well-known private student loan lenders, Sallie Mae has a Smart Option Student loan with fixed APRs ranging from 6.25% to 9.16%, and variable APRs ranging from 4.00% to 9.04%. You can borrow up to the cost of attendance, and this loan comes with a Graduated Repayment option.

Sallie Mae Bank

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on Sallie Mae Bank’s secure website

It’s also worth checking with your bank or local credit union for their rates. If you or your cosigner have an existing relationship with a bank, that could help you secure lower rates.

Are you afraid of your credit being negatively affected if you apply with too many lenders? As long as you complete applications within a 30-day window, then the credit bureaus will count all inquiries as one inquiry, ensuring your credit doesn’t take a huge hit. Shopping around for the best deal is worth the effort with student loan debt being such a burden. Lower interest rates will make your loan more affordable.

A Solid Option if You Have to Use a Private Lender

The SunTrust Custom Choice Loan is a solid option for students requiring more financial assistance than what the Federal government can provide. SunTrust customers benefit more with the 0.50% interest rate deduction, and no one can complain about receiving a 2% principal reduction on their loans upon graduating.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Erin Millard
Erin Millard |

Erin Millard is a writer at MagnifyMoney. You can email Erin at erinm@magnifymoney.com

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