Can You Get A Bank Account If You Owe Your Bank Money?
by Mr Credit CardWhat happens when you have defaulted with your bank and need a new bank account? One of our readers, Jack, had this question:
Hi Mr. Credit Card!
I had a quick question. So say I did owe a bank money and put them in my Bankruptcy, how will this affect me now and later? Will I be able to open a new bank account? Will this prevent me from getting loans later in life? Does it ever come off my credit report like a normal credit card?
Thank You!
Jack
Thanks for your question Jack.
When you default with your bank, it works a little differently than defaulting with a credit card company.
This is because credit card companies report your payment activity to one (or all) of the three credit bureaus. Banks on the other hand report checking account defaults to a completely different system: The CHEX system.
The following is from Consumer Debit Resource:
The Chex Systems, Inc network is comprised of member Financial Institutions that regularly contribute information on mishandled checking and savings accounts to a central location.
ChexSystemsSM shares this information among member institutions to help them assess the risk of opening new accounts. ChexSystemsSM only shares information with the member institutions and does not decide on new account openings.
So, even though you included the debt you owed your bank as part of your bankruptcy, you are still going to show up as having defaulted within the CHEX system.
This means that opening a new bank account may be difficult, or impossible for you.
When you decide it’s time for a new bank account, these are the steps you will want to take:
A couple of caveats: Do not attempt to go through ING Direct for a new bank account unless you have excellent credit (and definitely not with a bankruptcy). They pull not only your CHEX data, but your credit report as well. It counts as a hard pull – which means that it will lower your credit score.
Also, try to find a bank that advertises “second chance checking” or something of that nature. Be aware that you may have to keep a minimum balance in your account, or pay a monthly fee. It’s pretty much like rebuilding your credit. Sometimes you have to pay for the privilege.
It is definitely possible to still get a checking account while you have CHEX data listed from a default. It’s just going to take a little more work on your part to find a bank or a credit union that is willing to work with you.
One final warning: Please be especially wary of online scams. There are many, many results for “Non- CHEX system banks” on Google, and most of them are fraudulent – they want you to buy a service, or sign up for something. Just skip those sites.
Visit legitimate banks online, or go into your local credit bureau to fill out an application. Too many companies are eager to take advantage of people who have run into past financial troubles. Make sure that any business you deal with really is legitimate. If they are asking you to pay for a service, (or they charge a fee to open the checking account) then run the other direction fast.
Stick to visiting the websites of legitimate brick-and-mortar banks that you can drive by in your own hometown. Fill out online applications only for those banks.
The truth is, there are so many online scams for this second chance checking accounts – you really don’t want to end up a victim of identity theft just because you were trying to open up a bank account!
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January 21st, 2009 at 10:14
A hard pull really? Must be new since I didn’t receive one from ING when I opened last year.
January 21st, 2009 at 14:36
Thanks Mr. Credit Card for your super fast answer! I will try and open a new account with one of my local banks, but online instead of going in face to face.
January 27th, 2009 at 14:23
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April 1st, 2009 at 00:26
I have tried several banks and been turned down is there a bank that will help me.I am on chexsystem and telecheck
September 9th, 2009 at 02:54
Great advice!! Truly helpful. Thank you. I am on both Chexsystems (WAMU 2005) and Telecheck (USAA, 2007). I think I’ll just live on a cash basis for a while until they fall off. I may do a credit union or find a second chance bank like WoodForest (any bank in Walmart)
January 3rd, 2010 at 22:43
I also know there is an online account option that I have just opened an account with… it is http://www.netspend.com. If you have direct deposit, the cost for the service is about $5 per month and you have unlimited pin and signature purchases. You can also deposit money onto your card from any reload location for a small fee… Like WalMart for $3. This works great for me because I receive social security, and was using a direct benefits card, which was a mastercard through Chase, but I could not use it for any other deposits, besides my social security. Netspend lets me make deposits from anywhere I like, and the monthly cost is the same as the direct benefit was. I also have a routing and account number that I can actually make deposits to from anywhere, not just my social security. Also, if you receive social security, you get paid as soon as netspend receives your check… most social security payments are sent to the bank 2-5 days before your paydate, and netspend credits them as soon as they are received… so, if they receive your Feb. 3rd payment on January 29th, you get it Jan 29th. If you are interested in Netspend, there is a referral program (I was just looking because I thought if I am going to give all this great info on them, and I can get rewarded, I might as well go for it) that if I refer someone in and they activate their card, we each get $5. So, email me if you are interested. I can be reached at XXX – edited by Mr Credit Card – XXX (no emails on comments pls)
March 9th, 2010 at 23:29
Wow thanks for that information i been looking for this answer forever!