Denied a Checking Account? What to Do Now

Denied a Checking Account? What to Do Now

Margarette Burnette is a NerdWallet authority on savings, who has been writing about bank accounts since before the Great Recession. Her work has been featured in The Associated Press , USA Today and other major newspapers. Before joining NerdWallet, Margarette was a freelance journalist with bylines in magazines such as Good Housekeeping, Black Enterprise and Parenting. She is based near Atlanta, Georgia.

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

Does your banking history include unpaid fees such as overdue overdraft fees or bounced check fees? If so, it’s possible that banks may deny your application to open a checking account.

But you still have affordable options for managing your money, and you could put yourself in position to eventually qualify for a regular account again. Here's how.

Check your ChexSystems report

If a bank or credit union closed your old account because of unpaid fees, you might have a record with ChexSystems. ChexSystems is a consumer reporting agency that banks can check when vetting a potential new customer to see if that person has a history of unpaid fees or other banking history concerns.

Steven Hughes, an entrepreneur in Columbia, South Carolina, says he applied for a checking account a few years ago, and a bank told him he couldn't open one because of his ChexSystems file.

"I made a lot of financial mistakes when I went to college several years ago," Hughes says. "I bounced checks and had a lot of overdraft fees. The fees became too much for me to pay, and my old bank closed the account."

Hughes contacted ChexSystems and asked for a copy of his file. Then he reached out to his creditors to settle his debts. Under the Fair Credit Reporting Act, you have a right to ask ChexSystems for a free copy of your file if you're denied a bank account. You can also request a free copy at least once every 12 months. If there's an error, you can dispute the information and ask the company to remove it. Otherwise, ChexSystems keeps valid information in your file for five years.

Ask to remove settled debts

If you pay off your outstanding debt earlier than the five-year mark — and, of course, you should if you can — the ChexSystems record will be updated to show that you have paid what you owed. The negative file doesn’t automatically disappear, but you or your former creditor could ask ChexSystems to delete it.

Hughes says he sent ChexSystems receipts to prove his debt was paid. The negative mark was then removed from his file, well before the five-year time frame. “After that, I had no problem opening a new bank account," he says.

Cash Management Money Market A savings account is a place where you can store money securely while earning interest. A savings account is a place where you can store money securely while earning interest. Learn More

SoFi Checking and Savings

SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi members with direct deposit are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

Min. balance for APY Learn More

EverBank Performance℠ Savings

Min. balance for APY Learn More

Barclays Tiered Savings Account

Min. balance for APY

These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.

These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.

Learn More

on Wealthfront's website

Wealthfront Cash Account

Min. balance for APY Learn More

on Betterment's website

Betterment Cash Reserve – Paid non-client promotion

*Current promotional rate; annual percentage yield (variable) is 5.50% as of 4/2/24, plus a .50% boost available as a special offer with qualifying deposit. Terms apply; if the base APY increases or decreases, you’ll get the .75% boost on the updated rate. Cash Reserve is only available to clients of Betterment LLC, which is not a bank; cash transfers to program banks conducted through clients’ brokerage accounts at Betterment Securities.

Min. balance for APY

CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.

CDs (certificates of deposit) are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.

Learn More

Marcus by Goldman Sachs High-Yield CD

4.60% APY (annual percentage yield) as of 09/13/2024

Alliant Credit Union logo

Learn More

Federally insured by NCUA

Alliant Credit Union Certificate

Alliant Credit Union logo

Discover® Bank logo

Learn More

Discover® Bank logo

Annual Percentage Yield (APY) is accurate as of 09/13/2024

Discover® Bank logo

Learn More

Discover® Cashback Debit

Discover® Bank logo

Monthly fee

Chase logo

Learn More

Chase Total Checking®

Chase logo

Monthly fee Learn More

Deposits are FDIC Insured

Chime Checking Account

Monthly fee Money market accounts pay rates similar to savings accounts and have some checking features. Money market accounts pay rates similar to savings accounts and have some checking features.

Discover® Bank logo

Learn More

Discover® Money Market Account

Discover® Bank logo

Min. balance for APY EXPLORE MORE ACCOUNTS

Apply for a second chance checking account

About 20% of banks offer alternative checking accounts, known as second chance checking , for people who don't qualify for a standard account, the Federal Deposit Insurance Corp. says.

Second chance accounts usually don’t have the same perks as standard checking, such as overdraft protection or waivers for monthly service charges. The monthly fees generally range from $10 to $15. That’s not ideal, but it’s still cheaper than other alternatives, such as using a check-cashing company to deposit paychecks. Those services can cost up to 10% of the value of the check.

The best second chance checking accounts have no minimum balance requirements and offer debit cards and online banking for free. And if a year or so goes by without any negative balances or other problems, customers can usually upgrade to a better checking account.

Temporarily use a prepaid debit card

If you're not able to open even a second chance account, consider using a reloadable debit card while you work on paying off debt. This type of prepaid card lets you take advantage of some banking functions, such as paying bills and transferring money to other people, without the need for a checking account .

Customers can also deposit checks into special accounts linked to prepaid cards by using ATMs or mobile banking, sometimes for free. It’s a good idea to consider the size of a card’s free ATM network to help you avoid out-of-network charges. You’ll also want to look for a card that has fraud and purchase protection.

You can order prepaid debit cards online, sometimes for no fee, or pay around $5 at local retailers. The better cards don't charge monthly fees — or, if they do, the fees are under $5 a month. Some card issuers will waive the monthly charges if you sign up for direct deposit . You can use a reloadable card now and apply for a checking account in a few months, after your ChexSystems record improves.

With these alternatives, there's no reason to stay “unbanked” for long. You can use affordable alternatives and start taking steps today to clear your banking record.

Margarette Burnette is a staff writer at NerdWallet, a personal finance website. Email: [email protected] . Twitter: @margarette .

About the author

You’re following Margarette Burnette
Visit your My NerdWallet Settings page to see all the writers you're following.

Follow for more nerdy know-how Keep up with your favorite financial topics on NerdWallet.

Margarette is a NerdWallet authority on savings. Her work has been featured in USA Today and The Associated Press. See full bio.

On a similar note.

Finance Smarter Credit Cards Financial Planning Financial News Small Business

Download the app

QR code for downloading the app

Disclaimer: NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product's site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution's Terms and Conditions. Pre-qualified offers are not binding. If you find discrepancies with your credit score or information from your credit report, please contact TransUnion® directly.

NerdUp by NerdWallet credit card: NerdWallet is not a bank. Bank services provided by Evolve Bank & Trust, member FDIC. The NerdUp by NerdWallet Credit Card is issued by Evolve Bank & Trust pursuant to a license from MasterCard International Inc.

Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

NerdWallet Compare, Inc. NMLS ID# 1617539

California: California Finance Lender loans arranged pursuant to Department of Financial Protection and Innovation Finance Lenders License #60DBO-74812

Insurance Services offered through NerdWallet Insurance Services, Inc. (CA resident license no.OK92033) Insurance Licenses

NerdWallet™ | 55 Hawthorne St. - 10th Floor, San Francisco, CA 94105