Monday 11th May 2020
Having a checking account is a crucial money management tool.
Along with quick and easy access to your money, checking accounts provide proof of payments, convenient bill pay features and the ability to pay securely by actual checks (which are safer to use than cash).
Though incredibly useful and important, a bad banking history has kept 15% of bank applicants from being approved for a checking account. Even if you begin to repair your banking history, it can take years to clean it up. Where does that leave you?
Luckily, there are more financial solutions available to people who have made checking accounts mistakes in the past. If traditional banks have been giving you the cold shoulder, here are some a few alternatives worth considering.
Get a “Second Chance” Alternative
Current Account
For people who want an account that has many of the same features as current accounts at a big bank - debit cards, direct deposit, check writing, ATMs and money transfers - a second chance current account is a great option.
These banks, which are typically credit unions, have higher maintenance fees or opening deposits in order to help customers stay on their financial track and protect the bank from losing a lot of money.
They are also known for offering higher interest rates, so deposits can earn you more money than at a traditional bank.
Credit unions may be smaller, but they are known for their emphasis on customer service and the desire to maintain genuine client relationships with everyone, not just those with the right net worth.
Banks that offer second chance accounts are forgiving toward applicants, with some bypassing banking and credit history altogether. Online banking tools like LetMeBank can help you find banks in every state that work with people who have less than stellar banking and credit history.
Online Banking
If you've been having trouble getting approved for a traditional current account, online banks can offer much of the same services and even more.
Internet banks do not have overhead costs like brick-and-mortar banks, allowing them to pass along some pretty unique savings to customers in the form of unlimited ATM reimbursements, higher annual interest rates, no overdraft or maintenance fees and no minimum monthly balances.
If you are willing to give up having a physical bank to walk into, another great feature about this banking alternative is the convenience - customers typically have access to their online bank every day of the week, every hour of the day.
Online banks recognised the millions of people who were being underserved or not served at all by traditional banks and have come up with tempting current account alternatives, such as mobile apps, low fees and tons of features.
Often there is no credit check and once approved, access to a debit card and account are provided immediately.
Secured Credit Cards
Secured credit cards are a great way to build or improve your credit, possibly helping customers get approved for full-fledged current accounts down the line.
These cards required an upfront deposit which is held by the issuer in case a customer defaults, generally carrying a high interest rate and low credit limit.
This shouldn't cause too much worry, however, because if you pay if off at the end of the month, interest won't be an issue. Keep in mind that if you use it this way, you will have to have a way to pay off the credit card!
With the right card issuer, if this card is responsibly used, they will report it to every major credit bureau, giving you a good chance to increase your credit score.
Prepaid Cards
The final alternative to traditional banks is prepaid cards. Once upon a time, these were known for their ridiculous fees, but nowadays have become much more reasonable, with many of them working the same as a checking account.
To ensure you are getting the best deal, especially regarding fees, be sure to do a little bit of research. With some of the prepaid cards offered, customers receive their direct deposits two days faster than traditional banks, and because it is not a credit card, late fees and interest charges aren’t a concern.
Whether you prioritise online bill paying features or direct deposit options, make sure you choose the card that includes the functions and options you need the most.
Conclusion
A few current account mistakes in the past shouldn't keep anyone from having a bank account; they are far too important.
With the amount of checking account alternatives available, people no longer have to rely on traditional banks in order to access a checking account, one of the most critical money management tools.
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