A bad ChexSystems score may not scar you for life, but it does severely limit your choice of banks for those 5 years that your banking record remains tarnished. A little over 80% of banks you apply to will employ the use of your ChexSystems score to determine if, as a customer of theirs, you are a liability.
But if you’re prepared to get back out there after a bad past with your bank, and you have located a bank that does not use ChexSystems, there are a few valuable characteristics to look for in a bank.
1. Find a Bank That Has Your Financial Future in Mind
You will find it is not difficult at all to find online establishments to look past your ChexSystems record and grant you a spending account that includes a debit card. You may be presented with phrases like, “fraud protection,” and “second chance checking” and feel like this is where your money belongs.
But don’t be pulled in by the ease of the experience or the promise of FDIC backing. These are the times you’ll ask yourself what banks don’t use ChexSystems and why don’t they? Remember that the more your checking account builds up, the more you will benefit from possessing a savings account to link it to.
Your savings account will accrue interest and is also a nice fallback in the event of an overdraft. If you have $700 in your checking account and try to withdraw $701, that extra dollar can come from your savings account and save you from having an overdraft fee.
Will you want to take out a loan to buy a car or finance your first home? Look for these opportunities at the bank you choose. And if you find an online account that offers these benefits, go for it! You won’t be sorry.
2. Find the Fees
You are going to run into fees associated with your debit card, checking account, and ATM use. Even if you keep your minimum balance, limit the number of withdrawals and the number of ATM transactions, you can still find fees are a significant drain on your account. You could spend nearly $200 a year on fees, in fact. Here are some details to look for when choosing a bank that does not use ChexSystems:
- Minimum Balance Fee. If you aren’t sure if you can allow the minimum balance to remain in your account, even for a single day, you could be charged a fee from withdrawing more than is acceptable. Look for these terms before choosing your bank.
- ATM Fees. Most banks don’t charge fees if you use their ATM, but that isn’t always an option. Especially when traveling, you’ll want to know what your ATM fees are for using “out of network” ATMs. Most credit unions have reimbursement for a certain amount of out-of-network ATM charges.
- Withdrawal and Transfer Fees. Your bank may charge you a fee for too many withdrawals from your account. You may be thinking, “It’s my money. I should be able to take it out whenever I want without fees.” While that sounds good, your bank will still need a steady revenue coming in from their customers, especially because the revenue from the interest they charge on loans can be unpredictable. So, they charge what is called maintenance fees. This the money they are owed for all the transactions you make.
- Overdraft Fees. This might be where you got yourself into trouble in the first place. It’s a common issue. You committed an overdraft, which happens when your account goes negative. And then you couldn’t pay the fee. Maybe you simply forgot. That fee is the reason your ChexSystems score is bad and your report left you looking for a bank that would ignore it. So, if you’re working toward clearing that record, don’t overdraft. And if you do, pay the fee as quickly as possible.
- Non-Sufficient Funds (NSF) Fees. This fee seems identical to the overdraft fee, but there is a key difference. The NSF fee happens when you attempt to pay $701 for something even though you only have $700 in your account. Then, instead of your account going negative and becoming “overdrawn,” the payment is declined. So, you leave without having made a purchase at all. Your account still has the $700 in it but, nevertheless, you have to pay this fee for attempting the charge.
Despite the fact that you’ll have only about 20% of banks to choose from when selecting a bank that doesn’t use ChexSystems, you will be glad to know that 100% of US banks are required to disclose every fee in writing. So, check the fine print when applying for an account.
3. Find their Check Policy
You may be under the impression that since your bank doesn’t use ChexSystems, then you’re in the clear and you will be able to open an account with all the perks you require. But you should not assume that you will be given checks.
This is especially true if your Telecheck report (probably run by your bank that doesn’t use ChexSystems) shows that you have committed any misdeeds while using checks in the past. This could be cashing a check or even trying to pass a bad check at a store. If you are not able to have personal checks, even with a clean Telecheck history, that just means your bank probably has a policy that no one with a ChexSystems report is allowed checks. It isn’t an uncommon practice. You can’t fight that, because it goes across the board and isn’t on a person-to-person basis. First, find out what your bank’s protocol is for those times you are required to pay with a check.
No matter what specific financial goals you’re reaching with your new account, you are rebuilding your banking history. And the first step to a better fiscal potential is knowing what to look for in a new bank. Going forward, refer to these three steps and read all the fine print your bank account agreement includes. You can’t go wrong.
