Most American banks use a database called ChexSystems to determine the risk of new customers. Other banks report you to this database if your account is closed due to a negative balance. You can also get listed on the database if a bank determines that you lied on the account application. ChexSystems stores their information for five years, so you will have to wait that long to be removed if you do not remedy the situation.
Some banks will not allow you to open a new account if you are in the database, but they will allow you to keep a current account. Other banks will only allow you to keep your account open if you show proof that you paid off the debt. Some banks will make you switch to an account with more fees so they can offset the risk of having you for a customer.
If you have been denied a bank account, you have two months to contact ChexSystems for a report. Your bank may be able to assist you in getting a report, or you can visit the ChexSystem website for more information.
The report will show what fees you owe to banks so you can pay them off. You will need to pay off all debts in full or reach a settlement in order to get your name out of the database. When you pay off the amount that you owe, request a letter stating that the debt has been taken care of. You will need to take this letter to the bank in order to open a new account.
If there is inaccurate information listed on your report, you can dispute the negative mark by contacting ChexSystems. You will need to submit proof of payment in order to get the mark taken off of your record.
Some banks use a database called Telescan instead of ChexSystems. It works in much the same way, and you will have to contact them for corrections.
Having your name on ChexSystems can be a big inconvenience. You may not be able to have an bank account, or you may pay higher fees if you do get one. Many stores use ChexSystems when they accept checks, so you will not be able to use a check at many stores if you are in the database. Some stores will not accept any type of return if your name is on the database, even if you have a receipt.
If your paycheck is direct deposited, you will have to ask your boss for a paper check. Not all employers are sympathetic to banking problems, so this could cause trouble at work. You also will not have a bank in which to cash your paycheck, so you will have to use a check cashing store, which means a hefty fee to get your own paycheck.
Without a bank account, you will not have a debit card to use. You will have to carry cash with you, and you will have to purchase prepaid debit cards to use to shop online.
If your account does go in the negative due to an overdraw, call your bank right away. Some banks will help you set up an arrangement to get your account balance positive so you are not reported to the database.
Try not to overdraw your account by keeping your checking account balanced. If you find yourself overdrawing your account regularly, try to use cash for purchases so you do not face expensive fees for an overdraw.
There are some non ChexSystems banks that offer second chance checking. If you are not able to pay off your debt right away, you can find one of these banks to open an account. The fees are often much higher than a traditional account because you are a higher risk. You may have monthly fees to keep the account open, and the overdraft fee is usually higher, too.
While you should pay off your debt, these second chance checking accounts can help you keep a current bank account. Having a checking account means that you can get your paycheck direct deposited in to your account, which is more convenient than cashing a paycheck at the bank.