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5 Best Second Chance Bank Accounts for Bad Credit in 2024

Jarrod Suda

Guide

Byron Mühlberg

Reviewer

Nov 15, 2023
Advertiser disclosure

For individuals who have encountered financial issues such as previous account closures, unpaid overdraft fees, bankruptcy, or negative ChexSystems reports, traditional banking options may not be readily available. This is where second chance banking comes into play. Traditional banks often offer basic accounts to help you access essential services and give you a good foundation.

On the other hand, platforms like Chime® and Current are financial services that have features designed to provide those with low credit history with the opportunity to improve bad credit. By regaining access to essential banking services, you will have the tools you need to rebuild your financial standing.

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Chime is an excellent checking account that offers no minimum balance requirements, no monthly fees¹, and no credit checks. The optional Chime Secured Credit Builder Visa® Credit Card, which also does not require a credit check, has no annual fee and charges zero interest.²

How Do Second Chance Bank Accounts Work?

While traditional banks often rely heavily on an applicant's credit history and ChexSystems report to evaluate their eligibility for loans and credit products, second chance banks focus more on providing individuals with banking essentials.

The primary feature of second chance banking is the focus on offering basic banking services such as checking and savings accounts, debit cards, and online banking access to help individuals manage their finances easily. None of the services that they offer will require the performance of credit checks on you. These services are also ideal for students who have no prior credit history at all.

In accordance with Know Your Customer (KYC) laws, banks in the US will still require you to show proof of valid ID and proof of address to open a second chance checking account.

Advantages of Second Chance Bank Accounts

Although second chance banking is made to be accessible, some services and features may be restricted. For example, overdrawing your account will often be limited since the main purpose of these kinds of accounts is to help you build a positive financial history.

Here are a few things that the best second chance accounts will offer:

  • No monthly fees;
  • No minimum balance requirements;
  • No cost for debit card access and online bill pay;
  • Education tools to improve financial literacy;
  • Tools for budgeting and debt management.

The 5 Best Second Chance Checking Accounts to Build Credit

Without further delay, let's walk through the 5 best second-chance accounts if you have bad credit in 2024:

Chime

In our opinion, Chime is the best second-chance checking account service in the United States. In addition to no minimum balance requirements, no monthly fees, and no credit checks, Chime offers many educational resources to guide you through your finances. The checking account comes with a Visa debit card, an optional savings account, and user-friendly mobile features such as mobile check deposit and real-time transaction alerts.

Chime Overdrafts

One of its best features for helping those who are tight on cash is its optional fee-free overdraft up to $200 for eligible members. To be eligible for SpotMe®, you need to qualify first by setting up a monthly direct deposit of $200. Then, you'll may be able get fee-free overdrafts up to $200, in case of emergencies before payday, without incurring penalties.

Chime Credit Builder

Perhaps Chime's most impressive feature for those with bad credit is its optional Secured Chime Credit Builder Visa® Credit Card, which has no annual fee. There is no credit check required either. To apply for Credit Builder², you must have received a single qualifying direct deposit of $200 or more to your Checking Account.

This is how it works: you first add money from the Checking Account to the Credit Builder balance, which will be held in a secured account as collateral for your Credit Builder card. You can spend up to this amount with your card. When this money is used to pay off your charges at the end of every month, Chime will report that to the major credit bureaus in the United States.

Overall, Chime uses its powerful finance app to help Americans who want better credit to build a strong financial history and access essential finance services.

More info: read our in-depth Chime review.

Current

Current also provides a credit builder feature like Chime, and it offers a solid range of banking services that can help you manage your finances effectively and build financial stability. Whether you're looking for no overdraft fees, attractive savings opportunities, or the convenience of Round-Ups, Current has features that make it a compelling option for individuals seeking a second chance banking service.

Current Overdrive

Current's Overdrive feature allows you to temporarily overdraw your Current Account up to a certain limit, even if you have a negative balance. It can be helpful when you're in a tight spot financially. To qualify, you need to have at least $500 in direct deposits into your account within the past 30 days and continue using the bank's mobile app. While there are no additional interest charges or fees for using Overdrive, it's important to repay the negative balance within 60 days to avoid potential restrictions or account closure. It's a convenient tool, but make sure to understand the terms and conditions before using it.

Current Savings Pods

Another standout features of Current is their Savings Pods. By setting up and maintaining a qualifying direct deposit of $200 or more, you can earn an attractive Annual Percentage Yield (APY) of 4.00% on your savings. This allows you to grow your savings while still having easy access to your funds. If you don't meet the direct deposit requirement, the standard APY is 0.25%.

Current Round-Ups

Current also offers a convenient Round-Ups feature, making saving effortless and automatic. With each purchase, Current rounds up the amount to the nearest dollar and deposits the extra change into your chosen Savings Pod. This simple feature helps you save money gradually without even thinking about it.

More info: read our in-depth Current review.

Capital One

Captial One 360 Checking is a solid big bank option for those who need basic banking services since it doesn't use ChexSystems to survey your credit history, making it easier to get approved. It's free to open, charges no monthly maintenance fees, and has no minimum balance requirement.

Capital One Overdrafts

Capital One offers three free options for handling overdrafts: you can decline them, transfer funds from your savings account, or let Capital One cover the difference on a case-by-case basis. In the third case, you will need to pay back the overdraft as soon as possible. If your balance remains negative, Capital One may not approve additional transactions, and they hold the discretion to close your account — impacting your ability to open accounts at other financial institutions in the future.

When you set up direct deposit with Capital One, your paycheck can be available up to two days early. The bank also has a network of over 70,000 ATMs, which offer free cash withdrawals. Overall, Capital One offers everything you need in essential checking for no monthly fees.

More info: read our in-depth Captial One review.

Varo

Varo is a digital bank and FDIC Member that provides second chance banking services with no monthly fees, no minimum balance requirements, and no credit checks. Varo provides innovative solutions such as Varo Advance and Varo Believe Credit Builder Card, helping individuals to build creditworthiness.

Varo Advance

Varo offers Varo Advance, a small dollar line of credit with a 0% Annual Percentage Rate (APR). You have the option to repay the advance within 30 days, giving you flexibility. To qualify, you need an active bank account that is at least 30 days old, an activated debit card, and qualifying direct deposits of at least $1,000 during the current or previous calendar month. Timely repayments can increase your access to the advance, allowing you to borrow up to $75 after meeting the requirements.

Varo Believe

Varo Believe is a secured credit card designed to help you build credit. Prior credit history, credit checks, and minimum security deposits are not required. The card charges no interest and no annual fees. Instead, you will need to have received qualifying direct deposits of $500 or more in the past 90 days to your Varo Bank Account.

Your credit limit is based on your available balance in your Varo Believe Secured Account, up to $2,500 per day for purchases or $1,000 per day for cash advances (aka ATM withdrawals), with a total limit of $10,000 per billing cycle.

Acorns

Acorns is a platform that goes beyond traditional banking and serves as an educational tool to help you develop a habit of saving and investing. While Acorns is not a bank, the checking account, Acorns Visa™ debit cards, and banking services are issued by Lincoln Savings Bank or nbkc bank, members FDIC.

Acorns Direct Deposits

One of the standout aspects of Acorns is the variety of ways it enables you to save and invest. By setting up direct deposit into your Acorns checking account, you can receive your paycheck up to two days earlier compared to traditional banks. A percentage of the recurring deposit can automatically be invested too. Additionally, Acorns offers a feature that rounds up your purchases and automatically deposits the difference into your investment account.

Acorns Checking

When it comes to fees, Acorns charges a reasonable monthly fee of $3 ($5 for a family plan). This fee grants you access to all the features the platform offers, including investment management and a checking account. The checking account charges no overdraft fees, maintenance fees, or ATM fees for cash withdrawals from in-network ATMs.

Frequently Asked Questions About Second Chance Bank Accounts for Bad Credit

Disclaimers

Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A.; Members FDIC. Credit Builder card issued by Stride Bank, N.A.

¹ Out-of-network ATM withdrawal and over-the-counter advance fees may apply. See here for details.

² To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.

³ The Annual Percentage Yield ("APY") for the Chime Savings Account is variable and may change anytime. The disclosed APY is effective as of September 20, 2023. No minimum balance is required. Must have $0.01 in savings to earn interest.

⁴ On-time payment history can have a positive impact on your credit score. Late payment may negatively impact your credit score. Results may vary.

⁵ SpotMe® on Credit is an optional, no-interest/no-fee overdraft line of credit tied to the Secured Deposit Account available to qualifying members with an active Chime Credit Builder Account. SpotMe on Debit is an optional, no-fee overdraft service attached to the Chime Checking Account available to qualifying members after Visa debit card activation. Both SpotMe on Credit and SpotMe on Debit are sometimes collectively referred to as "SpotMe" or, if you have signed up to use SpotMe with only one account, "SpotMe" means the elected service. To qualify for SpotMe, you must receive $200 or more in qualifying direct deposits to your Chime Checking Account monthly. Qualifying members will be allowed to overdraw their Chime Checking Account and/or Secured Deposit Account (associated with your Chime Credit Builder credit card) up to $20 but may be later eligible for a higher limit of up to $200 or more based on Chime account history, direct deposit frequency and amount, spending activity and other risk-based factors. The SpotMe limit will be displayed within the Chime mobile app and is subject to change at any time, at Chime’s sole discretion. Although Chime does not charge any overdraft fees for SpotMe, there may be out-of-network or third-party fees associated with ATM transactions. SpotMe Debit Terms and Conditions and SpotMe on Credit Terms and Conditions.

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