4 Options When You Can’t Open a Bank Account

According to CNN Money, about 15% of bank account applicants are denied regular savings and checking accounts because of their banking history. Banks usually get information about this history from a company called ChexSystems, which maintains a file of information on your checking account history similar to your credit report.

ChexSystems, which is governed by the Fair Credit Reporting Act just like larger credit reporting bureaus, simply record negative banking account information. Items like non-sufficient funds overdrafts and unpaid bank account liens will stay on your report for up to five years.

So if you’ve made checking account mistakes in the past – especially issues like frequent overdrafts or unpaid obligations – you may be denied when you apply for a new savings or checking account. In addition, some banks pull your credit report and will deny your application if your credit score doesn’t meet their requirements.

If you do get denied, don’t worry, though; you’ve got plenty of alternative options.

Find Out Why You’ve Been Denied

The first step you should take when you’re denied a checking account is to figure out why you’ve been denied. Under the Fair Credit Reporting Act, banks are required to tell you why you’ve been denied a bank account.

The most likely reason to be denied an account is that you’ve got an outstanding debt with a bank – often because of unpaid bank fees. But you may also be denied because of a history of frequent overdrafts. Just ask the bank who has denied you exactly what the issue is.

Your next step is likely to check out your ChexSystems report, which you can access at ConsumerDebit.com. Like your credit reports, you can get one free copy of your ChexSystems report every twelve months. The report will show which bank or banks have reported you and why.

If you owe a bank money according to your ChexSystems report, you’ll need to either negotiate with the bank you owe to pay off the debt, or dispute the report as inaccurate.

If you pay off your debt with a bank, they’ll have to report the account as paid to ChexSystems, which may help your case next time you apply for an account. If the report is wrong, you can talk to the reporting bank first. If they refuse to deal with the matter, dispute the information with ChexSystems, who is required by law to investigate the claim.

The fact of the matter is that it can take months – or even years – to clean up your ChexSystems report. In the meantime, you may need to take advantage of other bank account options so that you can pay your mortgage on time and avoid hefty transfer or cashier’s check fees.

Consider Alternatives

1. Prepaid cards

Prepaid cards were once known for their outrageous fees, but they’re becoming much more reasonable in recent years. Many prepaid cards function very similarly to checking accounts – even allowing for automatic paycheck deposits.

Be sure you research prepaid card options to ensure that you’re getting the best possible deal – especially when it comes to fees. And be sure you choose a card with the basic functions you need most, whether that’s paying bills online or getting gas at the pump.

A top pick with virtually no fees is the American Express Serve®. Not only are the fees low, but it comes with many of the same benefits you get with an American Express card.

2. Secured credit cards

A secured credit card is a good way to build your credit, which may help you get a checking account in the future. With these cards, you pay a deposit up front. The deposit is held by the card issuer in case of default. Sometimes these deposits also earn interest like a checking account.

Secured credit cards generally have a very low credit limit and a high interest rate. But if you use a secured card to pay your bills each month, paying it off at the end of the month, you won’t have to worry about interest.

One thing to note: you’ll need to be sure you have a way to actually pay off your secured credit card if you don’t have a bank account!

3. Alternative checking accounts

As companies seek to reach out to unbanked or underbanked Americans, more are coming up with tempting checking account alternatives. These alternatives often come with lots of features and low fees, though you’ll want to do your research so you know exactly what you’re getting into.

One excellent checking account alternative is Bluebird by American Express and WalMart. This card is very similar to a checking account. It lets you may direct deposit, use online bill pay, and even write checks.

Bluebird is also unique in that it lets you set up family sub-accounts, so you can give your teenager or another family member limited access to your Bluebird funds.

4. “Second chance” checking accounts

One final alternative to a traditional checking account is a second chance checking account. These accounts include most of the same features as regular checking accounts – checks, ATM access, online bill pay, debit cards, money transfers, and direct deposit.

The main difference is that these accounts often come with higher annual/monthly maintenance fees or require a larger opening deposit. Basically, these accounts are set up to give consumers a “second chance” while protecting the bank from losing too much money.

Some banks that offer second chance checking accounts don’t even check your ChexSystems file. Others will require that any outstanding balances from old banks (reported in your ChexSystems file) be paid off before you can get a second chance account.

A second chance checking account can be a good way to establish a better bank account history, and can often lead you into a lower-fee, traditional checking account within a few months to a year.

Topics: Banking

10 Responses to “4 Options When You Can’t Open a Bank Account”

  1. Steve Sager

    You really have to dig into the fee schedules of “second chance” checking accounts. You will be paying extra for a second chance. A nice feature with some second chance checking accounts is the ability to upgrade to a regular account after a certain period of trouble free banking.

  2. Great post Abby. I only have two bank accounts, a chequing and a savings – with the same institution and I’ve had them for a while. I have thought about opening more accounts but what’s the point?

    As a financial planner I have declined bank account applications for clients and it’s surprising to know how many people don’t even know that banks can decline an account opening. I always offer alternatives, such as checking their credit bureau to make sure that all info is reported correctly and working on making their payments on time to improve their credit history. If a client at my bank is declined they can reapply in 3 to 6 months.

  3. My now husband cannot open a checking out ANYWHERE! We requested a report from CheckSystems and there is nothing on there. We went to Bank of America and it turns out his ex girlfriend back in 2009 opened an account and listed him as an authorized user. Well she made “fraud” transactions according to what the banker said and now he can never open an account with Bank of America. He opened an account with Chase and a week later they closed his account. We’ve been paying off stuff on his credit report because the ex also ran up his credit and him being so trusting and lazy if you ask me never bothered to check what she was doing with his info. Any suggestions?

  4. Good luck with American Express Serve if you’re having problems with ChexSystems. Serve uses Certegy, an equally crappy and opaque check-approving company, for their mobile app deposit system. I haven’t been able to get any check deposited — including payroll checks drawn on major banks — for months. Meaning I have to pay exorbitant counter fees to have them cashed, then burn gas driving somewhere to wait in line to load the card at a store. Neither Serve nor Certegy will offer any explanation for this humiliation.

    How GETTING MY OWN MONEY relates in any way to my non-existent check-writing history, or to check-writing statistics in my area, is beyond me.

  5. Cutiepii89

    The simple card is great! It’s my alternative online checking. Easy to use and they have direct deposit and deposit check a through app. Need an external account in order to load any money on it.

  6. I turned 18 in December and tried to open a student checking account with BB&T. I was denied because there was some kind of problem with “credit”, but that cannot be as I have never used credit or even had a bank account. I am so upset because this was going to be my first bank account ever and I’m entering the workforce soon. Can anybody help me by telling me what to do. I called ChexSystem and I received my report. I don’t know how to proceed.

    • Stephanie Colestock
      Stephanie Colestock


      Did you find any negative items on your ChexSystems report? Have you also checked your (free annual) credit report? If all is clear and you have no negative accounts (fraudulent or otherwise), then I would call and talk to BB&T. Perhaps the lack of credit is their concern, and you may need to build up your history a bit before opening an account with them.

      If this is the case, there are a number of other banks that would likely allow you to open an account with a limited history. Capital One 360 is usually a pretty good starter account, though there are many others… especially if you open online. Here are some of our favorite — and FREE — online banks: https://www.doughroller.net/banking/free-online-checking-accounts/

      Let us know if this works or if you have any other questions. Best of luck with the first bank account, and the beginning of your personal finance journey!

      [email protected]

  7. Jeffrey Bryant

    BlueBird from American Express started out okay for the first six months, then they slipped fees in that caused things to be returned. They did that again the first of this month. My only income is around $1,000/ month from VA. I cannot work because of a disability caused during deployment. BlueBird has again locked my U.S. Treasury deposit and suspended the account for no apparent reason, they won’t budge & my utilities are getting turned off in two days. Avoid them.

  8. Niannza

    I’m a victim of a scam and sent back the money to the scammer and now I can’t opens an account anywhere I don’t have any credit and have tried all of these option I want to fix my problem but I need help

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