According to a 2017 report by the FDIC 6.5% of Americans--or 8.4 million people are unbanked.” That means they have no bank relationship whatsoever. An additional 18.7% are considered underbanked,” which means they have only limited bank relationships, and rely on prepaid debit cards, check cashing services, and even payday loans.
There's a little doubt millions of people are in that situation because they have bad credit. Particularly with checking accounts, banks are reluctant to open them for people with impaired credit. If you fall into that category, and you don't have a bank account, we've compiled a list of bank accounts for bad credit.
Related: 4 Options When You Can’t Open a Bank Account
At least one of them should provide the checking account services you need to transact business freely.
Best Bank Accounts for Bad Credit
LendingClub Bank Essential Checking Best for Managing Your Entire Financial Life
LendingClub Bank Essential Checking is designed for customers who don’t have a perfect banking record. Not only does it offer a full-service checking account, but it also helps you to manage your money using powerful technology.
LendingClub Bank Essential Checking comes with the following features:
- Minimum initial deposit, $10
- Online banking with Bill Pay
- Mobile banking with mobile check deposits
- Comes with paper checks
- Daily debit card limit of $500
- Pay family and friends with Venmo
- Add Apple Pay, Google Pay, and Samsung Pay to your debit card
- After 12 months of positive banking history, you may be eligible to upgrade to a Rewards Checking account
The Financial Dashboard feature enables you to 1) build a budget and track spending, 2) analyze trends, 3) link external accounts, and 4) monitor your net worth.
The account has a $9 monthly service charge and does not offer a waiver provision.
Offers paper checks, which is uncommon for online banks
Mobile Wallet for your debit card - Apple Pay, Google Pay and Samsung Pay
Financial Dashboard enables you to link and monitor external accounts
Upgrade to Rewards Checking after only 12 months
No bank branches
No monthly service fee waiver provided
The LendingClub Bank Essential Checking Financial Dashboard enables you to manage your entire financial life on the banking app. That will help you get better control of your finances, which should help to improve your credit. You can also trade up to Rewards Checking after just 12 months.
Check out our full review of LendingClub Bank.
Discover Cashback Debit Best for Cashback on Everyday Purchases
The Discover Cashback Debit Account is a solid choice for all consumers, including those with bad or fair credit.
As the name suggests, the Discover Cashback Debit Account allows you to earn cash back for everyday purchases. And when it comes to free money, there’s never a good time to turn it down.
Some of its top features include:
- No balance or activity requirements
- No fees
- Earn one percent cash back on up to $3,000 in monthly debit card purchases
- Access to more than 60,000 no-fee ATMs in the United States
- Zelle integration
The primary advantage of a Discover Cashback Debit Account is the cash you earn for doing nothing more than paying your bills. This works in the same way as a cashback credit card. The only difference is that you’re using your debit card for purchases.
This is another area in which a Discover Cashback Debit Account comes out on top. There are no fees not even for:
- Monthly maintenance
- Insufficient funds
- Debit card replacement
- Online bill pay
- Check reorder
Cashback on every dollar you spend up to $3,000 per month
No fees (ever!)
You can only earn up to $30/month and $360/year in cashback
No local branches
Just because you have bad credit doesn’t mean you have to opt for a bare-bones checking account.
The Discover Cashback Debit Account allows you to save on fees, earn cash back, and manage your money in a way that’ll help you raise your credit score.
Wells Fargo Opportunity Checking Best for Full Service Checking Features and Benefits
As one of the biggest banks in the country, Wells Fargo is available in most states. There's also the advantage of having a checking account with such a well-known bank, especially when you have bad credit. They offer their Opportunity Checking account for customers who are unable to open a standard account due either to past credit problems or an unsatisfactory banking history.
Opportunity Checking comes with a wide variety of features and benefits, making the account comparable to an account for someone with good credit.
Those features include:
- Minimum initial deposit of $25
- Online banking with Bill Pay
- Mobile banking, with mobile alerts warning you of suspicious activity, low balances, and payment due dates
- Platinum debit card, with Zero Liability Protection against unauthorized charges
- Access to over 13,000 ATMs and 5,700 bank branches
- You can open an Opportunity Savings account to provide overdraft protection
One of the more interesting features offered on the checking account is the My Spending Report with Budget Watch that’s made to order for anyone with bad credit. It enables you to track your spending, which will give you greater control over it. That can help you avoid some of the situations that contribute to bad credit.
Opportunity Checking Comes with a monthly service fee of $10. However, you can avoid the fee with one of the following in each service period:
- Maintain a minimum daily balance of $1,500
- Have one or more qualifying direct deposits totaling at least $500
- Have 10 or more posted debit card purchases or payments
Other significant fees include $35 for overdraft and returned items, $2.50 per withdrawal at non-Wells Fargo ATMs, and $31 for a stop payment.
The minimum initial deposit required is very reasonable at just $25
The monthly service fee can be waived with one of three options
Both online and mobile banking are included
The My Spending Report with Budget Watch can help you better manage your finances
You can set up a savings account to provide overdraft protection
Wells Fargo isn’t available in all states
The monthly service fee applies if you can’t meet one of the three criteria to have it waived
There’s a 3% international debit card purchase transaction fee
The Wells Fargo Opportunity Checking account gives customers with bad credit histories all the typical features and benefits associated with a standard checking account. The My Spending Report with Budget Watch can help you get better control of your finances, while the addition of an Opportunity Savings account can enable you to begin saving money, so you'll rely less on credit. Overall, it's an excellent package for a person with bad credit to begin rebuilding.
Related: The Best Credit Cards for Poor Credit
GoBank Online Checking Best for Large ATM Network
GoBank Online Checking is an online checking account provided by Green Dot Bank. It’s an online bank, so there are no brick-and-mortar branches. But it’s one of the very best accounts for bad credit, since your application won’t be denied for either bad credit or negative bank information revealed through ChexSystems.
The account provides everything you'll need in a checking account. And even though it's an online bank, the funds in your account are fully FDIC insured.
GoBank Online Checking comes with all the services you’d expect from a checking account. Those features include:
- Minimum initial deposit of $0 online, or $20 with a GoBank starter kit
- Online banking with Bill Pay
- Mobile banking, with mobile check deposits and account alerts
- Debit MasterCard or Visa Debit Card, with Zero Liability Protection against unauthorized charges
- Send and receive money to individuals with either a GoBank account or PayPal
- Paper checks are available, which is unusual with online banks
- Access to over 42,000 in-network ATMs
- Deposit cash into your account at more than 100,000 retailers
- You can open a Money Vault savings account
An interesting feature is the Budget & Fortune Teller app. It enables you to set up a budget to track both your income and expenses. It even allows you to set up budget reminders, while the Fortune Teller feature gives you guidance based on your budget.
Related: 10 Online Budget Tools
GoBank Online Checking has a monthly fee of $8.95. But it can be waived with direct deposits of at least $500 per month, from either payroll or government benefits.
There are no fees for either overdraft or non-sufficient funds (NSFs). However, there is a 3% foreign transaction fee, as well as $2.50 to use a non-network ATM. Also, if you deposit cash through a retailer, there is a fee of up to $4.95 per deposit.
Access to a huge ATM network, as well as the ability to deposit cash through more than 100,000 retailers
Account comes with paper checks, which is not typical for online only bank accounts
No overdraft or penalty fees for NSFs
The Budget & Fortune Teller can help you better manage your finances
A savings account feature is offered
No bank branches
ATM withdrawal limit is $500 per day
Personal check deposits are limited to $500, or $1,000 per day
3% foreign transaction fee
There’s a fee of up to $4.95 per deposit if deposit is made through a retailer
GoBank Checking provides all the features of a full-service checking account even for those with bad credit. It’s also critical that they don’t check your previous banking history. The biggest reason people are declined for bank accounts is because of unsatisfactory banking relationships in the past. The Budget & Fortune Teller will help you to better manage your finances, while the savings account feature will enable you to begin building a financial cushion.
Related: How To Get Your REAL Credit Score
NetBank Best for Attractive Trade-up Checking Accounts
Offered by Axos Bank, NetBank Second Chance Checking is specifically for people who are in the ChexSystem and unable to open a regular checking account.
As the name implies, NetBank is a fully online banking platform and therefore has no local branches. However, it does offer full service checking with the following features:
- Minimum opening deposit of $50
- Free Visa Debit Card
- Overdraft protection available
- Online Banking with Online Bill Pay
- Mobile Banking with mobile check deposits
- Deposit cash with Green Dot Reload at participating retailers
- Account monitored for potential fraud
One of the major benefits of NetBank Second Chance Checking is that once you improve your credit and establish your banking relationship, the bank has a number of excellent checking account options. For example, their Rewards Checking pays interest up to 1.25% APY, while their CashBack Checking pays you 1% cash back on all transactions that require a signature. And neither account has a monthly service fee.
The monthly service fee is $6.95 with direct deposit. If you don't have direct deposit, the fee increases to $8.95 per month.
Ability to add cash to your account through participating retailers
Excellent checking account options when you improve your credit
No local bank branches
$4.95 fee to reload your account at Green Dot Reload retailers
No paper checks
NetBank Second Chance Checking is an excellent bank account for bad credit, especially since they don't even check the ChexSystem. And once you build a solid relationship with the bank, and improve your credit a bit, you can trade up to other checking accounts that have both serious benefits and low fees.
What is a Bank Account for Bad Credit?
It's an account for anyone who can't qualify for a standard bank account. This can certainly include anyone who has bad credit, particularly if there's a major derogatory event, such as a bankruptcy.
But an even bigger problem is a history of one or more unsatisfactory banking relationships. Several times in this review I've mentioned a service called ChexSystems, which is something like a credit reporting database for banks. The main difference is that it reports specific activity connected to previous bank accounts. For example, it keeps track of bank customers with a long history of bounced checks, or who have accounts that have been closed with unpaid negative balances.
Banks will access ChexSystems before opening any new accounts. If you have negative information in your report, you will not be permitted to open a standard account. Should that be the case, bank accounts for bad credit will be your only option.
Related: What is a Second Chance Checking Account and Where Can You Get One?
Why You Need a Bank Account for Bad Credit
In a world where money has gone full-on electronic, you need to have a bank relationship. It will make it easier to pay bills, deposit checks, accept payments of all types, transact business with online and point-of-sale businesses, and access cash.
What's more, having a bank account is much cheaper than using alternative financial services. For example, common non-bank financial services include:
- Prepaid cards, which have high fees and limited usability
- Money orders, which have high fees and aren’t accepted everywhere
- Check cashing services, which are the most expensive option for managing your income
Simply having a bank checking account can save you hundreds of dollars per year over these services, as well as enable you to transact business freely.
Improve Your Credit Score
You can take some steps to improve your score. Paying your bills on time, keeping credit card balances low, and leaving older accounts open will help raise your score.
Ready to increase your score now? Experian Boost™ can help raise your FICO score with every utility and mobile phone bill you pay on time. Until now, those payments did not positively impact your score.
Here’s our full review of Experian Boost.
If you've been going without a bank account because you have bad credit, you now know you have alternatives. Even if you can't qualify for a standard bank account, bank accounts for bad credit offer most of the same services.
Also read: How to Buy a House with Bad Credit
Choosing any one of the above bank accounts will not only make your financial life easier, but it will also save you money in the process.