It used to be that if you had bad credit you could only open subpar second-chance checking accounts. They often had high fees and few benefits or good features. Now there are a lot of online banks that offer checking accounts with great features, even if you have bad credit. This article looks at 18 great options.
Written by Attorney John Coble.
Updated November 24, 2021
In the past, if you wanted to open a checking account but had a bad credit report, score, or Chexsystems report, you would have to open a second-chance checking account. These accounts were often called essential checking, opportunity checking, and fresh start checking accounts. These second-chance bank accounts usually had high fees and didn't offer the same features as other bank accounts.
A lot has changed. In this article, we’ll discuss the types of checking accounts available to you if you have bad credit and the features of these accounts. We’ll also compare several different accounts available for people with poor credit.
If You Have Bad Credit, Don’t Settle for a Sub-Par Checking Account
Many checking accounts that don’t check your credit history or banking history offer better perks than standard checking accounts offered by major banks to people with good credit. How could this happen? There is heavy competition among fintech companies to lure customers away from the banks. As a result, the fintechs offer some of the best checking accounts available.
These fintechs are usually not banks themselves. They are technology companies. They team up with a financial institution to offer these new types of accounts. For example, Chime is partnered with BankCorp and Stride Bank. If you open an account with Chime, your money will be kept in one of those banks. Your account is insured by the FDIC just as if it were at Bank of America. The rise of the fintechs has caused some traditional banks and federal credit unions to offer better services for their second-chance checking accounts to keep from losing customers to the fintechs.
Since fintechs are technology companies, you can expect their mobile banking and online checking account features to be second to none. These companies are experts at mobile banking. That said, They do not have brick-and-mortar branches that allow you to do in-person banking. Your bank is located in your pocket in the form of your smartphone. If your employer direct deposits your paycheck, most of the fintechs allow you to access your money two days early. If your employer still writes a check, you can deposit the check by scanning it with your phone’s camera.
You may wonder how you deposit cash into one of these accounts. Most of the fintechs allow cash deposits at retail outlets like Dollar General or 7-Eleven. Unfortunately, they usually charge a fee to deposit cash this way. At least one of the fintechs has free cash reloads, though. Another option for sending and/or receiving money between friends is to use apps like Venmo, CashApp, PayPal, and Zelle.
Types of “Bad Credit Checking Accounts”
You can divide the types of “bad credit checking accounts” into those offered by traditional banks and online-only/mobile-only fintechs. Traditional banks usually charge higher fees and don’t offer as many technology tools. But, traditional banks offer branch offices where you bank in person. These include banks like Bank of America, Wells Fargo, and Capital One. These banks might be your best option if you prefer to write paper checks instead of using a debit card or online bill pay. Yet, some of the traditional banks are moving away from paper checks for their bad credit accounts. That’s because debit cards and online bill pay mean you can’t bounce checks.
The fintechs are mostly new companies. They’re FDIC insured just like the big banks, so your account is safe even if the company fails. These companies have names like Chime, Varo, Dave, Albert, GoBank, and Serve. These companies often have no monthly maintenance fee, no credit check, and no overdraft fees. They may have tools for people with bad credit like credit builder applications and money management tools. Most of these companies also offer large nationwide ATM networks with fee-free ATM withdrawals.
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What To Look For in an Online-Only Checking Account
There are certain things you should expect from these new types of bank accounts. They include:
No monthly service charge, or at least a very low monthly maintenance fee
Complete fee-free checking
No minimum opening deposit
Early access to your direct deposit
Mobile check deposits through phone scans
ATM use through networks like AllPoint and MoneyPass that provide free withdrawals and no ATM fees
Google and Apple contactless payments
No overdraft fees by declining transactions on a debit card when the money isn't in the account or access to overdraft protection
Online Bill Pay
No minimum balance requirement
Excellent mobile apps
They probably won’t offer traditional check writing, but if they do, it’s usually through online bill pay where they’re mailed by the bank. You never see the actual check. This helps avoid issues with insufficient funds.
Additional Perks Offered by Many Online Banks
These banks are competing for your business, so they offer a lot of great perks. The following list highlights a few.
Card Security and Control
Many of these banks offer the ability to freeze your card along with virtual cards. These tools help prevent fraud. You can freeze your debit card so it can’t be used with a simple tap in the mobile app. It may be a good idea to keep your card frozen all the time and just unfreeze it when you’re using it. This can pose a problem with subscriptions, though. You can address this by paying subscriptions with a separate account that’s used just for that purpose. It’s easy to do this when there’s no fee for your account and it’s easy to transfer money between accounts. Some accounts offer subscription monitoring services, too.
Virtual cards are separate from your physical card. Virtual cards only exist in cyberspace. They have a number and expiration date just like your physical card. If you suspect fraud on the virtual card, you can change the number with a quick call to the bank instead of waiting a couple of weeks to get a new physical card. You may want to use your virtual card for all internet transactions and virtual wallet (Apple Pay or Google Pay) transactions. With the widespread use of contactless payment, it’s rare to need a physical card.
Other Common Perks of the Online-Only Accounts
Much higher interest rates than traditional banks pay you for the money in your account
Savings and investment accounts
Free instant money transfers between members
Immediate refund of unused authorized amounts when paying at the gas pump
Credit builder services
No foreign transaction fees
Help to find side jobs
Overdraft protection — since overdraft protection is a loan, it’s best not to use this unless it’s interest-free
No-interest or low-interest loans and advances
Professional budgeting help
Bill negotiation services similar to Truebill or Billshark
Fraud and identity theft protection
Cashback rewards and discounts on debit card purchases
Comparison of Leading Accounts Available to People With Bad Credit
In this section, we compare several different features for popular checking accounts. In cases where there’s not enough information on the bank’s website regarding a feature, we’ve included a question mark.
Also note that some websites indicate they don’t check credit, but a close reading of the fine print in their account agreement shows that you consent to a credit check. This may lead to some discrepancies between what their website says, and what we say. Many of these companies don’t run credit checks because they don’t need to know about your banking history. They're not offering credit, and their accounts are protected from overdraft. If you can only use a debit card for transactions, and they'll be declined if there's not enough money in the account, there isn't a way to overdraft.
If the overdraft box says “you choose,” it means you can opt for your card to be declined or for overdraft protection.
Capital One 360
Capital One is one of the most innovative of the traditional banks. It’s nice that they have a few options to avoid overdraft fees should you choose to allow potential overdrafts. It’s usually best to have the bank decline any transaction when there isn’t enough money in the account.
Bank of America Safe Balance Checking Account
This Bank of America account has a $4.95 monthly fee. Although it’s a traditional bank much like most of the fintechs, you can’t write a personal check.
Wells Fargo Clear Access
This Wells Fargo account has a $5 monthly fee and no personal checks can be written.
The Go Bank account has an $8.95 monthly fee. The monthly fee is waived if you have a qualifying direct deposit of more than $500 within the month. There’s a fee of up to $4.95 each time you deposit cash. This is a Green Dot company.
Chime is one of the most feature-rich accounts available. Paper checks are available through online bill pay.
Free peer-to-peer transfers are only among those with a Varo account. This is standard among the fintechs. Chime is an exception.
This is a popular account that will help you with budgeting, finding side jobs, and building your credit.
An Albert account offers financial advice from experts seven days a week. It offers bill negotiation, subscription monitoring, and budgeting.
Acorns account has a $3 monthly fee. It has automated investing in stocks, bonds, and exchange-traded funds (ETFs).
Money Lion accounts do have a monthly fee, but it’s only $1. It’s a feature-rich account that also provides access to crypto-trading, investments, insurance, and even pet insurance. It has credit building services, too.
This is a newer entry that is designed for self-employed business owners. Found has bookkeeping, tax, and other business functions built in.
This account is designed for freelancers. Unlike other accounts that have early access for direct deposits from employers only, Lili offers early access from payment platforms like Square and Paypal. This account also has tax tools and other useful features for freelancers.
Current is a full-featured account. It has a free tier and a premium account. The premium account is $4.99 per month and includes gas hold removal when you pay at the pump and early access to direct deposit.
This is another online bank from Green Dot. Go2Bank has a $5 monthly fee. The fee is waived if there’s a qualifying direct deposit within the last month.
If you care about the environment and want to fight climate change, this may be the bank for you. You can use your spare change to plant trees. This bank doesn’t invest any deposited money in fossil fuel companies. Aspiration’s Spend and Save account, members pay what they want — including nothing — for the monthly fee. For the Plus account, there’s a $7.99 monthly fee, which drops to $5.99 if you pay for a year at a time. The Plus account provides carbon offsets every time you use the card to fill your gas tank.
This is the only fintech that offers a full credit card (not secured). Though they don’t check your credit for the rest of the account, they will check your credit if you decide to add a credit card.
One is a full-featured account. A perk is that you can put part of your money into a shared pod. The shared pod is like a joint account, but it can be set up through the app and can have several owners. This might be helpful if you want to control how much of your account you share with your spouse or children.
This is one of the oldest fintech companies. Though Serve’s app ratings aren’t as good as they once were, it has some interesting features. Serve’s users get American Express cards, while other providers give Visa or Mastercard. These cards are considered prepaid cards because the account isn’t considered a checking account. Yet, the Serve account provides all the same features — a routing number, an account number, and the ability to send checks through online bill pay. You can deposit checks through mobile check capture in the app, and it’s FDIC insured. However, some companies don’t accept the card because it’s called prepaid.
There are several different options when it comes to the types of Serve accounts. One of the options has a free cash reload feature, but there’s a $6.95 monthly fee. Still, if you’re accepting a lot of cash, this might be your best choice. There’s also a cashback card and another card with no monthly fee if there’s a qualifying direct deposit.
Betterment is an investment-centric app. But, it’s also a feature-rich banking company. The checking account is FDIC insured, but the investment side is not. This goes for all the investment accounts attached to banking apps regardless of the company. This company has some good retirement and financial planning tools. It also offers several types of accounts, including IRAs.
In the past, if you had bad credit, you had to settle for a sub-par checking account if you could get a checking account at all. These accounts had high monthly fees and crippling overdraft fees. If you couldn’t find a bank to open a checking account with, you had to take your check to a check-cashing business on payday, wait in line, and pay a hefty fee. Many people aren’t aware that those days are over and there are now many great banking options.
Fintech companies are offering accounts that are on par with the best accounts big banks give their best clients. Competition is high to sign up new clients and lure clients from the big banks. So the accounts are easy to open and come with great perks. There’s an account out there for you, no matter your circumstances, as long as you have a smartphone, tablet, or computer.