To most of us, opening a bank account is a pretty straightforward affair. You look at what
the various banks in your area are offering, you look at what you need, you pick the one that best
suits your needs, you go there, open your account(s) and you're basically done. For other people,
though, the reality is a lot more complicated than that.
Have I Been Reported To Chexsystems?
If you haven't tried opening a bank account, there's a very good chance you don't have to ask
yourself that question. Because it only matters if you're trying to open a bank account. Now we all
know that not being able to open a bank account complicates your life to no end. You can't do
direct deposit and have to go cash your paycheck at a check cashing store. You can't do ATM
transactions, you can't do online banking and/or pay bills online. To make a long story short, it
really messes you up.
So how do most people find out that they've been reported to ChexSystems? When they try and open
a new checking account. When you fill out an application for a new checking account, in about 80
percent of banks, your information will be run through ChexSystems' database so that they can make
a decision on whether or not they want you as a client.
How Do You Get Reported To ChexSystems?
Whenever you overdraw your bank account, the bank will send you a notice in the mail or try
calling you to get you to pay up so that you get your balance back to positive. You will be given a
few weeks to remedy the situation before they report you. As much as people like to vilify the
banks , they just don't see a negative balance and rush off to report you to Chexsytems. They will
try to get you to pay up first. It's only when you choose to ignore the bank, that it will report
you to Chexsystems.
If you are still wondering how you can land on that dreaded list, all you need to to is consider
a number of things that have become standard practice in the banking business lately:
- Overdraft protection programs. In theory, this is a very convenient service. In reality,
though, many people have found themselves owing a lot more money than they would if they didn't
have it, because of overdraft fees. Plus, relying on overdraft protection all the time really
shows that you're doing a poor job of managing your money.
- Debit cards. They're accepted everywhere now, and are increasingly being used for very
small transactions. Combine that with overdraft protection, and you can quickly run up a couple
hundred dollars in overdraft fees when the transactions themselves amount to only a fraction of
that.
- Biggest Check First policy. This refers to the order in which a bank posts transactions to
a customer's account. "Largest to smallest processing" tends to maximize overdraft occurrences
on a customer's account. This situation can arise when the account holder makes a number of
small debits for which there are sufficient funds in the account at the time of purchase.
Later, the account holder makes a large debit that overdraws the account (either accidentally
or intentionally). If all of the items present for payment to the account on the same day, and
the bank processes the largest transaction first, multiple overdrafts can result. The "biggest
check first" policy is common among large U.S. banks. Banks argue that this is done to prevent
a customer's most important transactions (such as a rent or mortgage check, or utility payment)
from being returned unpaid. Consumers have attempted to litigate to prevent this practice,
arguing that banks use "biggest check first" to manipulate the order of transactions to
artificially trigger more overdraft fees to collect, but to date the practice has not been
found to be illegal.
If you have been reported to Chex Systems, there's a very high likelihood that you will have
your checking account application denied by any bank that uses ChexSystems. Basically, without a
checking account, your entire financial life is put on hold.
Opening A Checking Account While ON ChexSystems.
Thankfully, there are a handful of banks out there who do not use ChexSystems at all. These
banks call themselves "second chance checking" banks. As the name suggests, they actually offer
checking accounts to anyone, except people who have engaged in fraudulent activities.
Second chance checking banks offer many of the same perks and benefits of "regular" checking
accounts that you can open at other banks.
How to Find a Second Chance Checking Bank
To find second chance checking banks that don't
use ChexSystems, follow these steps:
- Create a spreadsheet or list on paper to record your candidate non-Chex Systems banks.
- Make a checklist for each bank. For each bank you evaluate find out whether it is
FDIC-insured. Look into their fee structures. For example, will they charge you a monthly
checking fee? Do they have an overdraft protection program? Are they offering any promotions
right now that would give you incentive to open an account?
- Choose the best bank and apply.
Once you have decided that Chex Systems is the reason you are not getting approved for a new
checking account, look for a list of second chance checking banks, choose the best one, and
apply.
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