Having a bank account is a very important necessity for making financial transactions. While many people do not encounter any issues in opening a bank account, it is possible to get turned down if you have bad credit or poor banking history. That does not mean, however, that you’re stuck using prepaid cards forever. Even if you have bad credit, there are still financial institutions that will let you open a checking account and perform common banking transactions.
Why Would Having Bad Credit Affect Your Ability To Be With A Bank?
When you’re applying for a credit card, a loan, or any other type of credit, you’re probably aware that financial institutions will check your credit score and your credit history. Most of these companies will run soft or hard credit checks to see whether you have the ability to pay back what you’re borrowing.
What many people do not realize is that many banks also perform credit checks when you’re trying to open a new bank account. Banks usually check your credit through the major credit bureaus (Equifax, Experian, or TransUnion) and there are also banks that go through your banking history using ChexSystems and Early Warning Services. If your banking history is far from stellar, banks may deny your applications. Going through disapprovals can be very tedious and at the same time, frustrating.
Can I Open A Bank Account Even With Bad Credit?
Having a bad credit score does not automatically disqualify you from opening a checking account. There are now financial products that are geared towards people who have poor credit history, no credit history, or those with bad credit. These bank accounts are often referred to as second chance bank accounts because they cater to people who would not typically be approved for a standard bank account.
Many of the companies offering these products are online banks with no credit checks but there are also second chance bank accounts being offered by traditional banks. With some second chance accounts, you would need to apply first for the bank’s entry-level checking account with the least requirements, and only if you do not qualify will you be eligible to get their second chance bank account. There are online bank accounts, however, that accept all applicants whether you have good credit or not.
What Are The Best Banks If I Have Poor Credit?
So, what are the best bank accounts for bad credit? We’ve listed some of the companies that let you open a bank account with no credit check.
1. Wells Fargo Clear Access Banking
- Minimum Opening Deposit: Yes, $25
- Monthly Service Fee: $5 but can be waived for account owners aged 13 to 24 years old
If you are looking to open a bank account with a major bank, there are now banking products that will allow you to do so even with poor credit. Wells Fargo, one of the world’s largest financial institutions, launched a new low-cost banking account in September 2020 called the Wells Fargo Clear Access Banking.
According to the Wells Fargo website, the Clear Access Banking account is a good option for people who are unable to open standard accounts because of previous credit or banking history. The Cities for Financial Empowerment (CFE) Fund has certified Wells Fargo Clear Access Banking as a safe and appropriate financial product that can help people re-enter or enter the mainstream financial system. After one year, you can switch to a standard account once you qualify.
But just because this is a low-cost bank account does not mean that it doesn’t come packed with great features. Below are some of the top features of having this bank account.
- Bill Pay and online transfers
- Mobile deposit
- Debit card with contactless and chip technology
- Free access to more than 13,000 Wells Fargo ATMs
- No overdraft or non-sufficient funds (NSF) fees
- No paper checks
- Budgeting, cash flow, and spending tools
- Text banking
- 24/7 customer service
2. Chime Spending Account
- Minimum Opening Deposit: No
- Monthly Service Fee: Free
Chime is an internet only bank that does not perform any credit checks. So even if you have bad credit, you can open a Chime Spending Account. According to their website, applying for a Chime Spending Account is free and will only take 2 minutes. You need to be 18+ years old, a U.S. citizen, and provide your home address and Social Security Number. Chime is available in all 50 states so wherever you are in the United States, you can get a Chime account.
Below are some of the features of a Chime Spending Account
- Free to open an account with no deposit required
- No minimum balance requirements.
- Free Visa® debit card
- No hidden fees, no monthly fees, no foreign transaction fees
- Get paid up to 2 days early with the direct deposit feature
38,000+ fee-free MoneyPass® and Visa® Plus Alliance ATMs
NOTE: If you already have a Spending Account, you can opt to open a Chime Savings Account and a Chime Credit Builder Visa® Secured Credit Card. The Credit Builder credit card has no annual fees, no maintenance fees, no international fees, and no interest.
3. Varo Checking Account
- Minimum Opening Deposit: No
- Monthly Service Fee: Free
Varo is an online bank so you can open an account without visiting any physical branch. As long as you have an app, you can open a Varo bank account. Varo offers bank accounts for people with bad credit or any credit rating. When you apply, Varo will not look at your credit report, FICO score, or credit history.
Varo is also ideal for people who are struggling with their finances because you won’t have to pay any fees to maintain the bank account. That means no monthly fees, no penalty fees, and other bank fees traditional banks often charge. You can even open the account ASAP even if you do not have money to put into it yet.
- No minimum balance
- No monthly fees
- No transfer fees
- No foreign transaction fees
- No fees at 55,000+ Allpoint® ATMs in places you already shop (CVS, Walgreens, Target, etc)
- Your bank deposits are FDIC insured to at least $250,000.
- Get paid up to two days early with direct deposit
- Varo Bank Visa® contactless debit card
- You can deposit cash at 90,000+ retail locations
- You can deposit checks in the app once you receive your first direct deposit.
4. BBVA Easy Checking
- Minimum Opening Deposit: Yes, $25
- Monthly Service Fee: $13.95
The BBVA Easy Checking Account is specifically geared towards people who do not qualify for a standard checking account. By opening this bank account, you can get most of the features that you’ll typically get when you have a standard checking account, including the ability to write unlimited checks. With this account, you can rebuild your credit and upgrade to a different BBVA consumer checking account after 12 months.
Here are some of the primary features of a BBVA Easy checking account.
- One Complimentary Visa® Debit Card
- Unlimited check writing
- No ATM fees at BBVA USA ATMs
- Complimentary Online Banking and Mobile Banking, with Mobile Deposit and Bill Pay
- Instant transaction alerts* on the go with BBVA Mobile Banking App.
- Earn cash back rewards for everyday debit card purchases with Simple Cash Back
NOTE: If you want a BBVA bank account with no monthly service fee, you can also consider the BBVA Online Checking account. This is a good option especially if you mostly do your banking transactions online.
5. GoBank Online Checking
- Minimum Opening Deposit: Yes, $20
- Monthly Service Fee: $8.95
GoBank is one of the online banks with no credit check so even if you do not have a stellar credit record, you can still make financial transactions by having an online checking account. Owned by Green Dot Bank, GoBank offers customers who enroll in their Direct Deposit program zero monthly fees if you have a total of at least $500 a month. Otherwise, you would have to pay a monthly fee.
To open a GoBank account, you can get a GoBank starter kit from participating retailers like 7-11 or CVS for $2.95. You can also sign-up online for free to open your account. Some features of GoBank Online Checking include the following:
- Access to mobile banking through the GoBank app
- Pay bills online through the app
- No ATM fees with GoBank network
- No overdraft fees, no nonsufficient funds fee (NSF), and no penalty fees
- Deposit checks using your phone
- Easily send money to another GoBank card
- GoBank Account Alerts to track your transactions
- With GoBank ASAP Direct Deposit, get your pay up to 2 days before payday or government benefits 4 days before benefits day
- $4.95 fee to deposit cash at 100,000 participating retailers and get your cash into your account in minutes
6. Radius Essential Checking
- Minimum Opening Deposit: Yes, $10
- Monthly Service Fee: $9
GoBank is one of the online banks with no credit check so even if you do not have a stellar credit record, you can still make financial transactions by having an online checking account. Owned by Green Dot Bank, GoBank offers customers who enroll in their Direct Deposit program zero monthly fees if you have a total of at least $500 a month. Otherwise, you would have to pay a monthly fee.
To open a GoBank account, you can get a GoBank starter kit from participating retailers like 7-11 or CVS for $2.95. You can also sign-up online for free to open your account. Some features of GoBank Online Checking include the following:
- Access to mobile banking through the GoBank app
- Pay bills online through the app
- No ATM fees with GoBank network
- No overdraft fees, no nonsufficient funds fee (NSF), and no penalty fees
- Deposit checks using your phone
- Easily send money to another GoBank card
- GoBank Account Alerts to track your transactions
- With GoBank ASAP Direct Deposit, get your pay up to 2 days before payday or government benefits 4 days before benefits day
- $4.95 fee to deposit cash at 100,000 participating retailers and get your cash into your account in minutes
Are There Alternatives To A Bank Account?
Many people with bad credit or those who are struggling to maintain their financial situation look for other alternatives to manage their money. One of the most popular alternatives is using a prepaid card. Unlike opening a traditional bank account, getting a prepaid card is easy. You can load money into a reloadable prepaid card and use the card for your daily transactions like receiving direct deposit from your employer, sending money, loading checks, and most prepaid card companies also offer mobile banking services.
Another alternative to help you make day-to-day financial transactions is using a money app like PayPal or Venmo. These apps allow you to send and receive money as well. You can use these apps without linking your bank account, however, the types of transactions are limited.
Why Should You Open A Bank Account? Bank Account Vs Prepaid Cards
If you are already actively using prepaid cards or money apps to perform your daily financial activities, you might be thinking that opening a bank account is not necessary for you. While you might not see the benefit of opening a bank account right now, having an active bank account could help you in your future financial transactions.
There are many instances when a bank account is required. For example, when you are applying for a loan or a mortgage, the lender may ask you to provide a bank statement. Even payday loan companies often require that you have an active checking account before you can borrow money. A bank statement can also be useful if you are applying for a travel visa and you need to show the embassy proof of your finances.
While many prepaid cards already have similar features that a checking account can do, there are still limitations. Most prepaid card companies do not provide bank statements and it is often much more difficult to show your financial history with prepaid cards.
Opening A Bank Account With Bad Credit
If you have bad credit, this will often disqualify you from getting access to many financial products. However, opening a bank account is not an impossibility. The best option is to choose an online bank that charges the least fees so you can slowly rebuild your finances. Choose a bank account that will not require you to pay any monthly fees or will not require a minimum balance. This way, you can keep your bank account open without being penalized for not having enough cash to maintain it.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
