Best Bank Accounts for Bad Credit – Dump your prepaid card

A bad credit bank account bank account lets you dump your prepaid card to open a real bank account.
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If you've come up short when looking for a bank account for bad credit, it's not surprising. Bad credit has wide-reaching consequences, even on your ability to open a bank account.

No-credit check banks offer people with bad credit a safe and convenient way to save and manage money at a traditional bank.

7 Bad Credit Bank Accounts

Banking for bad credit opens the door to a variety of financial products to help improve your financial health.
1

OneUnited Bank

Best for no-credit check cash advance and secured credit card

2

mph.bank

Best for roundup widget to save automatically
3

Acorns Banking

Best for high-yield checking
4

Current Banking

Best for credit builder card
5

Upgrade Banking

Best for high-yield savings
6

Albert Banking

Best for $250 cash advance
7

Consumers Credit Union

Best for No monthly maintenance fees

A Closer Look At The Top Checking Accounts for Bad Credit

OneUnited customers have access to a cash advance feature that offers a short-term loan up to $1,000 without a credit check.

Features we like most

  • Minimum deposit: $25
  • Get a Loan, No Credit Check
  • Surcharge free ATMs at over 100,000+ locations
  • Up to 20% cash-back in various categories like food, hair products, hotels, cosmetics
  • Early paycheck with direct deposit
  • Add cash at over 90,000 locations across the country through a partnership with Green Dot
  • FDIC insured up to $250,000
Apply Today

Apply at OneUnited's Secure Site

mph.bank's Fresh digital checking account allows people with past ChexSystems issues to open a new account.

Features we like most

  • $9.00 a month service fee
  • Minimum deposit opening deposit $25
  • Early paycheck with direct deposit
  • 55,000 Free AllPoint ATMs
  • Save for goals: Create unlimited savings accounts for your specific goals and earn 1.00% APY on your balances. 
  • FDIC insured: Yes
Apply Today

Apply at mph's Secure Site

Acorns offers the Mighty Oak debit card with banking features that earns high-yields on the checking and savings account.

Features we like most

  • Earn 3.00% APY on Checking and 5.00% APY on Emergency Fund
  • Minimum deposit opening deposit $25
  • Get paid up to 2 days early
  • Tungsten metal debit card
  • No overdraft fees
  • 55,000+ fee-free ATMs
  • FDIC-insured up to $250,000
Apply Today

Apply at Acorn's Secure Site

Current customers can get paid faster, build credit, earn 4.00% APY all in one place.

Features we like most

  • Build credit with everyday purchases
  • Get paid up to 2 days faster
  • Earn points on swipes for cash back
  • 40,000+ fee-free ATMs
  • Earn up to 4.00% annual bonus on savings
  • FDIC-insured up to $250,000
Apply Today

Apply at Current's Secure Site

Upgrade customers earn up to 2% cash back on everyday expenses and 5.21% APY with a qualifying direct deposit of $1,000.

Features we like most

  • $0 minimum opening deposit
  • Get paid up to 2 days faster
  • Up to 2% cash back on specific purchases1
  • Unlimited 1% cash back on other purchases
  • Earn up to 5.21% APY on savings with $1,000 monthly direct deposit
  • FDIC-insured up to $250,000
Apply Today

Apply at Upgrade's Secure Site

Albert's customers earn get access to a low-cost cash advance up to $250 with no credit check.

Features we like most

  • $0 minimum opening deposit
  • Earn cashback on gas, groceries, delivery, and more
  • Early direct deposit
  • Save and invest in the Albert banking app
  • FDIC insured up to $250,000
Apply Today

Apply at Albert's Secure Site

Consumers Credit Union Rewards Checking earns up to 5.00% APY after meeting specific requirements including.

Features we like most

  • $5 minimum opening deposit
  • Unlimited reimbursement for any and all ATM fees
  • Early direct deposit
  • Over 30,000 ATM & over 5,000 shared branches
  • NCUA insured up to $250,000
Apply Today

Apply at Consumers CU's Secure Site

What is a checking account for bad credit?

A checking account for bad credit is a type of bank account designed specifically for people who have a poor credit history or prior banking issues that led to negative records in ChexSystems.

Checking accounts for bad credit can be found at online banks, traditional banks or credit unions, and banks that offer second chance checking accounts.

It's not uncommon to have both bad credit and ChexSystems records. The two often go hand-in-hand.

One reason is that a bank can report an unpaid negative account balance from an overdraft to ChexSystems, then later the bank can sell that debt to a collection agency.

The collection agency can then report the debt to the major credit bureaus – causing bad credit.

The main advantage of bad credit checking accounts is that it allows people with poor credit to have access to a safe place to deposit money, manage finances in one place, cut check-cashing and money order fees, use online tools to pay bills and easily transfer money.

Just like you can rebuild credit, banking privileges can be restored by responsibly managing a checking account for bad credit.

Reasons people with bad credit need a bank account?

Having the ability to conduct financial transactions quickly and securely is vital in a largely mobile society.

Whether you need to pay a utility bill, quickly transfer money to friends or family members, or make an online purchase, you need the ability to conduct financial transactions fast and securely.

  • Fewer people use cash. Conducting transactions with cash or money orders is slowly becoming obsolete, especially in the wake of COVID-19. Some retailers and fast-food joints are requesting customers to pay with debit or credit cards only. This is hard to do without a bank account.
 
  • Check-cashing stores are expensive. Using check-cashing services to access the funds in your paycheck is time-consuming and costly. According to the Financial Health Network, Americans spent $1.5 billion in check-cashing fees at nonbanks in 2021.
 
  • Lack of a banking relationship. Another major issue with conducting financial transactions without a bank account is the lack of a banking relationship. Not having a banking relationship can make it tough to get a car loan or mortgage loan. Many lenders won't even consider a loan application if you don't have a bank account.

Avoid overdrafts with your new account

Avoid overdrafts with your new account by keeping track of your money. Most bank accounts, if not all, allow online access and apps that offer up-to-date account information and alerts.

Bank accounts for bad credit and second chance banking accounts are typically not free. But, most banks and credit unions will give you an opportunity to upgrade to a free account or at the very least, an account that offers more benefits after a 12-month proof of good account management.

Your new account is more than likely to be monitored by the bank. If you’re prone to overdrafts, you need to be conscious of your balance at all times and open a bank account that offers overdraft protection or an overdraft line of credit.

Alternatives to bad credit checking accounts 

Bad credit doesn't mean you can't open a checking account. Here are workarounds to open a checking with bad credit.

1. Look for banks that don't use ChexSystems

If bank accounts for bad credit are not an option, the next best alternative is banks that don't use ChexSystems. These accounts are very similar to bank accounts for bad credit but the main difference is they don't use ChexSystems to verify new accounts.

When banks open a checking account for bad credit customers, they may use ChexSystems to verify new account openings but decide to give customers a fresh start.

On the other hand, banks that don't use ChexSystems never see your negative banking records at all, which might be a better option for consumers with multiple ChexSystems records.

When you search for a bank, review its policies online. Most banks that have a second chance checking program explicitly state whether they conduct credit checks or use ChexSystems reports.

2. Challenge your ChexSystems Report

ChexSystems does not operate as an unregulated company. Because ChexSystems is considered a consumer reporting agency, they are subject to federal laws, in particular, the Fair Credit Reporting Act.

You have the right to challenge errors on your ChexSystems report the same as you can with your credit reports.

Federal law entitles you to a free ChexSystems report once every 12 months under federal law. If you are denied a bank account or job due to entries on your ChexSystems report you can get a free report within 60 days of the denial.

After reviewing your ChexSystems report online, you can dispute any mistakes or inaccuracies. You have the option to use the online dispute form to submit your dispute online, by mail, or via fax.

Here is what to review on your ChexSystems report:

  • Negative balances
  • Insufficient funds fees
  • Overdraft
  • Unpaid loans

Supporting documentation should be submitted with ChexSystems disputes if it exists. If you are unsuccessful in the dispute process with ChexSystems, dispute directly with the bank that reported you.

Banks that report customers to ChexSystems must adhere to the same dispute requirements under the Fair Credit Reporting Act.

ChexSystems or the bank generally must investigate the dispute within 30 days of receiving it. The dispute will either be verified as accurate or not. In some instances the bank or ChexSystems will not complete the investigation in 30 days, in such case, the account must be deleted.

ChexSystems or the bank will have 5 business days after completing an investigation to notify you of the results.

If you have the funds, try negotiating a settlement with the bank or collection agency for the debt in exchange for getting the negative information removed from your ChexSystems report, essentially similar to a credit account pay for delete.

3. Request Reconsideration

Just like you can request reconsideration when denied for a credit card, you can ask a bank to take another look at your account application.

With instant approval bank accounts, the automated process can overlook compelling hardships that may have caused a negative banking record.

A denial may be overturned with a manual review of your application. If you can show that your negative banking history is an anomaly caused by emergency circumstances, the bank might reverse its decision.

4. Open a Second Chance Checking Account Near You

If bank accounts for bad credit don't fit your needs, find a local second chance bank or credit union near you that offers second chance banking accounts.

These types of accounts let you enjoy the perks of a bank account while restoring your banking history plus you get to know the bank's representatives to form a more personal banking relationship.

5. Temporarily use a prepaid debit card 

I know we said, “dump your prepaid card.” But if you have exhausted all options, temporarily using a prepaid debit card will at least offer a limited form of banking. Card issued by The Bancorp Bank, N.A offers prepaid cards with early direct deposit.

This account is good for people with bad credit because there is no credit check or ChexSystems to open. Check out our review of Card with a variety of designs to fit your personality.

Card issued by The Bancorp Bank, N.A Features

  • Minimum opening deposit $0.
  • Get paid up to 2 days early with direct deposit.
  • 8,000+ card designs to choose from.
  • Get the details on account transactions and more with anytime alerts.
  • $50 Bonus for setting up a minimum $200 direct deposit within 60 days of opening new account.

Best account features for a bad credit bank account

Now that you know the ins-and-outs of checking accounts for bad credit, it's time to find one that fits your financial needs. Here are four features to consider before opening a new account.

1. Monthly service fees

The last thing you want is money eaten up in bank fees. But unfortunately, when you have bad credit, a monthly service fee may be mandatory unless you meet certain criteria. For example:

  • Meet the minimum balance requirement. Most banks allow customers to avoid fees by keeping their balance above a certain amount.
  • Enroll in direct deposit. It's common for banks to waive the monthly service fee when customers sign up for direct deposit.
  • Open a savings account. A bank also might waive fees for customers who have multiple accounts under the same roof.

2. No Minimum Balance Requirements 

Avoid accounts that require a minimum balance. Look for a bank that does not require you to keep a certain amount of funds in your checking account.

That way, you won’t have to worry daily about dipping below the minimum and getting hit with fees.

3. Free Perks

Banks want your business and are willing to compete for it with free checking account perks. Cash-back checking accounts are an excellent perk some banks offer for purchasing everyday items like gas and groceries.

Many online only banks offer ATM reimbursements is another excellent perk offered by some banks. That means you can count on getting your money back for practically any ATM charge.

4. Mobile Banking

Mobile banking gives customers a convenient way to connect with their bank. Mobile banking also gives banks an opportunity to create a closer banking relationship with their customers. If you're one of the 85 percent of people across the world who own a smartphone, you could probably benefit from mobile banking.

Having the ability to see your account in real-time, receive account alerts and deposit checks can be a big help in successfully managing a checking account.

Financial Resources for Bad Credit

Never ignore bad credit. Without a banking relationship, you're stuck using money orders or cashier's checks to pay bills or using check-cashing services to access the funds in your paycheck. Ignoring bad credit only makes it worse.

But without good credit, you're stuck using high-rate personal loans or payday if you need to borrow money. Paying an extra deposit if renting an apartment, or flat-out being denied.

Bad credit can make it harder to get car and home loans, and to qualify for credit card accounts. Plus people with lower credit scores generally pay more for auto, renter’s, and homeowner’s insurance.

1. Secured Credit Cards. Credit cards managed the right way can boost your credit scores in less than 6 months. Make only small purchases and pay them off immediately, before the due date.

That means if you normally use cash for things like groceries or gas, use the secured credit card for those items then pay the credit card in full.

2. Credit Builder Card. The Current Secured Credit Card is designed to help consumers build or rebuild credit. Qualifying is simple:

  • Must open a Current account
  • Funds transferred into the Current account become your security deposit, and thus your credit limit, for the card
  • No credit check
  • There's no APR because you literally can't carry a balance month to month
  • The Current Build Card only reports to TransUnion

3. Personal Loans. Unsecured personal loans for bad credit may cost you more due to higher interest rates; but, having a personal loan on credit reports can improve scores. Personal loans can enhance your credit history and your credit mix.

A blend of installment debt (personal loan) and revolving debt (credit cards) can benefit your credit scores. Personal loans for bad credit can also be used to pay down debt.

4. Credit For Utilities. Experian Boost lets consumers get a positive payment history from accounts that don't normally appear on your credit report. The types of bills reported with Experian Boost include:

  • Utility
  • Cell phone
  • Cable
  • Internet
  • Streaming service bills, like Netflix.

Experian Boost makes it possible to add monthly utility, rent, streaming service and other bills to your credit report. While Experian Boost only works for your Experian credit report, letting you benefit from additional positive payment history that can improve at least one of your credit scores. 

5. Credit-Builder Loans. Credit builder loans are designed to help people establish or improve their credit score. These loans are typically small, ranging from $300 to $1,000.

The lender will hold the loan funds in a savings or Certificate of Deposit account, and you'll make monthly payments on the loan for a set period of time.

Your payments are reported to the credit bureaus and once the loan terms end, you'll get the money, sometimes with interest.

6. Debit card that builds credit. Building credit can take on many forms, there are a few debit cards that can help build credit by reporting monthly transactions to the credit bureaus.

This type of debit card that builds credit is typically linked to your regular checking account and charges a monthly fee for the service of positive credit bureau reporting.

Final thoughts

There's no reason to pay a check cashing store or pay prepaid debit card fees when bank accounts for bad credit are available throughout the United States.

Mistakes happen. Many people don’t know how to manage a checking account until they make a mess of it. Who you’re banking with matters to your overall financial health.

But learning how to manage a bank account responsibly can save you money and time, but most of all help you build wealth.

Upgrade Disclaimers

1 Active Accounts with a monthly direct deposit of $1000 are eligible for additional benefits on Rewards Checking Plus such as additional cash back rewards, ATM fee reimbursement, and more. See the Active Account page for more information.

2 Rewards Checking Plus customers who set-up monthly direct deposits of $1,000 or more earn 2% cash back on common everyday expenses at convenience stores, drugstores, restaurants and bars – including deliveries – and gas stations, as well as recurring payments on utilities and monthly subscriptions including phone, cable, TV and other streaming services, and 1% cash back on all other debit card purchases. 2% cash back is limited to $500 in rewards per calendar year; after $500, customers earn 1% cash back on all eligible debit card purchases for the remainder of the year. Rewards Checking Plus accounts with less than $1,000 in monthly direct deposits 60 days after account opening will earn 1% cash back on common everyday expenses and 0.50% cash back on all other eligible debit card purchases. Some limitations apply. Please refer to the applicable Upgrade VISA® Debit Card Agreement and Disclosures for more information.

3 The 1.5% Annual Percentage Yield (APY) for the Performance Savings account is effective as of June 1, 2023. The APY for the Performance Savings account is variable and may change at any time. Active Accounts qualify for 5.07% APY with monthly $1000 direct deposit. The APY for Active Accounts is effective as of September 1, 2023, is variable, and may change at any time. Please refer to the applicable Cross River Bank Performance Savings Deposit Account Agreement and Truth in Savings Disclosure. To earn APY, you must open and fund a Performance Savings account. Rewards Checking Plus accounts do not earn APY.

4 Early direct deposit requires set up of recurring electronic direct deposit from your employer, payroll, or benefits provider and is limited to direct deposits under $5000. Early access to direct deposit funds depends on the timing in which we receive notice of impending direct deposit, which is generally up to two days before the scheduled deposit date.

5 There are no overdraft fees or annual fees associated with Rewards Checking Plus accounts. Rewards Checking Plus charges no ATM fees, but third-party institutions may charge you a fee if you use their ATM/network or if you use your Upgrade VISA® Debit Card internationally. For Active Accounts, Upgrade will rebate ATM fees charged by another institution for debit card withdrawals in the United States, up to five times per calendar month. To be eligible to receive third-party ATM fee rebates in any calendar month for eligible ATM withdrawals made during that month on a Rewards Checking Plus account, the account must be an Active Account in the prior calendar month. See the Active Account page for more information. As a courtesy to new customers, Upgrade will provide third-party ATM fee rebates for 60 days after account opening regardless of account user status. Some limitations apply. Please refer to the applicable Cross River Bank Checking Deposit Account Agreement and Upgrade VISA® Debit Card Agreement and Disclosures for more information.

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