My parents ran into some financial problems a few years ago and ended up having to close out their bank account. They tried to open another account at a different bank, but were turned down because of their credit. They eventually found a bank that offered second chance bank accounts, and we quickly discovered that they have their benefits and drawbacks.
The first and biggest benefit is that second chance bank accounts allow people who have gotten into a little bit of trouble financially, or people with credit issues, to get a fresh start. They can actually open a checking account, which is important to have for so many reasons.
Typically, such accounts also give people a debit card, which of course can be used at most grocery stores and department stores. Many don’t charge exorbitant fees, either, which really helps people who are struggling to get their finances in order.
As far as some of the drawbacks of second chance bank accounts are concerned, there are not as many locations as there would be with a larger bank. I know that the bank where my parents did their business was the only one for miles in any direction.
A bigger issue is that second chance bank accounts are usually not federally insured. This means that there is always the possibility if something were to happen to the bank and it were to go under, clients could lose their money.
Another thing that I have noticed about second chance bank accounts is that it is not always as easy to find an ATM to withdraw money when you need it, so it can be kind of hit or miss in that respect. I have a friend who had such an account and said he only knew of three ATM’s where he could go to get money with his card.
With all of the benefits and drawbacks, the fact remains that second chance bank accounts have their place. For some people, they are absolutely critical and provide a necessity in life that other banks won’t if you have bad credit.
I have a couple of friends who say they don’t know what they would have done if it had not been for a second chance bank account when they were struggling financially.
I think that the best thing about second chance bank accounts is that it restores a sense of self-worth in people who are having financial problems. I noticed my mother’s face when she was able to open up an account after being turned down by a couple of larger banks. While second chance bank accounts certainly have some drawbacks, I think a fresh start is the best service they provide.