A bad credit checking account is designed for people who have had credit problems in the past. These people are likely to struggle to be approved for a regular checking account (or may have already been refused), but still require the benefits of everyday banking and being able to write checks and pay their bills quickly and easily.

Checking accounts are usually refused based on ChexSystems, rather than your credit report. Banks report to ChexSystems when customers have problems making payments, and as a result the customer will have a report made against their name. This means that when they next go to apply for a checking account they will likely be turned down.

If you have any existing account and find that you have been reported to ChexSystems, there are a series of steps that you should follow: Do not close the account, and make sure you keep your balance in the positive, pay off any outstanding overdraft fees as soon as possible, and make sure any checks you have issued will clear.

If you have been refused due to a ChexSystems report, you are able to view your report for free, by visiting www.chexhelp.com.  If entries have been made in error, you can write to the bank and request that the information be amended. Entries are automatically removed after a specified period of time, usually five years.

If waiting this period of time is not an option, and you are not able to remove a previous bad record from your ChexSystems report then you may wish to apply for a bad credit checking account. These accounts are issued by a huge number of banks, and it pays to do your research and look at a few different products before committing.

Many of these banks advertise online, but it is hard to find any information on them (other than on their own websites) – so it is hard to know how reputable these companies are before you sign up for any of their products. Some of the more well-known companies that offer these types of accounts include the Bank of America and the US Bank.

There are several benefits of owning a checking account. You will be able to pay bills using your account number(s), become PayPal verified, and will be given an online check writing facility – allowing you to pay bills online. This type of account can also help you re-build your score.

Many of these accounts promise instant approval with no credit check or ChexSystems check. These accounts are recommended if you have had previous problems getting approved, but do your research before you take the plunge.

A second chance credit card is aimed at people who have made financial mistakes in the past, but can still benefit from cards everyday uses. In essence, the providers believe that these people deserve a second chance to show that they can look after their finances.

The cards are also sometimes referred to as ‘bad credit’ credit cards, and the main purpose of cards such as these is to help the user improve their rating, whilst at the same time allowing them to pay bills, buy products and services  and have most of the benefits of a standard card.

These cards can come in several forms, depending on how poor the individual’s rating actually is. Many people will be offered an unsecured or secured card. People who have a particularly low score may be offered pre-paid card.

It is a good idea to contact a credit provider before you make your application, as they will be able to give you details on which type you are most likely to be accepted for. This is important because every unsuccessful application can further adversely affect your rating.

An unsecured second chance card is similar to the regular Visa or MasterCard that many of us are used to. The main difference is that these will often carry higher annual percentage rates of interest (APR), meaning that the customer will pay more in interest if they do not pay their bill off in full every month. The reason for the higher rate of APR is that the cardholder represents a greater risk to the lender.

A secured card differs in that the cardholder is required to make an initial deposit of their money. This in turn becomes their limit, and they are not able to exceed this amount. If the customer then mismanages their card and misses payments, money will be taken from their deposit. If they manage their finances well and close the account on good terms, they will receive the deposit back.

Both of these types can help the customer improve their rating, as the provider will (usually) report to the three national credit agencies on a monthly basis. Over time, a cardholder can rebuild their rating and become eligible for products that offer better rates of APR and lower fees and charges.

A pre-paid card is not actually a credit card at all. The owner has to top up their card in order to use it, through Direct Deposit or by adding funds at a designated location. These will not enable people to improve their score, as the user is not being extended a line of credit.

A second chance credit card can be beneficial for those who have a low score, but require the everyday benefits cards provide. The charges, fees and interest rates associated with these cards can vary widely, so it is recommended that people do their research before applying.

There are many people out there who may have in recent times suffered significant financial setbacks due to the credit crunch and recession. This may not only have caused problems with living costs but may also have had an impact on many people’s credit scores.
The good news is that even for those whose score has suffered there may be a way to access some level of credit to help through these tough times.

If you have been with a bank for a very long time then it is possible that they may offer you a card if you have managed your bank account well. Many people with a bad score may however have had problems with their banking in the past, so this may not be an option for everyone. Another solution which may be suitable for many is a sub-prime credit card.

These cards offer a solution to anyone who has bad credit and is unable to secure a conventional card. Sub-prime lending is offered to anyone who has a poor record but not so bad that no-one will risk lending to you.

There are however several downsides associated with sub-prime cards. Firstly, the limit is likely to be very low. This is because companies are generally unwilling to risk lending large amounts to people with a poor record of paying money back. If you manage your account well though, this may be gradually increased over time.

Secondly, the interest rate associated with these types of cards is likely to be far higher than on an ordinary card. This is partially to encourage prompt repayment and partially because the companies need a higher rate of return to make it worthwhile lending to a possibly risk customer.
Finally, most sub-prime cards also charge an annual fee, with many also having additional charges including monthly fees, set-up fees and transaction fees.

Despite these downsides, a sub-prime card may be a good option on a short-term basis to help you to rebuild your score as if you manage your account well this will show on your report. If you have the slightest doubt over whether you would be eligible for an ordinary card you may want to consider a sub-prime card.

Each attempt to apply for an ordinary card will be marked on your record and this may actually further lower your overall score. Applying for a sub-prime card in this instance may be a better option, until you are sure you have built your score back up to a good enough level to secure a more economical card.