ChexSystems is a tool that many banks use. It helps them understand what kind of a customer you might be. Therefore, if ChexSystems says that you don’t present as a good customer, you might not qualify for the bank account that you want. However, you’re not out of luck. There are banks that don’t use ChexSystems.
What is ChexSystems and How It Affects You
You know what a credit bureau is, right? Well, ChexSystems is similar to a credit bureau but it’s for banks. In other words, banks report to ChexSystems about how they perceive you as a customer. Then, when you apply for a new bank account, some banks will check that system to determine whether or not to give you that account.
Therefore, if your bank reports the following things, it will look bad in the ChexSystems database:
- Multiple overdrafts and/or overdrafts that you failed to pay back
- Overdrawing the account and then closing it
- Frequently opening and closing bank accounts
- The bank closing the account on you
- Abusing your account / violating account terms
- Any fraudulent activity by the account holder
To be clear, the bank doesn’t report this to the credit bureau. However, they may report it to ChexSystems. If they do, the negative information will stay on your ChexSystems account for up to five years. If you have more than one negative report on the account, you’ll find it difficult to get a bank account.
5 Banks That Don’t Use ChexSystems
If this ends up happening to you, then one of your options is to use choose among that banks that don’t use the ChexSystems database to determine whether or not you deserve an account with them.
If you look up lists of banks that don’t use ChexSystems, then you’ll almost always find BBVA at the top of the list. You might also notice that many listings add a caveat. They note that although the bank doesn’t use ChexSystems, they do use the Early Warning System (EWS). Therefore, it’s important to know what this system is and whether or not it affects you.
EWS is an alternative to ChexSystems. Banks use it to report fraudulent activity. What this means is that if you have a history of bank fraud then you’ll probably show up in both systems. In contrast, if you simply have too many overdrafts, you’ll probably show up in ChexSystems but not in EWS. This matters when you’re trying to rebuild your banking credit. If you don’t have fraud, then you can get a BBVA account even if you have other issues that would show up in ChexSystems.
BBVA’s Easy Checking Account is most likely where you want to start if you’re looking for banks that don’t use ChexSystems. You can open it with as little as $25 although notably and there is no minimum balance. There are also no ATM fees.
2. Varo Bank
I learned about Varo Bank when I downloaded the Steady app. It’s an app that you can use to find work from home jobs and other employment opportunities. They also offer a wide range of ways to earn extra money. One of the options was to set up a Varo Bank account. I don’t open new bank accounts lightly, but I always think it’s worth looking into, especially if I can get money for opening an account.
Varo Bank is an online bank. GoBankingRates reports that they’re one of the banks that don’t use ChexSystems. They have no minimum account balance and no minimum no open an account. They also don’t have overdraft fees, which might appeal to you if overdraft fees are the reason that you ended up on the ChexSystems blacklist in the first place.
Chime is another online bank that is very similar to Varo Bank. For example, both banks offer the opportunity to get your paycheck Direct Deposited into your account and to access the funds up to two days earlier than usual. Like Varo Bank, it has no overdraft fees and no account balance minimum.
Digital Fodder did an account comparison between Varo and Chime. The two accounts shaped up as very similar. The only difference noted was that Varo offers personal loan options whereas Chime does not. If you’re simply looking to rebuild your banking history with an online bank then either bank should do. Research them both and see if one stands out more to you than the other.
4. Southwest Financial Federal Credit Union
Credit unions are similar to banks but they’re also different. Therefore, each has its own rules. Some use ChexSystems and others don’t. Southwest Financial Federal Credit Union is an example of a credit union where you can get an account even if you have some bad banking history. Ask about their Checkless Checking account, which is a mobile checking account offering overdraft protection and no monthly fees.
Credit Union One and Navy Federal Credit Union are two other credit unions that don’t use ChexSystems. Each credit union has different requirements for applications. For example, Navy Federal is for members of the armed forces. Look into credit unions that might be right for you.
5. TD AmeriTrade
As you can see, there are many different types of banks that don’t use ChexSystems. Online banks, credit unions, and even some traditional banks make the list. TD AmeriTrade is a little bit different in that it’s a brokerage. Therefore, you have to open a brokerage account with them. However, once you’ve done so, you can also open a checking account. You might even earn interest your deposits.
Alternatives to Banks that Don’t Use ChexSystems
You don’t have to choose banks that don’t use ChexSystems. Some banks use the tool but don’t make their final decision based entirely on what it says. Additionally, there are alternatives for people who have a negative report in the ChexSystems database.
One of the most popular options is to choose a bank that offers a “second chance checking account.” These accounts have a lot in common with the banks that don’t use ChexSystems. However, they tend to be specific to the account, not the bank. For example, Wells Fargo uses ChexSystems but they offer the Wells Fargo Opportunity Checking as a second chance bank account for people with negative banking history.
It’s important to have a bank account. People with bank accounts save money on bank transaction fees. They’re able to access Direct Deposit benefits. Moreover, studies show that people save more if they have an account than if they deal entirely in cash. Therefore, even if you have negative banking history, you should attempt to get back on track with a bank account. Try the banks that don’t use ChexSystems or look into second chance bank accounts to get back on track.
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