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The Pros and Cons of Banks that Don’t Use Chexsystems

You have 5 years to wait for your Chexsystems report to be cleared of all indiscretions, so the best way to make those 5 years count is to make the most of your banking relationship

So, you’ve found a few banks in your area that don’t use Chexsystems. You’re ready to take the plunge and apply for a new checking account. But you still have a few questions. How will it be different from traditional banks you’ve used in the past? Will it be different at all?

Banks that don’t use Chexsystems aren’t exactly in short supply, but they may be difficult to find in your area. So, if you choose a bank to start to rebuild your banking record you might find yourself wondering where to start. If you relish the idea of making difficult or important decisions with the help of a pros and cons list, then you’ll appreciate this!

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Right off the bat, banking customers with a history of indiscretions will be glad to find a bank that doesn’t use Chexsystems. But not all those banks are totally ignoring your Chexsystems report. While they may not make a decision about whether you’re allowed to hold an account based on your Chexsystems score, they are likely to run your Chexsystems report to weed out the more outrageous acts of imprudence.

Some Cons Associated with Banks That Don’t Use Chexsystems Should be Quickly Followed by a Pro!

While some cons are straight-up negatives with no way to place a positive spin on them no matter how hard we try, that isn’t true for all of the cons we’ve found about these banks. You have 5 years to wait for your Chexsystems report to be cleared of all indiscretions, so the best way to make those 5 years count is to make the most of your banking relationship.

  1.     Con: They Can be Hard to Come By. It’s typical that banks that do not use Chexsystems are regional or online-only banks. But some bigger banks are joining the “second chance banking” game. Depending on how important a brick-and-mortar location is to you and your geographical location, you may not live near one of these banks and be forced to go totally online.

The Pros and Cons of Banks that Don’t Use Chexsystems
Only 80% of banks are using Chexsystems. Pinterest

In that case, depositing cash and cashing checks would become an inconvenience. It’s something to be aware of when choosing a financial institution online so that you can ask before you open your account.

  1.       Pro: Plenty of them Exist if You Know Where to Look. It could be argued that 100% of banks should be using Chexsystems. It’s a liability to take on a customer with blemishes in their banking history, right? But only 80% of banks are using them. That leaves plenty of opportunities for you to get your finances on track and build trust with a new bank that is taking a chance on you. At least you’ve got options.
  2.     Con: The Accounts Often Come with Fees. If this is your first time applying for a checking account with a Chexsystems record or poor score in the system, you will want to be aware of this. You will encounter fees associated with maintaining your new checking account. These banks counter the liability of taking you on as a customer with the fact that they charge fees.

Maybe your debit card has a fee, or you have a monthly cost to keep your checking account open. The fees vary widely bank-to-bank and some are proud to offer NO FEES. So, if free checking is important to you, you’ll want to avoid banks that charge.

  1.     Pro: You Don’t Have to Pay the Fees Forever. Depending on your bank, those fees will drop off after 6 months, a year, and in some cases 2 years of perfect conduct on your account. If your bank does charge these fees, you’ll want to ask about this timeline before you apply.

A multi-faceted Con:

Each Bank is Doing Things a Little Bit Differently Than the Others.

The most frustrating of all the cons found in banks that do not use Chexsystems may be the fact that each bank is enacting different procedures for protecting themselves from possible lack of payment or fraud. You will have to shop around to different banks to find the one that works for you.

  •  Fraud is Still an Issue for Many Banks. Even if your bank doesn’t use your Chexsystems score against you to stop you from opening an account, they can still run a Chexsystems report to ensure that you haven’t had fraud in your history. In that case, they will deny you then and there.
  • Checking Accounts are not Available at Every Bank. Spending accounts are gaining popularity as some banks create and back companies that support people who are trying to build up their banking practices after a lapse in payment or fraud. 

If checking is the most important part of banking for you because you want to eventually have a savings account and use your bank for investment advice in the future, then you’ll want to make sure your bank offers to check rather than a spending account.

The most frustrating of all the cons found in banks that do not use Chexsystems may be the fact that each bank is enacting different procedures for protecting themselves from possible lack of payment or fraud.
The most frustrating of all the cons found in banks that do not use Chexsystems may be the fact that each bank is enacting different procedures for protecting themselves from possible lack of payment or fraud. Unsplash

  • Checks May Not be Available to You. Banks that don’t use Chexsystems may run a Telecheck report on you. Telecheck reports determining if you are a risk to them if you are given the privilege of having paper checks at your disposal. 

If the report doesn’t give them warm fuzzies, they can approve you for a debit card only. And many banks that don’t run Chexsystems, Early Warning Service (a service similar to Chexsystems), or Telecheck still don’t offer checks. This is a business practice that protects the bank from fraudulent check usage by its customers with a spotted banking past.

It can seem as if banks that don’t use Chexsystems are still attempting to hold you back from the fresh start you’re seeking. Having parameters placed on your accounts makes it feel like you’re not actually in control of your own hard-earned money that you willingly placed in this checking account. For more information check out the best banks that don’t use ChexSystems here: https://indebtedmom.com/banks-that-dont-use-chexsystems/

But when you look at the total picture and include the pros, keep in mind the promise of redemption that will occur after the 5-year Chexsystems record falls off. Maintain on-time payments of any overdraft fees and focus on creating an exemplary relationship with your bank. And within a few years the cons that once held you back from fully experiencing all of the services your bank could provide will be a thing of the past. 

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