What Are Chexsystem Checking Accounts?

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ChexSystem checking accounts are bank accounts that the provider will not approve a customer for unless they have been cleared by the ChexSystems service. If the individual making the application is found to be in ChexSystems, their application will likely be rejected and they will not be able to open the account.

ChexSystems is a consumer credit reporting agency and check verification service. The service provides information on the way in which customers are handling their accounts, and is used by an estimated 80 percent of the banks and credit unions in the country.

If a customer misses a payment, goes overdrawn in their account and is unable to rectify it, opens an account with false information, or performs almost any other type of banking irregularity that results in the closure of their account, they will be put in ChexSystems.

Being placed in ChexSystems will mean that the customer receives a significant black mark on their record, and opening new ChexSystem checking accounts will prove near impossible for a number of years. For these people, however, there are a number of alternatives that they can consider.

The first alternative is to simply wait for the black mark to be removed automatically. The problem with this is that it can take up to and over five years for this to happen, so more viable alternatives require making an effort to do something about the situation yourself.

The second option for the individual is to access their report (this is free to do if you have been refused a bank account within the last 60 days) and check that all information held in their name is in fact correct. Incorrect entries can be removed or amended, and it may be possible to get out of ChexSystems this way.

If the information is correct and the account is closed, the customer will not be able to open a ChexSystem checking account. However, there are non-ChexSystems checking accounts to consider. These are sometimes known as bad credit checking accounts, and allow the customer to pay bills using their account number, re-build their score and have many of the same benefits that a normal checking account offers.

Many non-ChexSystem checking accounts can be applied for online and offer instant approval, subject to identification and address confirmation. The downside is that they often have higher charges for carrying out everyday transactions such as ATM cash withdrawals.

It is obviously preferable not to be placed into ChexSystems in the first place. Make every attempt to keep your balance in the positive, to honor all checks and to pay off any outstanding overdraft charges as quickly as possible.

If you do get caught in this unfortunate predicament, non-Chexsystem checking accounts are an option you should strongly consider. As with all financial products, compare a number of options before you make an application, as fees and charges can vary from provider to provider.
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