Banks That Don't Use Chexsystems

Finding a bank that doesn't use ChexSystems can be challenging, because few American banks don't use the service. Several websites, however, keep regularly updated databases of financial institutions that aren't with ChexSystems. Because these institutions are sparse and dwindling rapidly, it's best to preserve whatever banking products you have now.

Significance

ChexSystems, a private financial information clearinghouse, often denies bank account applicants because of negative information stored in their databases. Having just one bounced check on ChexSystems can make it difficult for a consumer to open checking or savings accounts in member banks. Refused customers often resort to using high-fee check cashing franchises to cash payroll checks, and lose out on possible interest on deposits. This, in turn, increases costs for clients with low credit or financial hardship.

Banks that allow second-chance accounts, or ones that don't use the ChexSystems network, afford a chance at financial rehabilitation as well as giving opportunities to grow their money.

Geography

There are banks and credit unions all over the United States that don't use ChexSystems. In order to find these institutions, it's best to check websites that keep regularly updated lists of non-member banks. Debt forums also have regular postings from consumers who have been blocked from opening accounts due to ChexSystems. Many times, members will post the names of banks that they found "good" or welcoming of their business.

Often, smaller community banks opt out of ChexSystems memberships, or override refusals after completion of a personal finance course such as Go Checking. In these cases, it's best to visit or call the branch and speak to a manager to get clearance. Community banks are often more willing to work with risky customers than larger banks, but the accounts may have more fees and a higher minimum balance. Research is key to finding a bank that doesn't use ChexSystems.

Size

Included in the many banks that use ChexSystems to verify new consumer bank accounts are Internet-only banks and brokerage houses such as TD Waterhouse. The number of subscriber banks has increased as banks seek to reduce exposure to potentially risky consumers. As smaller banks are absorbed by larger institutions, ChexSystems has become even harder to avoid.

Benefits

Banks that don't use ChexSystems are a lifesaver to people who have made a couple of mistakes in the past financially. Having no bank introduces hardships during the bill-paying process, as well as making credit rebuilding impossible. Those hardest hit by ChexSystems are often people without a sizable savings or checking cushion to avoid accidental bounced drafts. Many people also make mistakes in their personal accounting that can have repercussions for up to 5 years (the duration of a negative report). Banks that still accept their business allow a chance to learn better money habits, as well as adding money into the economy that otherwise wouldn't be earning interest.

Warning

Although banks still exist that work outside of the ChexSystems network, it's still wise to do everything possible to keep existing accounts in good order. Because the number of non-network banks is dwindling, consumers need to stay vigilant in order to avoid bounces. It can take time and work to clear a negative report on ChexSystems, so it's best to never have one in the first place. Keeping good records and using cash is probably the safest bet for those who are at risk for ChexSystems' attentions.

Resources

• ChexSystems Bites!: List of Good Banks
• List of Recommended Banks and Credit Unions