How to Open a Bank Account After Bankruptcy

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Bankruptcy can be devastating to your personal finances, but it also can help you better prepare for financial emergencies in the future. An important step in rebuilding your financial life after bankruptcy is opening a bank account. Given the financial misstep in your credit history, some banks may be reluctant to do business with you. However, given that a bank account doesn't involve issuing any credit, you can typically find banks that want your business.

Choose the Right Bank

Your best chance for success may be to find a bank that wasn't a part of your bankruptcy. For example, if there are two major banks in your town and you defaulted on a credit card with one of them, the other might be your best bet for a new account. You may very well be approved for a checking account with the first bank, but the bankers there may scrutinize your record more closely, since you didn't honor your prior agreement with them.

Community banks and credit unions often are a good place to start, as they are typically more willing to work with local customers who have encountered financial difficulty in the past. Another option would be to visit a bank that focuses on so-called "subprime" customers, or those with troubled credit histories or low credit scores.

Start with a Savings Account

After you get your bankruptcy discharge, saving money for a rainy day should be one of your top priorities. Opening a savings account also can make it easier for you to open a checking account down the road. Some banks might prefer you to open a savings account, as it represents less risk for the bank. Building a nest egg can help assure the bank that you can be responsible handling money.

Open a Probationary Checking Account

If you can't open a checking account after your bankruptcy, ask if your bank or credit union has a probationary or "second chance" checking account. Some institutions offer these, which often function like a regular checking account but without the issuance of a debit card. Second chance accounts also may charge higher fees to compensate the bank for the added risk of taking on a customer with a lower credit score.

Get a Secured Credit Card

While the last thing you want to do coming out of bankruptcy is to go into debt, your credit score can't recover until you demonstrate that you can use credit effectively. A secured credit card requires you to make a cash deposit equal to the amount of your credit line, which typically starts at about $500. After a year or two of responsible usage, you may qualify for a more traditional credit card that doesn't require collateral. Responsible usage of a credit card also can make it more likely that you'll qualify for a traditional bank account as well.

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