What Are the Differences Between a Second Chance Banking Account and a Traditional Account?
Second chance banking accounts have a different target audience, certain account restrictions and added fees. As the name suggests, these accounts are intended for people with a bad checking account history who are ineligible to open a traditional checking account.
In other words, if you can open a traditional checking account, it will usually be a better option. If your banking history prevents you from opening a traditional checking account, a second chance checking account, like OnPath FCU’s Rise Checking, will give you many of the same features and the chance to repair your bank history.
Typical Features in a Traditional Banking Account That Aren’t Available in a Second Chance Account
Overdraft Protection Features
Overdrafting means you either withdrew more funds than were currently in the account or a debit or automatic payment exceeded the funds in the account.
Some banks and credit unions (including OnPath FCU) provide overdraft protection in the form of a linked savings account where money will be transferred to the checking account if the balance goes into the negative. Others may extend a temporary line of credit to cover the overdraft until it’s paid back by the customer.
While interest or fees may be charged for these overdraft services, the features do allow customers to cover the cost of purchases even if they don’t have the funds available in their checking account when they make the purchase or pay a bill.
Second chance accounts do not allow customers to overdraft and won’t provide any of the common overdraft protection methods.
Courtesy Pay
Similar to overdraft protection, Courtesy Pay is a service that allows the credit union to cover any balance shortfalls if the cost of a purchase made with a debit card exceeds the funds currently in the account. One way it’s different from overdraft protection is that approvals are made on a case-by-case basis at the discretion of the credit union. There’s also a strict limit on the amount that Courtesy Pay will cover.
Unlike some other credit unions, Rise Checking from OnPath can potentially include Courtesy Pay. If account holders remain in good standing for 60 days, a $100 Courtesy Pay limit may be extended to the account. That limit can increase to $300 after six months based on ongoing account usage.
Check Writing Privileges
While being able to write checks is a key feature of many traditional checking accounts, it’s not available to members with a second chance checking account. You may still be able to get a cashier’s check from your bank, but many customers are able to make most purchases or payments with a debit card or cash, making the lack of checks less of a problem today than it may have been in the past.
What Members Get With Rise Checking
Rise checking offers a number of features second chance banking customers at other financial institutions may not receive.
For example, not all second chance checking accounts extend Courtesy Pay to account holders ever, even after keeping their account in good standing for many months.
Our second chance checking account also offers a low $25 opening balance requirement with no minimum balance requirements once the account is opened. The $10 monthly fee is also competitive compared to many other nationwide banks.
Maybe most importantly, second chance checking customers who maintain good standing for 12 months will be eligible to transfer their account to a regular checking type.
Who Is Eligible for OnPath Federal Credit Union Membership and Rise Checking?
OnPath FCU was initially founded to serve members of the New Orleans community, including people who live, go to school and work in and around the city. We also have a Select Employee Group program that businesses and organizations can join to give their employees and members access to a free OnPath FCU membership along with the many services that membership entitles them to (free cash checking, consumer education and financial counseling tools and more).
Even those who don’t meet the above qualifications can still become a member with a $5 donation to the OnPath Foundation. Learn more about membership or Rise Checking by calling 800.749.6193.