What Is a Blacklisted Checking Account?

Bank accounts can potentially be flagged for a variety of potential reasons. Some account behaviors are associated with criminal activity or activity that violates the terms of the account. In other instances, a bank or credit union may receive instruction from law enforcement, regulators or another government agency that a banking customer is in violation of local or federal statutes or that the account is associated with illegal activity and needs to be placed on a watchlist or frozen.

What happens to those accounts may vary. An account may be allowed to continue functioning but will be monitored by regulators, the bank or law enforcement agencies for activity associated with money laundering, terrorism financing, fraud or funding other illicit activities. Whether those activities are actively curtailed will usually depend on governmental requests or requirements.

Rating Agency Blacklists

Some people may be referring to banking scores when asserting that they or their accounts were “blacklisted” by a bank. Although not discussed as frequently as the credit rating agencies that issue credit scores, there are a handful of organizations that compile account behaviors and provide scores on banking customers to other banks and credit unions. These scores are related to a person’s reliability and safety as a banking customer rather than their perceived level of risk as a borrower.

It is possible to be put on an informal “blacklist” based on past banking behavior, like bouncing a lot of checks, being suspected of fraud or overdrafting a checking account and never paying the resulting fees or penalties.

Although there’s not technically a blacklist, these reports do act like the “don’t accept checks from:” signs that used to be posted in some convenience or grocery stores. These signs warned cashiers not to accept a check from certain people back when many people paid for retail purchases with checks.

Stores that accepted checks wouldn’t know whether the customer had the funds to pay for what they bought until the check bounced when the store tried to deposit it.

Reporting agencies like ChexSystems are a more formalized version of those warning signs. Banks and credit unions will check with the rating agencies to learn the bank ratings of people applying for credit union membership or a bank account. If the applicant has a recent history of risky or fraudulent behavior, the bank or credit union may deny the applicant membership or a checking account.

Having a poor bank history rating doesn’t resolve itself quickly — it may take up to five years for some behaviors to fall off your banking record.

Second Chance Checking Accounts

Not every bank or credit union goes out of their way to give people a second chance. Some, especially those with a community focus, are willing to work with customers who have been blacklisted by other banks due to a poor banking history rating.

At OnPath Credit Union, we take pride in providing banking solutions to every member of the New Orleans community, including people who may have been blacklisted by other banks or credit unions. Our second chance checking account product, Rise Checking, helps customers get back on track.

Customers who keep their Rise Checking account in good standing for 12 months may have the opportunity to transition into one of our normal checking products, providing a more accelerated path to normalization compared to waiting years for past behaviors to be forgotten.

How to Qualify for a Second Chance Checking Account at OnPath Credit Union

Applicants will need to obtain management approval to open a Rise Checking account. Although Rise Checking accounts do not include physical checks, account holders will receive a debit card as well as access to mobile and online banking features. Keeping the account in good standing will qualify Rise Checking account holders for better features, like Courtesy Pay limits.

If you’d like to learn more about Rise Checking or the other ways in which OnPath Credit Union can help you improve your bank rating or credit score, call us today at 800.749.6193.