Bad Credit: Bank Account Reference Guide

The "no-chexsystems" bank account is a type of bank account extended to individuals with an unfavorable credit scores. A bad credit bank account should be insured by the Federal deposit insurance corporation (FDIC), if located within the United States. FDIC insurance allows the money within the account to be protected. If the money is not FDIC insured, the bad credit bank account may be located offshore or be an unsuitable type of account.

To obtain a bad credit bank account and individual should be of legal age i.e. 18 or over and have a valid form of appropriate identification. These types of bank accounts can be set up online and deposits can be made via an electronic payment service of which there are several on the internet that are reliable.

As with any transaction involving finances, it is wise to take precautionary steps before depositing and/or sending money to a financial institution. Such steps may include but not be limited to verifying a physical address in the case of online banking within one's country, performing fraud and scam searches using the bank's name, and by contacting the FDIC to verify insurability of the funds.

Obtaining a bad credit bank account may allow an individual to later obtain a secured credit against the account or obtain loans against the funds in the account. In such instances, this would allow the account holder to build credit and have a bank account in which to deposit paychecks, and/or other funds. Bad credit bank accounts may also allow the account holder to obtain debit cards, issue checks, offer interest on savings etc.

Disadvantages of bad credit bank accounts include the possibility of few or no physical locations other than ATM machines. This is especially the case if the bad credit bank account is obtained through an online financial institution. Additionally, the risk of online identity theft is present when conducting financial transactions over the internet. Whether an account is through a brick and mortar financial institution or via the internet, confirming privacy policy with the bank may be necessary.