Having to rely on check-cashing places or pre-paid cards to make transactions can be inconvenient and expensive, but 1M+ California households struggle to access traditional banking methods, due in large part to the activities of ChexSystems. If you’ve had banking troubles in the past, if you are struggling to open an account, or if you are in the middle of a ChexSystems dispute, then you should avoid ChexSystems the next time you open an account.
In this article, we’ll explain what ChexSystems is, how it impacts your banking options, and the best banks Californians can use to avoid them.
ChexSystems is a credit-reporting agency that banks use to run risk assessments on account applicants. Their job is to monitor certain banking activities (e.g., bounced checks, returned checks, and account closures). If your bank or credit-union account is closed, then the bank can report the closure to ChexSystems, who will then report it to credit bureaus. While it won’t directly impact your credit score, it can make it exceedingly difficult to open a new account, as other banks may deny you based on information found in your ChexSystems report. They typically keep records of closed accounts for five years.
Although ChexSystems performs a similar function as credit bureaus, they have no impact on your FICO score. Instead, they use their own metric—the ChexSystems Consumer Score. No assessments of your credit or loan history are factored into this score. It’s calculated solely from records related to your banking activities (e.g., new account applications, garnishment subpoenas, overdrafts, negative balances, account closures, and unpaid checks).
Fortunately, you don’t need to rely on banks that use ChexSystems to jumpstart your banking needs. Keep reading for the best California banks that don’t use ChexSystems.
Pros: Low minimum deposit to open, no minimum balance, educational resources
Cons: Monthly fee of $5, no interest
Why We Recommend: The Fundamental Checking Account restores reliable access to banking tools, which are necessary for anyone who’s recently been between banks. There’s also no minimum balance, which is ideal if you tend to carry lower account balances. They also offer free educational resources to help you better manage your resources and avoid further banking troubles in the future.
Summary: This is a basic, low-cost checking account from one of the 10 largest banks in the US. It has everything you need to make digital transactions quickly and easily.
Pros: No monthly fees, no credit check to open, overdraft protection, early direct deposit, free ATMs
Cons: No physical locations
Why We Recommend: Chime is a great option for people in financial recovery. They’ll spot you up to $200 to cover an overdraft fee; they let you get your money early with direct deposit, and they offer account holders a Visa credit card with no credit check required for approval. With 60K+ no-fee ATMs throughout the country, you can get your money quickly and easily, wherever you are.
Summary: This is a customer-focused, budget-friendly checking account with lots of rewards. It may not be suitable for those who prefer to do their banking in-person, but the thoughtfully designed mobile app helps fill the gap. It is a great option for those seeking to build credit and enjoy some financial leniency in the form of overdraft forgiveness and no fees.
Pros: Early direct deposit, no overdraft or monthly fees, $300 direct-deposit sign-up bonus
Cons: No branch locations, fee for cash deposits
Why We Recommend: Sofi offers the opportunity to make your money grow as you bank. Not only does your balance earn an annual percentage yield of 1.25%, but you can also earn up to 15% cash back when you use your Sofi debit card to make purchases from local businesses. You can also get your paycheck up to two days early, which can help you avoid overdrafts and overdue bills.
Summary: This is a high-interest-earning account with convenient ATM access and minimal fees. It has good remote customer service but may not be suited to those who prefer banking in person.
Pros: Extremely competitive APR of 4.00%, free withdrawals at 40K+ ATMs, rewards debit card
Cons: No phone customer service available, fee for cash deposits
Why We Recommend: Current offers a high APR of 4%, which is 6X the national average. They also offer a points system on their debit card, with which you can earn cash back, and an immediate hold release on gas purchases. It gives people with spotty banking history the opportunity to save money and rebuild their finances. Current’s Overdrive product provides overdraft protection of up to $200 for all customers who set up direct deposit.
Summary: Current has one of the most competitive interest rates in the industry, thereby making it easier for your money to work for you.
Pros: Open an account in as little as five minutes, opportunity to earn an unsecured credit card
Cons: No sign-up bonuses, lower rewards percentage than some competitors
Why We Recommend: Sable has no fees, credit checks, or minimum deposit. There’s also no need for a Social Security Number when you apply, thereby making it a strong choice for non-citizens. They also offer multilingual support. You get a secured credit card as soon as you sign up, and you can graduate to an unsecured card 3X faster than at a traditional bank. You will also have access to free credit coaching.
Summary: This is an excellent option for people who are looking to build or rebuild their credit as quickly as possible. It offers multilingual support and has no need for your Social Security Number, thereby making it convenient for non-citizens. It offers rewards when you shop at Amazon, Netflix, Hulu, UberEATS, Whole Foods, and more.
Even if you’ve had trouble in the past, restoring your access to online banking is possible with these options. Californians can enjoy the benefits and convenience of digital transactions without having to worry about past or future mistakes. Visit one of these banks’ websites or branches to open a new account and start fresh today!