Savings Accounts for Consumers With Poor Credit

Credit

• Poor credit can result from a number of factors, including missed payments, late payments, repeated bank overdrafts, bounced checks or filing for bankruptcy. Having bad credit makes it difficult to secure apartment rentals, impress a prospective employer running a background check or meet larger financial goals, since you're still struggling to recuperate from credit card payments, defaulted loans and other setbacks. Opening a savings account to build an emergency fund can help you meet sudden financial challenges, like medical bills or being laid off, without resorting to high interest credit cards or predatory payday loans.
  
  

Second Chance

• Some banks offer "second chance" bank accounts, including savings accounts, for consumers with poor credit. Second-chance accounts frequently offer the same types of services as traditional bank accounts. These might include online banking and check cards -- no-frills extras, but for consumers recovering from bad credit the basic opportunity to deposit or withdraw funds is a step toward normalizing finances by building savings or paying bills. Because banks are aware that consumers interested in opening a second-chance savings account carry greater risk than those seeking traditional accounts, expect to pay a minimum deposit and monthly fees.
  
  

Prepaid Debit

• Some consumers may want to steer clear of savings accounts linked with a debit card, especially if regular account overdrafts contributed to their initial financial woes. Since some banks penalize consumers for regularly withdrawing from a savings account (using it as a de facto checking account) this can be another reason to avoid obtaining a debit card. However, if you want to make purchases from your savings account, consider applying for a prepaid debit card linked to the account. The card will be good for an amount of money prepaid into your savings account; once you've burned through the cash, the card can't authorize further purchases. This can prevent overdrafts while allowing you freedom to make purchases using plastic.
  
  

Improvement

• Use your new savings account conservatively, being careful not to overdraw funds. Rely on a monthly budget to track deposits and withdrawals, or resolve not to withdraw from the savings account at all in order to accrue savings. Responsible use for a prolonged period of time (for example, one year) sometimes results in banks upgrading customers to traditional accounts. Since credit card companies and other lenders like to see potential applicants maintaining positive bank accounts, including checking accounts and savings accounts, this can be another step toward improving overall finances.