How About a Second Chance?

How many times did you use this phrase as a child, “Please, can I have a second chance?” And then, the inevitable correction given by your mom, “May I have a second chance?” This was likely followed by, “If I’ve told you once, I’ve told you a thousand times!” Sound familiar? I have two brothers, and we eventually made it to the “…told you a million times…” mark!

But what about a second chance for people who have been impacted by the tough economy over the past few years? Unfortunately, many with good banking practices in the past have been subject to unexpected financial issues while trying to continue to make ends meet. Just a few bounced checks or late credit card payments, and boom—their good credit standing has been tarnished. Understandably, financial institutions avoid offering deposit products to those with a long history of bad banking practices. But what about those non-habitual offenders who are trying to get back on their feet and need a little indulgence and patience?

In September 2012, the FDIC published the results of a 2011 study of the “unbanked”…individuals that have no banking relationship:

8.2 percent of US households are unbanked. This represents 1 in 12 households in the nation, or nearly 10 million in total. Approximately 17 million adults live in unbanked households.

The proportion of unbanked households increased slightly since the first survey [2009]. The estimated 0.6 percentage point increase represents an additional 821,000 unbanked households.

One common reason for being unbanked is due to a bad banking record. Of the reported 10 million unbanked households, about 1.27 million were due to not being able to open an account or having an account closed in the past.

To help the unbanked, many financial institutions are offering “second chance” checking products…a basic, no perks checking account that has a flat monthly fee and specific requirements that must be met during a set time frame. Most have a $25.00 - $50.00 opening balance requirement, $5.00 - $15.00 monthly fee, no participation allowed in a Courtesy Overdraft Program, no or limited ATM usage allowed and no or limited NSF transactions during a 6 – 12 month period. If the account stays in good standing and no other negative credit issues arise, the institution can then offer a move to a regular product.

Think about the positive impression this could make on your institution…that you are willing to help those with recent financial issues get over the hurdles they are facing and back on their feet. Stories are frequently heard about folks who were down on their luck, and after a helping hand was given, they bounced back, overcame those problems and achieved financial stability…you could be part of someone’s story.

So, what about your bank or credit union…are you offering potential customers and members in your footprint a second chance?