Hello, fellow FICO-ers. Hope everyone's having an awesome weekend so far! Just FYI - this is going to be a long post, but if you're considering one of the "online-only" banks out there to help you get a checking account without the ChexSystems checks due to bad credit, it may be important.
Tl;dr - If you're thinking of opening an online-only checking account, be aware that some of them may not show up on your reports as a checking account at all, and no matter how long you keep that account open, you won't be building any banking history. This has caused me some pretty serious headaches over the last few weeks. Do your research before you make a decision! I wish I had.
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Backstory: I'm a self-employed copywriter/editor/SEO specialist. My clients are all over the world. Some are in South Africa, one's in Norway, one's in Canada, etc. To make things easy, I've used PayPal to invoice/collect income since 2006. Unfortunately, PayPal is not a bank account. Three years ago, when I got a secured credit card, I needed a bank account to make my payments. ChexSystems was not my friend at all and banks wouldn't even consider me back then. After checking my reports, I discovered that my ex had overdrawn an old joint account by close to $300 and never paid it.
Though I paid it, I was expecting it to take some time to update through ChexSystems/Clarity/etc, and I needed a checking account like yesterday. After doing some research, I went with Simple Bank. Back in 2015 it was partnered with WebBank, but it's now partnered with BBVA Compass, which is headquartered in Europe, I believe. People raved about the company and said it was much easier to get an account with them than with traditional banks, so I took the plunge.
These people were right. Simple Bank has been a blessing to me for the past three years. Their website and app rocks, their customer service is outstanding, and I love the various tools they offer to help manage my money. I opened my account almost three years ago to the day, and I've never had an issue with my account. No overdrafts, no nothing. Everything was wonderful.... until I started my rebuild process. There are two VERY big issues with this bank account, and these two issues led me to a local bank - Old National Bank - where I opened a traditional checking account just last week.
The first issue stems from another thread I started about long holds on my payments to Capital One. Since I opened my secured CC through Cap1, every payment I've made has been held for six days, and it takes roughly 8 to 10 days for my payments to reflect in my available credit. The CSR said that it was likely due to the fact that I make numerous payments throughout the month, so I decided to make only two payments rather than one every week or so.
Well, my statement cut this morning, so I wanted to make a payment yesterday to bring down my util. I was a bit upset because I figured my payment wouldn't post in time (my fault - not Cap1) but I went ahead and did it anyway from my new checking account at Old National. It was the first time I've ever used this account for a Cap1 payment so I was REALLY expecting them to hold it. Oddly enough, there was no hold at all. The payment posted to my account and reduced my balance immediately, and oddly enough, they applied the payment to my available credit immediately, too. This has never happened with my Simple account. Not once.
The second issue comes from a loan I tried to get. I wanted to take out a debt consolidation loan with a decent interest rate so I could get all of these baddies paid off all at once. I applied for the loan, verified my identity, sent them the required paperwork, etc. They said everything looked great and explained that they needed to do two more things - verify my income (I send them my Federal tax return for this) and verify my bank account. The income went fine, but when it came to the bank account, this particular lender uses Clarity for their Clear Bank Behavior scores. According to Clarity (and ChexSystems, and others like it), I don't have a checking account at all. 
My application was instantly rejected due to "insufficient banking history". I offered to send the lender three years' worth of statements proving my history with Simple, and they said that's not good enough. Needless to say, I was pretty upset. Apparently, Simple isn't really a bank. It's partnered with a bank, which means my funds are FDIC-insured, but it isn't truly a bank.
My application was instantly rejected due to "insufficient banking history". I offered to send the lender three years' worth of statements proving my history with Simple, and they said that's not good enough. Needless to say, I was pretty upset. Apparently, Simple isn't really a bank. It's partnered with a bank, which means my funds are FDIC-insured, but it isn't truly a bank.Any advice? Anyone in a similar situation? Is there something I could have done? Does anyone else with a Simple account have any of these issues? I mean, I'm going to keep the account open because it's an amazing company and I love doing business with them, but I'm going to start doing the majority of my banking through Old National account, which is a traditional checking account.
@Anonymous wrote:Simple Bank is nice.... But the main focus of a bank account should be fraud and loss protection, and I think most here don't understand that. I haven't heard anything positive regarding fraud protections from Simple. The entire core principal of having a bank account is to protect your money from loss, whether because of something that's the fault of yours, or the fault of a hacker. When you lose your wallet or some hacker steals your debit card information... You should be assured you won't lose your money.
I cringe when people join Simple Bank (or other banks or very small credit unions) that don't make it a priority to get your fraudulent funds back or to get a new card in your hands as fast as possible. Nobody should care about getting 0.20% APY on their checking... They should care how a bank will react when crap hits the fan and your $1,700 checking account balance is drained with rent due in a few days.
A little off subject, but just some advice for everyone. I wouldn't use Simple Bank unless I couldn't get a checking account at an instutition that I could store money in and be confident my money is protected.
This is a good reason to have more than one banking institution as well as use credit cards and not debit cards, unless absolutely necessary. Tough for a fraudster to get money out of my accounts. They have to go through the middle man first.😉
Sorry OP about the issues you had with Simple.
I've never come across anything like this and I bank online 100%. I can go years without ever walking into a bank. Unless I have a cash deposit. I find it completely unnecessary to go in a bank or credit union.
I agree the Paypal debit card is great! I used it 100% of the time before I got more into credit cards. I have a brand new unused one in my night stand at this very moment.
I use Ally, Redneck bank, and USAA most of the time. I have many, many more. The only locals are Wells Fargo and Navy Federal.
Ally has been fantastic. I have no real complaints about them. The free virus protection is also terrific!
I agree the Paypal debit card is great! I used it 100% of the time before I got more into credit cards. I have a brand new unused one in my night stand at this very moment.
It's especially great for someone like me who moves a few thousand through PayPal every month. 
It's just unfortunate that I wind up transferring a lot of money out of PayPal and into my bank account. I spend what I can through PayPal, and my average cashback reward is something like $12 monthly. It's not a lot, but roughly $150 over the course of the year just for spending my own money is decent.
I am looking to drop PayPal, though. I got to looking at my statements for last year when I pulled my tax return up to send off for the loan I applied for. Over $1k in fees alone. :-/ These are tax-deductible (I'm an independent contractor aka freelancer), but still. I realize that PayPal has to make its money somewhere, but the fees are just crazy. I've had my PayPal account since 2006 and it's been much like my "bank" ever since. PayPal has made a whopping $10k from me since I've been using them. If you have any suggestions (or if anyone does) feel free to PM me!
I use Ally, Redneck bank, and USAA most of the time. I have many, many more. The only locals are Wells Fargo and Navy Federal.
Ally has been fantastic. I have no real complaints about them. The free virus protection is also terrific!
Ally wouldn't open an account for me when I applied a couple years ago. I didn't bother pulling my ChexSystems back then, but as it turns out, my ex ended up leaving $350 worth of unpaid overdraft fees on our old joint checking account at a local bank. I had NO idea it had happened. I moved to another state and forwarded my mail, but nada. I found out about it when I took my daughter to open her first checking account. It was PIF on the spot, of course. I haven't tried Ally again, but Old National Bank opened a checking account for me (they wouldn't before) so I assume paying it off really helped a lot. I should take the ex to small claims. There were two purchases - one on a check he wrote and another on his debit card. Also, I will never have another joint bank account. Ever. Not even if I get married. It's just asking for trouble!
I guess my only question is whether having that many accounts has ever raised any red flags with anyone. I technically have three - Simple, Chime (I don't like it and as soon as I figure out whether closing it will hurt my ChexSystems/Clarity score, I'm closing it), and Old National Bank. I pulled all the money out of Chime and now it's just sitting there empty. Someone once told me that having an inactive account makes that account a prime target for fraud, but I'm not sure how much truth there is in that.
Thanks for all your help & opinions!