If you have a checking account, there’s a chance that you’ve heard of some systems that you never want your account to show up in: ChexSystems, EWS and TeleCheck. Here’s a closer look at what they are and why you don’t want to ever be listed on ChexSystems or the other two systems.
What Are TeleCheck, ChexSystems and EWS?
Though all of these systems are consumer-reporting agencies that list information for individuals who mismanaged their checking accounts, they do have their differences. Here’s how each system is distinct from the others.
What Is TeleCheck?
TeleCheck is a check verification company that keeps records of checking account abuse. However, the abuse that it looks at is the account owner writing a bad check or a declined check, rather than other issues that could occur during the processing stages for a paper check.
What Is ChexSystems?
ChexSystems is probably the most well-known of the three systems. It’s a database that allows banks to determine if a potential customer is too great of a risk to take on as a client. It keeps records of any abuses that might have occurred with a previous account and details the mismanagement so that the bank has a clear idea of what it’d like to avoid.
What Is EWS?
Early Warning Services is the newest system of the three and its main difference is that it’s owned by banks: Bank of America, BB&T, Capital One, Chase and Wells Fargo. EWS keeps a record of any account misconduct.
Why Would I Be Reported to ChexSystems, TeleCheck or EWS?
Here are some reasons your account could become a TeleCheck, EWS or ChexSystems checking account:
- Not reimbursing the bank for overdraft amounts
- Writing bad checks
- Misusing ATMs or debit cards
- Opening your account with misleading or incorrect information
- Misusing your savings account
That’s right; the last one said savings account. With ChexSystems, you can get in trouble for misusing any bank account — even savings — so keep this in mind as you handle your day-to-day banking transactions.
On the other hand, getting reported to TeleCheck occurs pretty much for one reason: writing bad checks. If you write a check and have insufficient funds to cover that check’s amount, then the company can report you to TeleCheck for abusing this privilege.
As far as EWS is concerned, the records it keeps are given in full to any bank that requests it.
Learn: How to Avoid Overdraft Fees
How Long Do I Stay in the System and Who Has Access?
If you’ve been reported into any one of these systems, you could have a difficult time opening a bank account for an extended period of time because banks view you as a risk. But you don’t have to stay in these databases forever.
The average time frame to keep your account in both systems is around five years. After this time frame, if the company reporting you hasn’t had it removed, EWS, ChexSystems and TeleCheck will usually remove it on their own. But until they’re removed, it’s important to know just who has access to your accounts.
Thanks to the Fair Credit Reporting Act, only those with legal permission have the right to view your reports. These individuals and companies might include:
- Employers who have written approval
- Individuals and businesses ordered by the court
- Those you allow to view your report with written consent
- Any individual or business that requests access after you’ve initiated a business transaction
- Government officials after you apply for a license that requires proof of financial responsibility
- Specified individuals who need proof of financial status in child support circumstances
Also, it’s good to know that, like your credit reports, you get access to one free TeleCheck, ChexSystems and EWS report each year.
How to Avoid These Systems
The best way to avoid showing up in EWS, ChexSystems or TeleCheck is to practice responsible banking behaviors, including:
- Making sure you have sufficient funds in your account before writing a check
- Avoiding the misuse of ATMS and debit cards — withdrawing or spending more than you have in your account
- Paying back overdraft funds in the allotted time period
- Giving the correct information when opening a checking or savings account
If you are in one of these systems, it’s good to know that there are ChexSystems banks that don’t check TeleCheck when considering new customers. Some banks only verify with TeleCheck, which often makes it easier to open an account because fewer people show up in this system.
Of course, more than anything, you want to manage your checking and savings accounts so you don’t have to worry about being rejected by any banks. The fewer problems you have in the banking world — like bouncing checks when check processing — the more opportunities you have to save your money and watch it grow.
Stacey Bumpus contributed to the reporting for this article.