If you’re worried that your credit rating might be too low to set up an account, fear not, this is where Basic Bank Accounts come in.
What is a basic bank account?
Unlike current accounts, you can still set up a basic bank account with a ‘not so good’ credit rating.
Basic bank accounts do not come with a credit check, the only eligibility criteria are:
• that you’re 16 or older;
• live in the UK and have a permanent address; and
• have documents proving your identity, like a passport, driving licence or utility bill.
How do they work?
They are not too different from current accounts in that they will allow you to do the following: –
• Use a bank card – some accounts will offer you a debit card, which you can use to make purchases, others will offer a cash card, which you can only use to withdraw money from cash points.
• Pay Bills – you can set up direct debits and standing orders to cover regular payments. This can include, gas and electricity bills, Council Tax or transfers into a saving account.
• Receive Payments – your employer or the Job Centre Plus can pay your wages/benefits directly into your account. You can also receive other bank transfers or pay in cash/cheques.
How is it different to other current accounts?
The main difference between current accounts and basic bank accounts is that basic bank accounts do not come with an overdraft facility. This means you can only spend what is in your account and you cannot borrow additional money from the bank.
You will also not receive any interest on the money you hold in a basic bank account.
How do I get one?
Most banks and building societies now offer basic bank accounts. Bear in mind, banks don’t generally advertise them, so you will need to go into a branch and specifically ask for one; alternatively you can apply online. Below is a list of the top 15 providers compiled by independent consumer magazine, Which?