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Basic Bank Accounts
If you need a basic bank account, or perhaps you have bad credit and need a reliable bank account provider we can help. Compare a wide range of bank accounts that offer basic banking facilities from across the UK market place.
A Guide to Basic Bank Accounts
When it comes to banking and managing your finances, wanting a simple and easy solution often makes sense. With so many different types of bank accounts available, each with their own extra features, it can become overly complicated.
In addition to a heap of different features and extras, bank accounts also come with an array of fees and charges that need to be considered. This is where basic bank accounts come in. They offer a simple and straightforward solution to banking and are perfect for those looking for a no-frills bank account option.
This guide explains what a basic bank account is, who they are for and the pros and cons of opening one.
What Is A Basic Bank Account?
A basic bank account is a type of current account that offers very basic facilities for both receiving and withdrawing money. All major banks offer them, and they let you withdraw cash and set up automatic payments such as wages, salary and benefits.
As well as payments, they also allow you to make withdrawals through an ATM or branch, make payments with a debit card and set up direct debits and standing orders. Basic bank accounts have no option for a borrowing facility such as an overdraft, making them popular among those with poor credit.
To open a basic bank account, there is no need for full credit checks like with other bank accounts, and all that is required by the bank is a proof of identity and address.
Not every bank in the UK will offer basic bank accounts, but all the major ones will do. Not many banks advertise their basic bank accounts because they prefer customers to open a current account with a borrowing facility.
Who Are Basic Bank Accounts For?
Anyone can open a basic bank account should they choose to, but they are specifically designed or those who would fail to be approved for a standard account. This is usually due to having poor credit because of previous debts. Individuals who have been declared bankrupt are also able to open a basic bank account as there is no risk to the bank.
Basic bank accounts are popular among those with previous credit problems, including CCJs, Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs) or Debt Relief Orders (DROs).
Anyone over the age of 18 can open a basic bank account, and as no credit check is required all that is needed is a proof of identity such as utility bill, driving licence or passport. Although a credit check is not required to be accepted for a basic bank account, some banks may run a credit check just to confirm your identity.
Most banks allow you to apply for a basic bank account online or over the phone. However, there are some providers that require you to go into a branch.
Some banks will not offer you a basic bank account if you can qualify for their standard current account. If you specifically want a basic bank account but can be accepted for a standard account, you may need to discuss it with them before you apply.
What Are The Advantages Of A Basic Bank Account?
A basic bank account offers a really easy way of managing your money. Payments can be made directly into the account, either by automatic payment, transfer or cash and cheque deposits. Direct debits can be set up to pay utility bills and other outgoings, and you can get a debit card to allow you cash withdrawals and to use in-store and online.
Many banks will also provide an internet banking service so that you can manage the account easily from anywhere.
When you choose a basic bank account, you will only ever be able to spend and withdraw money that you physically have in the account. This means there is no risk of overspending or ending up in debt as you can only spend money that you already have.
Almost anyone can open this type of account over the age of 18 and living in the UK.
They are an excellent option for individuals who cannot get accepted for a current account due to poor credit and previous credit problems. Basic bank accounts are entirely free to open and run, with no service fees or interest charges as overspending isn’t possible.
Those with bad credit history could also be approved for a specific poor credit account instead of a basic bank account. These poor-credit accounts usually offer more features than a basic account, but they usually charge a monthly fee.
What Are The Disadvantages Of A Basic Bank Account?
Basic bank accounts are great for managing money easily. However, they do also have their downsides that you should be aware of. The main disadvantage is the lack of features and facilities that you can get with other types of bank accounts. Basic bank accounts do not give you a cheque book, so the ability to write cheques is entirely out of the question, and they also don’t allow customers to set up standing orders for regular payments.
There are some basic bank accounts that don’t come with debit cards and are instead limited to cash cards only.
For some, the lack of overdraft and borrowing facilities can be seen as an advantage as there is no chance of getting into debt. However, for others, this can be a significant disadvantage. Having no overdraft facility available gives you nothing to fall back on if you really need it and can mean that payments will bounce if the funds are not available.
If payments such as direct debits are not covered on a basic bank account, the bank may charge you very high fees.
Before opening a basic bank account, ask the provider what would happen if there is not enough money in the account to cover a payment. If there are fees charged for this, be sure to know exactly how much these are.