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What are basic bank accounts?

What are basic bank accounts?

Category: Banking

Updated: 18/01/2017
First Published: 21/06/2011

Basic bank accounts are, as the name suggests, a no-frills type of current account. They allow you to receive payments into your account (such as from your employer) and generally offer the following services:

Unlike some other current accounts, basic bank accounts normally don't:

  • Charge a monthly fee, so offer free banking
  • Allow you to go into overdraft.

Who are basic bank accounts good for?

As they are free and don't let you get into debt with an overdraft, basic bank accounts are suitable for:

  • Young people opening their first current account.
  • People who don't want the temptation of spending more than they earn.
  • People who have had debt problems in the past.

You're not safe from nasty charges though

Although you can't go into overdraft, this doesn't mean you're safe from nasty charges.

You need to keep a watch over your spending to ensure that your direct debits and standing orders are covered, otherwise the payment will bounce and you may be charged a fee, not to mention other repercussions (if, for instance, the payment was the minimum payment on your credit card).

Watch out when you go to take out a basic bank account

Be careful in branch if you want to switch to a basic bank account. Banks and building societies make less money out of these accounts and would much prefer you to have an account where you pay a monthly fee, so stick to your guns and don't be persuaded to take out an all singing, all dancing current account if it's not what you want!

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

 
 
 

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