Basic Bank Accounts Guide

Category: Money
Date: 6/28/2008

What is a Basic Bank Account?

• Basic bank accounts are aimed at people who have no credit history or a poor credit history and who won't be eligible for a normal credit card. Credit checks are used by banks setting up a current account so they can offer an overdraft facility.

• A basic bank account offers some of the facilities of a current account, but not all of them. You'll generally be able to receive money such as salary, pension or benefits payments, pay bills and set up direct debits and standing orders, and you'll get a cash card so you can use cash machines.

• You won't get an overdraft facility but some accounts provide a debit card and if you look hard enough you might even get a cheque book. Most accounts don't pay credit interest, and those that do tend to be at a low rate.

• Basic bank accounts can be accessed in a number of ways, such as bank branch, internet, telephone and at the Post Office.

• If you run your basic bank account well, you may well be able to upgrade to a full current account, which will allow you to improve your credit rating. So you can think of a basic bank account as a stepping stone to getting other financial products in the future.

Who Are They Suitable For?

• Anyone who wants access to the banking system but who isn't eligible for a current account ;
• People who don't want to have access to an overdraft, and are willing to give up some of the facilities available with current accounts.

What Should You Look Out For?

Basic bank accounts tend to be fairly standard but there are some differences:

• Interest - some accounts pay interest, others don't
• Debit cards - less than half of the basic bank accounts offer a debit card. If you want to shop online, and don't have a credit card, you'll need to choose an account that does.
• Cash Machines - make sure that your account allows access from a wide range of cash machines and that these transactions are free.
• A small number of accounts provide a cheque book, or the ability to sweep some of the money into a savings account on a regular basis.