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Basic Bank Account

Basic Bank Account

Category: Money

Updated: 31/10/2008
First Published: 09/10/2006

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Basic bank accounts were set up through a Government scheme to help poorer families and those who have problems opening a normal bank account. The scheme is aimed at giving everyone access to banking facilities.

Some people have problems opening a normal bank account because they:

  • Have poor credit history
  • Have been bankrupt or have individual voluntary arrangements (IVAs)
  • Are not on the electoral roll

Basic bank accounts allow you to pay in your wages, benefits, tax credits and state pension. They give you a cash card to withdraw your money and some offer standing orders and direct debits. Unlike normal bank accounts, they do not give you a cheque book or overdraft facility.

Basic bank accounts also appeal to people who are worried about over spending, as they do not give you an overdraft. Therefore, you can only spend what is available in your account. However, you still need to keep an eye on your account balance if you have standing orders or direct debits set up. If there is not enough money in your account to pay these, they will be rejected and you will be charged.

Different accounts offer different means of access including:

  • Branch
  • Digital TV
  • Internet
  • Post Office
  • Postal
  • Telephone
  • WAP

Like many current accounts the rate of interest on these accounts is typically low; many pay no interest at all. Some pay interest of 0.1% and above so it is worth checking what rates are paid before choosing your basic bank account.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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