Basic bank account FAQs

14 June2011

A few of the questions people often ask about basic bank accounts.

I have a bad credit history. Can I apply for a basic bank account?

Yes. Almost anyone should be able to open one of these accounts, although the account provider may want to check your credit history to find out if you've been declared bankrupt or if there are any CCJs (County Court Judgments) against you.

In fact, basic bank accounts were introduced as part of a government scheme designed to help people who couldn't open 'standard' current accounts - in many cases, because they had a bad credit history.

So they should be available to people who have a bad credit history, even if they've been turned down for other kinds of bank account. If your application for a basic bank account is turned down, the bank account provider should tell you the main reason why this was - if you ask them.

Why have I been turned down for an account?

If you've been turned down, it could be for various reasons. Ask the company that rejected your application and they should tell you why.

How can I improve my credit rating?

There are quite a few things you could do to improve your credit rating, depending on your financial situation today. Simply having a bank account can actually help you improve it - as can registering on the electoral roll, correcting any errors in your credit report, closing lines of credit you're not using any more, etc. For more on improving your credit rating, click on this link.

I've been declared bankrupt. Can I have a basic bank account?

Not necessarily. Some basic bank accounts are open to people who've been declared bankrupt, but depending on which basic bank account you're applying for, your application could be declined.

The thinkbanking account, however, is open to anyone who's a UK resident and over the age of 18. As long as you can prove your identity and address, you can open a thinkbanking account - even if you've not yet been discharged from bankruptcy. Be aware that there's a set-up fee and a monthly management fee (25 and 14.50 respectively).

I've got no problems with my credit history. Is there any reason I should apply for a basic bank account?

There could well be. It depends on what you're looking for in a bank account.

If you feel you really need an overdraft facility, for example, a basic bank account won't be for you, since they don't provide overdrafts.

If you're keen to avoid getting into debt, however, you may make the deliberate decision that it's better to get a bank account that doesn't offer an overdraft. In this case, a basic bank account could be just what you're looking for.

Can I have an overdraft with a basic bank account?

No. Basic bank accounts don't come with overdraft facilities, although they may offer a small 'buffer' zone - if there's only 4 left in your account, for example, you may still be able to withdraw 10 from a cash machine.

Can I set up Direct Debits with a basic bank account?

Yes. Direct Debits are an important part of modern financial life, giving you a simple, reliable way of making sure your bills get paid (as long as there's enough money in your account, of course). Some bills - like your utility bills - could be cheaper this way, as companies might actually charge you less if you pay by Direct Debit.

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