All You Need To Know About Basic Bank Accounts

All You Need To Know About Basic Bank Accounts

By David P Walker

Most of us are aware that if we have poor credit we may struggle to get a credit card, but the thing not so many people know is that if you do have a bad credit rating, defaults, missed payments, a CCJ, arent on the electoral role, or even have just moved around a lot, you may also find it tough to secure a bank account.

However, there is a solution. Most high street banks offer a basic bank account, which you can apply for as long as you havent committed fraud, and have proof of identity, such as a passport or driving licence. Some basic bank accounts will even be open to those who have been made bankrupt.

What is a basic bank account?

A basic bank account does what it says on the tin. Its a very basic bank account with limited features which allows you to manage your money on a day to day basis and will offer a cash card, to withdraw money at ATMs. Some, but not all, basic bank accounts may offer you a debit card instead, which can be used to make purchases in shops and online. An important point to note is that you will not be offered an overdraft with a basic bank account.

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What are the pros of a basic bank account?

By setting up a basic bank account your money will be safe and accessible from any high street with your ATM card. If your bank allows you to have a debit card with your basic bank account you will also be able to pay for things in shops and online using your card. You can have your salary, pension or benefits paid straight in to the account and you can arrange to pay your bills by direct debit, standing order or one off payment, all of which saves you time and hassle. Some providers even offer discounts to customers who pay their bills via direct debit. Finally, there is no way you can be overdrawn as your account will not offer this facility.

What are the cons of a basic bank account?

As you might expect, due to the limited features of a basic bank account, there are certain downsides. While not having an overdraft may be good for getting back on track with your credit rating, it also means there are no emergency funds. This means you have to be careful managing your money, as if you do not have sufficient funds to pay a direct debit, your bank will not cover the costs and you may be charged an additional fee, have the direct debit cancelled or even have your account closed.

Other downsides to a basic bank account are that your money wont earn any interest and you wont receive a chequebook or a cheque guarantee card.

What if I am rejected for a basic bank account?

Most people will be able to find a bank which will allow them to have a basic bank account despite their circumstances, but if all else fails there is another option. The One banking account doesnt require any credit checks, so anyone can apply, but it does cost 30 to open and 12.50 per month thereafter.

About the Author: Credit Choices give impartial, comprehensive information on financial products such as

basic bank accounts

, loans and credit cards. For more information about

bank accounts

visit creditchoices.co.uk.

Source:

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