Where to find a basic bank account

by Simon Ward on 06 November 2012  |  1 comment
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If you need to access your money, there are plenty of basic bank accounts. But some come with restrictions.

Basic bank accounts are a relatively recent invention. They were introduced to help people on low incomes or with a poor/non-existent credit history.

And they have been very successful. There are now an estimated 8.4 million of these accounts open in the UK

But they are coming under threat as banks limit what they offer and how customers can access their money.

Restricted access

Last year, both Lloyds Banking Group (which includes Bank of Scotland, Lloyds TSB and Halifax) and the Royal Bank of Scotland Group (which also includes NatWest and Ulster Bank) announced that basic bank account customers couldn’t withdraw money from rival banks’ cash machines.

And the Co-operative Bank has recently stopped offering basic bank accounts to undischarged bankrupts, leaving Barclays as the only option for people in that position.

As a result, there have been calls for a set of minimum standards for basic bank accounts.

But if you want to open a free basic bank account now, here are your options.

None of these accounts pays any interest or offers an overdraft facility. If you want those features, you should ask the bank when you apply if you would be eligible for a current account.

However, if you’ve had debt problems in the past, it’s probably a good idea to steer cash of an overdraft as the fees can quickly mount up.

There are some fee-charging basic bank accounts out there which promise no credit checks and therefore could be tempting. But there’s no need to pay for a bank account, particularly if all you need is basic features such as a cash card.

Another option

You could also open a bank account with your local credit union, if it offers one. The Association of British Credit Unions runs the findyourcreditunion.co.uk website, which will help you find a credit union near you.

More on banking

Three ways to get rid of your overdraft for good!

HSBC customers to get Post Office access

Online banking: How to stay safe

Alternatives to current accounts with the big banks