Many tenants do not have a bank account and this can cost you money!
It is estimated that having a bank account can save you about £5 a week as they let you take advantage of money-saving discounts, for example, paying bills by direct debit.
They are also a safe place to store any money you receive, and they allow you to get money from a cash machine or pay for purchases in shops and online with a cash card.
What are basic bank accounts?
Basic bank accounts are simple current accounts that are designed for managing day-to-day money. They offer fewer features than a standard current account and don’t allow overdrafts.
All basic bank accounts provide you with a cash machine card (which will allow you to withdraw cash from ATMs) and some may provide you with a debit card (either Solo, Electron or Maestro, with which you can pay for items).
Who are they for?
Basic bank accounts are available to almost everybody. They are often favoured by people with a poor credit history who have been unable to open a standard current account due to the results of their credit check. The bank or building society may want to check your credit history when you apply for an account, but even if you have CCJs or have been made bankrupt, you may still be able to open an account.
Advantages
- You can arrange for your income such as salary, pension or benefits to be paid straight into your account.
- Most basic bank accounts allow you to arrange standing orders, direct debits and one-off money transfers to pay bills and other payments straight from your account.
- If you get an account that provides you with a debit card you will be able to use this to pay for goods and services, for shopping online and for getting cashback.
- You can have instant access to your cash over the counter at your bank or at the Post Office or using your cash machine card.
- Many banks and building societies will allow you to manage your basic bank account online.
- You can’t go overdrawn because you won’t get an overdraft limit – you won’t be adding getting into debt.
Disadvantages
- You can’t go overdrawn with a basic bank account because you won’t get an overdraft limit – you will have no emergency fund.
- If a direct debit payment is due to be made and there isn’t enough money in your account then the bank will not make the payment. You may be charged a fee, the bank may cancel your direct debit or they might even close your account.
- You won’t earn interest on credit balances.
- You won’t receive a chequebook or cheque guarantee card.
