Basic Bank Accounts: Top 6 Tips
A basic bank account is an account people can use even if they have trouble qualifying for regular bank accounts because of a poor credit rating. If you have a poor credit rating and are having trouble being accepted for a current account, a basic bank account could be a good option. Read out top 6 tips to find out about basic bank accounts.
At Credit Choices you can find the right basic bank account and do credit rating checks.
1. Find out if you qualify for a standard account first
It's best to use a basic bank account as a last resort, because they have fewer benefits than regular current accounts. You will be given a cash machine card for ATMs and you may also have a debit card with which to make purchases. But basic bank accounts do not allow overdrafts and there may also be a monthly fee to keep it open. You will also not earn interest on your balance.
2. Show you are reliable
Using a basic bank account properly can help you to build up to a more stable financial situation. One thing you can do to improve your trust with the account provider is to arrange for your income to go straight into your basic bank account. This will help if you want to upgrade your account at a later date, as it builds up a certain level of trust with the provider.
3. Budget very carefully
The differences between a basic bank account and a standard account mean that you need to budget effectively and watch all outgoings. Basic bank accounts will not honour direct debits if you don't have the money in your account. If a direct debit payment cannot go out this could lead to you being charged, the direct debit being cancelled or even your whole account being closed by the provider.
4. You can apply even if you have very bad credit rating
Basic bank accounts are very safe for providers to offer because it is not possible for them to lose money on them. Therefore, these types of account are available for virtually everyone. Even if you have been made bankrupt or have CCJs you may well be able to open an account. Even though they may have to check your credit rating, even with a very bad rating you will probably still be approved for a basic bank account. If you are not approved, there is still an option ' the 'one bank account', which accepts all applicants regardless of their credit history.
5. Consider ditching the credit card
Many people find they tend to overspend or make unwise purchases when paying by card, which they wouldn't do if they were paying in cold hard cash. This is because it can seem as though it isn't real money when paying by card. Having to withdraw money and pay for items with cash often leads to a more considered approach so, if you are one of these people, you could be helped by signing up to a basic bank account which does not offer a bank card. This way, you may find yourself saving more money each month.
6. Get good advice
If you are struggling with debts or a bad credit rating then you can gain free, impartial advice from organisations such as the National Debtline, Citizens' Advice Bureaux and the Consumer Credit Counselling Service.
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