Subscribe Feed (RSS)Types of bank accounts
Personal bank accounts are for day-to-day money management and a place to keep cash for quick and easy access.
For receiving money and paying your bills, the choice is between a basic and current account. The third, a savings account is for depositing cash that you may need to lay your hands on, like saving for Christmas or a holiday.
Basic bank accounts
Basic bank accounts are no-frills places to pay in money like wages, benefits, pensions or cash. Basic account holders can access their cash with a card at a bank or from a cash machine.
The drawback with a basic account is banks do not allow direct debits, standing orders, overdrafts or chequebooks with this type of account.
Banks allow people who have had credit difficulties to open a basic account because the holder cannot draw out more money than they have paid in, so the account gives people with a chequered financial background the chance to build a new credit record without the risk of slipping back in to financial hardship.
Basic accounts are not available from every bank, and even banks offering the accounts do not offer them to everyone. Account availability depends on the applicant’s credit history. Some banks will consider undischarged bankrupts, customers with histories of fraud and trails of bad debts.
- A list of banks providing basic accounts is on the web at http://www.moneymadeclear.fsa.gov.uk/
Current accounts
Current accounts are more flexible than basic accounts and offer bank customers extra services.
The account holder has more responsibility to manage their financial affairs.
In addition to setting up direct debits and standing orders, banks will consider overdrafts and offer other forms of borrowing, like loans and credit cards for current account holders.
Most current accounts attract a low rate of interest if kept in the black.
You can find current accounts at high street banks, some supermarkets and on the internet.
Savings accounts
Savings accounts pay a higher rate of interest than current accounts and are for people who want accessible cash. The market is crowded with banks and other financial institutions vying for the privilege of managing your savings.
Like current accounts, most high street banks, supermarkets and online banks and building societies offer savings accounts.
Another place to check out savings accounts is a credit union. Credit unions are like neighbourhood banks where you can deposit money and earn interest.
Lastly, some banks offer a combined current, borrowing and savings account that can even include your mortgage. Often called ‘Australian’ accounts because that’s where the idea originated, they work by reducing your borrowings when your salary or other cash is paid in and charge interest if you draw money out to a level agreed with your bank manager.
For More information on specific Banks use thes links
- Alliance & Leicester
- Barclays
- Capital One
- Child Trust Fund
- First Direct
- HSBC
- Post Office
- Tesco Savings
