If you don't have a bank account or you've been with a certain bank for a
while, you might think that opening a new account or changing banks is too
much hassle. But knowing which bank is right for you doesn't have to be
difficult – it really depends on what you want to do with your money. We’ve
teamed up with national charity Citizens Advice to
show you the benefits of having a bank account and how to decide which
account could be right for you.
Why do you need a bank account?
- If you're on benefits, they have to be paid into a bank account.
- You can pay your bills (like your gas, electric or water) quickly and
cheaply.
- Depending on the interest rates of your account, you may be able to
make a bit of extra money just by having money in your account.
- You'll need an account to get your wages for some jobs.
- Having a bank account is safer than keeping or carrying around lots of
cash.
- You can cash cheques for free, although you do have to wait a few days.
- You may be able to go overdrawn when you need some extra money and you
won't be charged as much as some loans.
How do you use your money?
What's your banking behaviour like? You need to think about what it is you
do with your money before you can decide on the right bank or the right
bank account for you.
- Do you have money going in and out all the time? Then it's a good idea
to look at the different types of current accounts available. These types
of account were created especially for people who spend often and have
regular incomes (however small).
- Do you often go overdrawn or would you like the option to spend a
little bit more than what you have in your account in emergencies? You
should be seeing which bank accounts offer you an overdraft facility and
compare how much interest you'll be charged for dipping in to your
overdraft.
- Do you put chunks of money away from time to time to save up? If so,
you should be looking at the types of saving accounts that different banks
are offering. This is so you can increase your money by finding a saving
account with a high interest rate. Find out more
about saving accounts.
How do you like to bank?
- If you prefer to pop into your bank in person then you should look for
a bank that has a branch near to where you live. You might also want to
find a bank that's open at the right times for you. If you work during the
week then you might want to find a bank that's open on Saturdays or
evenings.
- If you prefer to do your banking online from home then you might want
to find out which banks give you the option to bank online and with what
accounts. It might also be a good idea to look at each bank's website and
see which one you find easiest to use. Some banks, for example smile.co.uk,
are purely online meaning you never need to leave your house to get in
touch with your bank.
What do other people think?
Talk to your friends and family about their experiences with different
banks, they'll be able to give you a good idea of what you can expect from
a bank. You can also search the internet for different reviews on certain
banks – a great way to find out what their customer service is like!
What different types of accounts are there?
There are 3 main types of bank account available – a basic bank account, a
current account and a savings account. We've listed below the things you
need to know about these different accounts so you can choose the one
that's right for you.
Basic bank accounts
- This type of account is available at many banks and building
societies.
- You'll be able to take out money at cash machines using a cash
card.
- Lots of basic bank accounts let you take out money at the Post
Office too.
- You can open one of these accounts without having any money to
pay in.
- The bank may check your credit score when opening one of these
accounts, but not always. You might, however, be refused if you
have a fraud conviction or have been bankrupt. You can talk to your
bank about this to find out more though.
- You can pay in your social security benefits and tax credits.
- You can also pay in wages and cash.
- You can set up direct debits to pay your bills out of this
account you'll usually be charged if there's not enough money in
your account to cover a direct debit that's due to come out as
there's no overdraft to fall back on.
- You don't always get a debit card to use with one of these
accounts.
- There's no overdraft facility allowed with a basic bank account
but you may have a small ‘buffer zone'. This means you might be
able to get the last £8 out of your account at a £10 only cash
point.
Current accounts
- Current accounts are available at banks and building societies.
- You'll be able to take out money at cash machines with a cash
card.
- Some accounts will also let you take out money at the Post
Office.
- You need to have some money to open the account with, you can
talk to your bank about how much this will be.
- Most banks will check your credit score when you want to open a
current account. You may get refused if you have a poor credit
history.
- You can pay in your social security benefits and tax credits to
this account.
- You can also pay in wages and cash to this account.
- You can set up direct debits so you can pay your bills out of
this account.
- You will usually get a debit card with a current account
meaning you can often get ‘cashback' at shops too.
- You can usually get an overdraft with this account. You can
talk to your bank about how big your overdraft will be and if
you'll be charged for using it.
Savings accounts
- Savings accounts are available at banks and building societies.
- You may not be able to take out money at cash machines.
- You usually need some money to open the account with.
- You'll get paid interest on money in the account.
- If you want to take money out of the account you may need to
wait a while or notify the bank first.
- Benefits can be paid into this account.
- Wages and cash can also be paid into this account.
- You normally can't set up any direct debits with this account,
so you can't use it to regularly pay your bills.
- You normally can't get a debit card for this type of account.
- There's usually no overdraft allowed.
What next?
Once you've got a good idea of how you're going to be using your bank
account and the different expectations you have for your bank, you can pop
into the different banks in your local area to chat to someone about what
they can offer you. You'll normally be able to find out the same
information from a banks website or by calling them if you don't have time
to visit.
Struggling with the language of money? Take a look at
our glossary of bank
jargon.
Test your knowledge by taking our jargon buster quiz
If you scored 0 - 3:
It’s ok, don’t worry! Did you struggle to get your head around the language of money? If you need to boost your confidence around financial jargon and gain a maths qualification while you’re at it, we have a range of courses that could help.
If you scored 4 - 7:
Not bad at all, but do you feel you need more confidence beyond the basics? Have you been putting off getting your money in order because of some gaps in your maths, English or IT skills? If so, we can help. Our range of courses all lead to nationally recognised qualifications. Even better, our learning is flexible so you don’t have to re-learn the things you already know.
If you scored 8 or above:
Well done, money maestro! You really know what’s what. Make sure you can prove that you’re worldly wise to employers by getting a qualification with us and keeping those skills up to scratch.
Now you’re a bit clearer on how to store your money in accounts,
think about spending it wisely with our guide to being a savvy
supermarket shopper >>
