Bank accounts are useful for managing your money and your budget.
Before choosing a bank account think about what services you need to meet your day to day and long-term financial needs, then shop around for the best account that meets your needs.
The right account that provides the convenience, rewards and service that you need.
Common bank account services and features
These rewards may only last for a limited period for example when switching to another bank or opening an account.
A reward may be paid regularly or on a specified date, payment or occasion – These rewards vary and may range from cashback to vouchers when a payment is made.
Fees or charges – Fees and charges are usually applied for some services or if you try to spend more money that you have in your account.
Some bank accounts allow bill payments, bank transfers within the UK, or sending money abroad. Your bank may ask for payment to perform these services.
- Online banking – You may access your bank account and bank services online 24 hours a day, 7 days each week. Please ensure that you use a secure internet network to avoid identity theft or loss of your savings
- Mobile payments – This allows payments to be made from your mobile
- Direct debits or standing orders – You may set up payments to be made from your bank account each week, fortnight or month. Just tell your bank how much should be paid and the payment will be made unless there isn’t enough in your account.
- Credit – Your bank may decide to set a credit limit which allows you to spend more money than you actually have. The difference between your actual bank balance and how much you are allowed to spend is called your credit limit. Credit is usually provided with an overdraft or credit card. You will usually be charged a fee if you use more credit than agreed.
- Debit cards – You are usually provided with a debit card when you open a bank account. A debit card does not provide any credit. You can only spend the money that you have in your bank account.Lifestyle benefits – Some bank accounts provide complimentary tickets, membership or subscription – terms, limitations and conditions usually apply.
- Lifestyle benefits – Some bank accounts provide complimentary tickets, membership or subscription – terms, limitations and conditions usually apply
- Added features – Home, car, contents or travel insurance, breakdown cover, terms, limitations and conditions apply.
- Money management app- Some banks provide a money management app, which allows budget preparation and access to check your spending.
- Text alerts – You can ask your bank to send a text when you are near your spending limit.
Choosing a Bank Account
Remember to choose a bank account that suits your needs. Search the internet to review bank accounts, features and services. There are quite a few websites which specialise in comparing bank accounts and banking services.
- Convenience – Are the services, access and opening times suitable to my needs?
- Fees, charges and costs – Am I paying the least that I can for the services that I need or may occasionally want. Could I get these services somewhere else for less?
- Added features or benefits- Are these features or benefits useful to me? Could I get them for less elsewhere?
Carefully read all the information about your account – terms, conditions, limitations, and charges- to avoid any unwanted surprises.
Keep checking your bank account features and services and switch accounts or banks for better deals.
Ensure that you regularly check other bank accounts and switch if there are better features, services and cheaper charges.
Types off accounts
There are 4 main types of bank account
- Current Accounts – Allows direct debts and payments, and may have added benefits or features.
- Basic Bank Account – Credit is not usually offered and you may only be issued a cash or debit card.
- Jam Jar account – Available through your credit union. You will tell the credit union how much money should be placed in each expenditure or savings ‘jar’. Standing orders or direct debits are set up based on your request. You may be charged a fee for using the jam jar service.
- Packaged bank accounts – A current account with added features and benefits. A monthly fee is usually payable
What will I need to open a bank or building society account?
Two sets of documents are usually required
- Proof of address
- Proof of identity
These could be:
- your driving licence
- statements from banks and utility companies, usually less than three months old
- utility bills, usually less than three months old
- Proof of tenancy or ownership of your home
- a solicitor’s letter confirming a rent agreement or house purchase within the past six months
- a passport or birth certificate
- a letter from the Department for Work and Pensions.
Managing your bank charges
You may be charged a fee if you use some bank services
- Overdraft fees – You will be charged a fee if you spend more than your bank allows
- Cash machine (ATM fees) – if you use your card abroad or in some ATM machines in the UK
- Foreign transaction fees – if you access your money or use credit whilst abroad
- Same day bank transfer fees
- One off item fees – You may be charged a fee for some services, such as duplicate statements, or mortgage applications
Avoid or reduce bank charges by planning your spending or budget (hyperlink to budgeting page) and monitoring your spending.
Avoid unpleasant and expensive surprises by using an app or text alerts to manage your account and minimise or avoid bank charges. Alternatively, just simply ask about charges before using a service or making a payment so that you could decide if the fee is affordable. You can also shop around for a cheaper service somewhere else.
Remember, you are less likely to incur unarranged overdraft charges if you use a mobile banking app or text alert service.