Basic Bank Accounts Explained
Basic accounts give almost anyone access to a no-frills bank account
Basic Account Features
Starter accounts provide the bare minimum of features, so that they cost the banks as little as possible to run and can be offered to people with as wide a range of circumstances as possible.
Employers can pay wages direct to the account rather than dealing in cash and wage packets, while government can pay pensions, benefits and tax credits into it, so saving money and administration time.
Account holders can access their money through a cash machine or, in most cases, at Post Office counters. Cheques and cash can both be paid into the account, direct debits can be set up to pay bills, and money transfers can be arranged.
Most accounts won't allow you to go overdrawn, and chequebooks and debit cards are rare. You may also find that you have to pay to use the cash machines of another bank, although ones owned by the bank you have the account with will be free.
As these accounts are often taken out by people with low incomes, there's generally no minimum monthly deposits required, and in most cases an account be opened with £1 or even nothing.
Some accounts also don't charge fees for unpaid direct debits, while sometimes interest on balances is paid, and in some cases you can set up standing orders.
In short, basic accounts give you a way of storing and managing your money that's an improvement on sticking solely with cash, but which doesn't let you get into debt.
Who qualifies?
By their very nature, basic bank accounts are aimed mostly at people who are unable to open a standard current account, whether because of a bad credit history, low income, or being in receipt of benefits. Because of this, and the fact that the features on offer are, well, basic, rejected applications are rare.
Almost everyone will be able to open a basic account, even with previous credit problems such as bankruptcy. You'll need evidence of your identity and evidence of your address - although even if you have no permanent address many banks will accept other documents such as a letter from a hostel manager.
Although different banks have their own acceptance criteria, generally the only major things stopping you are if you're an undischarged bankrupt or you have a history of fraud or very significant bad debts.
In brief...
Basic bank accounts are a great way for people who were previously financially excluded to organise their finances and enjoy some of the benefits of a bank account, and also possibly providing a 'step up' towards a more fully-featured current account.
Home - Banking - Basic Bank Accounts
