Basic accounts for people with bad credit history

bank accounts with bad creditWith the emergence of new technology in banking, it’s almost impossible to manage your money without having even the most basic bank account. These days, it’s necessary to have a current account to carry out the basic things like paying for groceries or sending direct debits. Unfortunately, because of one reason or another, ranging from bad credit history to bankruptcy, not everyone is qualified to have an account. This in itself presents a constant headache for people who desire to have one, but find they have limited options for managing their finances. The good news is that banks here in the UK normally offer a basic bank accounts for people with bad credit history (More commonly called ‘ bank accounts for bad credit ‘), with most having a simple application process, and once opened provide you with not only an account, but also a debit card (although not normally with an overdraft).

How is a basic bank account designed?

As suggested by the name, basic bank accounts are bank services that basically offer you a place for you to keep your money safe. It’s designed in such a way that one can make all money transactions over the phone or through cash withdrawal system without all the added costs. It also enables you to make direct debits without providing the overdraft or giving you the chance of gaining any credit interest from money deposited.

Because most banks offer almost a free banking service to the public, many banks keep them hidden. This is mainly because they are not making any profit on you. On the other hand actually they are accruing losses in terms of administration cost and keeping the basic bank account active and up to date by producing and sending debit cards and account statements.

As it is basically a current account, credit checks that are usually done to a person to verify the financial status are not a stipulation. Identification documents is deemed sufficient for you to qualify for this service

Who is a bank account for bad credit for?

People with a history of having major default issues of paying bills and bank loans often find themselves in challenging situations with no banks accepting them. A basic bank account is normally offered to such like people in the hopes that they get absorbed in the system. Bankrupt people also qualify for this service as the poor credit store they have is not taken into account. This service is especially suitable for people with money control spending issues who wish to operate a bank account that offers no enticers of overspending and at the same time keep their bills paid up to date. It’s however it is good to note that people with criminal records in the UK especially those with fraud charges against them will under no circumstances qualify for this banking service.

What are the requirements needed to open basic bank accounts?

As expected some form of identification is necessary as stipulated with international laws in order to curb money laundering vices. However the requirements (in the originals) that are needed to open a basic-bank account are not complicated and they include but are not limited to.

• Full colored current passport photograph

• Current UK photo-card driving license or UK full-paper driving license.

• Identity-card issued by the Electoral-Office for Northern Ireland

• Benefit books/benefit-entitlement letters; that includes pension, child-benefit, income-support, disability and jobseeker’s-allowance (if you qualify for them.)

• Current European-Union member state identity-card

• Current personal address.

• Current HMRC-tax notification or assessment-letter

If these documents are not readily available, it would be wise to contact the bank regarding information of alternative identification documents that they accept. If after meeting all the requirements the bank still rejects your application, the bank should be readily willing to give you a legitimate reason for its decision.

How to choose a bank offering a basic bank account service?

Basic bank accounts are availed from a number of building societies and credit unions apart from high street banks. However there are certain things that need consideration that come to play before opening a basic account anywhere.

• First of all, convenience of operating the account should be taken into account. Because of this the bank should be near place of residence or place of business where the need to commute in order to deposit or withdraw money is eliminated.

• Convenience of operation from cash machines near your home should also come to place. This cuts the need for having to wait for business days to operate an account especially in emergency situations.

• The bank should also offer the services that you desire such as standing orders, stranding orders or if it offers debit cards without unnecessary restrictions on what services they offer.

• A buffer zone should also come to play to ensure that restriction of withdrawal of funds from a cash machine or payment of goods is not limited if the amount left in the account is low.

How to apply for a bank account with bad credit

If you think you meet all the requirements that are needed, it’s time to apply to do this, there are certain stipulations that are to be kept in mind in order to better your chances of being accepted by a bank. Usually there is a preference of banks wanting you to apply for opening of a bank account in person; however some banks are now giving the option of application online or through the phone or by post. This gives you the added advantage of saving time and avoidance of long queues.

You can usually apply for a basic current account in person, by post, over the phone or online.

Check with the bank what proof of personal identity and address you need to show them when you open your account. If you don’t have the documents, ask what they will accept instead.

If your application is turned down, don’t be afraid to ask why – the bank should be happy to give you a reason for a rejected application.

What can you do with a basic account?

Well it is quite obvious that there are many more restrictions that with a standard current account. Overdraft is not offered limiting the amount that can be withdrawn. Interest is not earned on this account. The option of paying bills through cheque is also unavailable. However on a good note, there are higher chances of getting approval from the bank. The basic account necessities services such as having the benefit of getting salary, pension and tax credits directly deposited. Easy cash withdrawal and free cheque deposit and processing.

What are the drawbacks of basic accounts?

Though you will be operating an account, basic bank accounts are just where you store your money; it offers no other services that benefit you. Overdrafts and credit are not offered on this account. Some banks do not offer debit cards, necessitating the need to withdraw hard cash for use. Care should also be taken to ensure that debit card payment should not exceed the amount in the account, as an unpaid transaction fee payment is levied of up to 25 GBP if you go over, and if left unpaid could lead to cancellation of your basic bank account with the bank.