Banking in the United Kingdom
Bank current accounts are often more than just somewhere safe to store your money and carry out your everyday banking practices, with banks offering customers various other benefits. Many banks for instance offer insurance policies with their accounts or perhaps cashback on some of your spending. Banks also pay interest on credits in your account, usually calculated on an annual basis. With a bank account customers are usually offered a debit card, which allows them to make payments from their account in most outlets. In order to qualify for a bank account with added benefits, especially if an overdraft facility (the facility to spend money that isn’t in the bank account, up to an agreed amount) is required, customers usually need to have a good credit rating and to have a minimum amount paid into the account on a monthly basis.
Joint bank accounts work the same as any other bank account with the exception being that the account is operated by two people, usually partners or friends. The main benefit of a joint account is that it can make it easier to manage household bills if they are paid from one place rather than separate accounts. Any spending, however from a joint bank account is not verified by both account holders, so it is important that you have a good level of trust in anybody that you’re thinking of opening an account with. Indeed, if you incur any debt through your account, such as through an overdraft both parties are responsible for repaying it regardless of who spent the money. In order to qualify for a joint bank account both applicants will need to pass a credit check.
Business accounts are similar to personal current accounts but they offer customers the opportunity to keep their business and personal spending separate. Indeed, if your business is set up as a limited company or a partnership then it is a requirement that you have a business account.It is also a requirement for such businesses that there are two key signatories, with extra signatories being added at the request of these key signatories. Sole traders are able to determine, whether they wish to use their own personal account or a business account for their transactions and can also determine their own authorisation practices. Business accounts can vary from basic accounts with a simple debit card and cheque book to more intricate accounts with extra benefits, such as insurance or access to a business advisor included.
Bank Accounts for Bankrupts
Setting up a bank account as a bankrupt can be a daunting process due to the serious effects that bankruptcy has on credit ratings. It is possible to have a bank account, even if you have been declared bankrupt, although it is unlikely that you will be able to have access to any credit facilities. This means that any account you are eligible for is likely to be a basic account without any extras and most banks won’t offer these to undischarged bankrupts. There are also guaranteed bank accounts, these allow customers to open an account without a credit check and as stated customers are guaranteed to be accepted. There is usually a small fee to pay for these products but they can be useful to those who are finding it hard to secure a current account.
Bank Accounts for Children
Children can open current accounts from around 11 years old. These accounts are very similar to adult current accounts, in that they can offer children a debit card to allow them to withdraw up to £100 from a cash machine per day or pay electronically in-store or online. Most banks offer two different accounts for 11-16 year olds and 16-17 year olds, with the account for older children usually giving them the luxury of withdrawing more money a day, if they wish. Children under 11 are usually not able to open a current account but can open a savings account from the age of 7. Bank accounts for children never use a credit facility, so children can only spend what is in their account and no more.
Bank Accounts for Bad Credit
Even if you have a poor credit rating it is possible to secure a bank account with a debit card and the facility to use direct debits. These accounts are known as bank accounts for bad credit and unfortunately, they are not well advertised by banks, so you may need to do some research and ensure you ask for the right bank account by name during the application process. These accounts will not have an overdraft facility and you will not receive any interest payments if the account is in credit but you will be able to do everything that you can do with a normal bank account. Most people are accepted for basic bank accounts, even if, for example they are currently in an IVA, DMP, DRO or are a discharged bankrupt.
Bank Accounts for Students
Student bank accounts offer all the facilities of a normal account with the added benefit of a free overdraft, provided that customers stay in their agreed overdraft limit. They usually come with other benefits, aimed specifically at the student market, such as railcards. Customers who are eligible for a student bank account are usually those who are studying at university and you will normally have to provide evidence of your university offer in order to open an account. Once you have completed your course you can still keep you free overdraft facility for a further year by switching your account to a graduate account.