Bank Accounts - Safe & Basic

Contents

Overview

Everyone can have a bank account. Which one depends on your financial background and current situation. Most banks use credit reference agencies to assess your application. The good news is that even with a low credit score, there is a bank account product applicable to you called a 'Basic' Bank Account.

If you have an  overdraft or any other debt with your bank, you will be advised to open a 'Safe' Bank Account. This is a type of bank account that does not grab your income to offset borrowing with the same bank.

A safe bank account will not be frozen while you are in a debt solution.

Basic Bank Accounts

A basic bank account is offered when you have a low credit score, i.e.  if you have missed payments or have debts. Features include:


The banks & building societies listed below offer free basic bank accounts:


Always check terms, conditions before you commit to a bank account.

The Financial Conduct Authority state that, from September 2016, you will be entitled to open a basic bank account if you are ineligible to open a standard bank account, unless it would be unlawful for the firm to open the account. The bank should give you an explanation if they turn you down. If  you believe you have been turned down unfairly you may be able to complain to the Financial Ombudsman Service.

Safe Bank Accounts

A safe bank account is opened at a bank or building society with no debt owed to them. Reasons to switch are:

Debt Advice - Banking

Banks can freeze your accounts when a debt solution is notified to them, this prevents you getting any credit balance out until the account is unfrozen, you could be without any money over a weekend. Banks can also use 'right of set-off' if you owe any other debts to them.

Banks offering Safe & Basic Accounts

The following banks/building society must now allow anyone in a formal debt solution, such as bankruptcy, debt relief order or IVA to open a basic bank account:

Usually the bank will check your eligibility for their current account first, before offering you a basic account.  You must make it clear that you want to apply for a free basic bank account if you are about to enter into a debt solution. If you do not make this clear, you could be credit scored and your application may be rejected.

Other banks may let you open an account while in a formal debt solution, but will depend on their policies.

You should always check with the bank you choose whether you are allowed to open a safe bank account before or after a formal debt solution has been approved.

Digital Banking

Digital banks are banks that do not have a high street presence, their banking facilities are only available through a mobile banking app. These digital banks are sometimes referred to as 'challenger banks'. If you are able to use your smartphone or tablet with confidence, this type of banking might be a good option.

Digital Banks have simpler ways to approve you opening  an account online, usually meaning that you are either lightly credit scored or not credit checked at all.

You should always check that they provider is regulated, you can check the approved Open Banking register.

See our A to Z list of Digital UK  'challenger banks'.

Current account switch service

The majority of banks have a guarantee that will let you switch accounts within seven days. This is referred to as the Current Account Switch Guarantee. In addition banks will guarantee that payments in and out of your new account are switched over in time to ensure you do not miss any regular bills or payments.

Business Bank Accounts

If you enter a formal debt solution as a business, you will not be able to continue to use any previous credit lines, this will be an important consideration if you need credit to continue trading.


Business bank accounts like personal bank accounts can be run as a 'basic business account'.


The following are 3 main Banks that offer Business Bank Accounts for a person with a poor credit history:



The following providers do not perform a credit check:



You can also view our A to Z list of Digital UK  'challenger banks'.


Always check terms and conditions before you commit to a bank account.

Acceptable Identification (ID)

Below is a list of accepted identification:​​


Banks publish their own lists of acceptable ID so you should check these. You'll also need proof of address. If you can't provide any of the accepted forms of ID on the list, it's best to contact the bank to explain the situation - it will be able to tell you if any other ID is acceptable.