basic bank accounts

Basic bank accounts

Top easy-to-open accounts with no fees and no overdrafts

If you've a poor credit score, you might have struggled to find a bank account that will accept you. If so, you're not alone – more than one million people in the UK don't have a bank account. Yet there is a solution – a basic bank account. This guide runs you through what they are, what you need to know, and our top-pick accounts. 

Other MSE banking guides...

Best bank accounts: Can you get a 'standard' bank account? 
Packaged bank accounts: £100s of insurance from £13/mth
Cut overdraft charges: How to pay less and pay it off

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What is a basic bank account?

Piggy bank image in the shape of a bank

Basic bank accounts are products designed for those with poor credit scores. As the name suggests, these accounts offer a place for you to store your money and pay bills from, though they don't come with overdrafts, or many of the perks that standard bank accounts offer.

You still get all these features with a basic bank account:

  • A debit card
  • The ability to set up direct debits and standing orders to pay bills
  • Free access to UK ATMs (unless the ATM itself charges)
  • Online or phone banking

However, you won't get:

  • A chequebook
  • An overdraft
  • Perks such as cashback or interest

The six basic bank account need-to-knows

Before applying for a basic bank account, there are some key points about them you should be aware of...

  • To get a standard bank account you need to pass a credit check – this is where the bank assesses whether it wants you as a customer. Every bank has its own wish list of what's a perfect customer, so if one bank rejects you, don't assume all the others will too.

    The credit check is often not too harsh, but if you've a poor credit history with serious defaults, county court judgments or bankruptcy, it can be very difficult to pass the credit check and get a standard bank account.

    If this is you, it's likely you'll need to open a basic bank account while you sort your credit problems out. While you may still be credit-checked by the bank for a basic bank account (so it may show up on your credit report), it's usually only done to check your identity. Don't worry though, you're not alone – in the UK, there are almost eight million basic bank accounts open.

    If you want to improve your credit rating, or find out more about why banks might reject you for an account, see our Credit Scores guide.

  • You can open a basic bank account in branch, or sometimes online or over the phone, depending on the bank. As well as filling in an application form, you'll be asked to show some ID, and proof of address.

    To confirm who you are, you'll usually need one (original) of the following:

    • Full, current passport
    • Current UK photocard driving licence or UK full paper driving licence
    • Current European Union member state identity card
    • Identity card issued by the Electoral Office for Northern Ireland
    • Benefit entitlement letters, including pensions, disability payments and universal credit (or benefits such as income support and jobseeker's allowance if you've not yet been moved on to universal credit)
    • HM Revenue & Customs tax notification or assessment letter

    Banks publish their own lists of acceptable ID, so you should check these too. Though if in doubt, it's easier to call the bank or visit a branch and ask them what you'll need, and if they're able to accept anything else.

    If you don't have acceptable ID, you might not be able to open the account. But if this happens to you, it's not the bank being difficult – it needs to see certain acceptable ID documents to comply with money-laundering regulations (basically, it needs to check you're not a fraudster and you're opening the account for legitimate purposes).

    Yet two banks have launched pilot schemes to help those who may not be able to fulfil the above requirements, though the schemes will only help those in a couple of specific situations...

    • HSBC – will open accounts for those with no fixed address

      HSBC is working with charities Shelter, Crisis and Refuge (and their networks) to open accounts for people who don't have a fixed address of their own.

      This can be a first step towards claiming benefits and getting into local authority housing schemes, so if someone you know is affected and might benefit, tell them to contact one of the charities above.

      To open an account, you'll need to attend one of the selected HSBC branches with your case worker from the above charities. Bring along any ID or official documentation you have, as it will all help – but if you don't have any at all, your case worker will be able to vouch for your identity in branch. You'll be able to use the charity's address, your safe house address or a PO Box address on the application.

      You can find a full list of the branches taking part on this HSBC page.

    • Halifax – will open accounts for those soon to be released from prison

      Halifax has been working with the Ministry of Justice, the Prison and Probation Service, the Scottish Prison Service and also directly with prisons in a scheme to set up bank accounts for prisoners who are soon to be released.

      The bank account opening process starts before the prisoner is released, the idea being that having a bank account helps them adjust back to life outside the prison walls.
  • Banks can't charge you for the day-to-day running of a basic bank account. For example, you can't be charged for an unpaid direct debit or standing order, or charges for going into your overdraft (you won't have this facility anyway).

    However, it's still wise to know exactly what money you have in the account, and to manage it carefully as you could still get charges if you didn't have the money to pay a bill from the company that hasn't been paid.

    Plus we've heard a few tales of banks cancelling direct debit facilities, or closing accounts where they've had to bounce lots of payments. We don't think it's common, but just something to be aware of. Your bank should write to you before it does this.

    You should also be aware that basic accounts can still charge you for things like using your debit card abroad, and for certain types of special payments from the account, like same-day CHAPS payments (you'll know in advance about the charges for special payments).

    If you need help managing your money, our Budget Planner has hints, tips and tricks to see where you're spending and to help you cut down.

  • Basic bank accounts are designed to help people with poor credit scores, who won't pass the credit check for standard bank accounts. Because of this, past credit problems – such as county court judgments, defaults or having been declared bankrupt in the past year – aren't usually a barrier.

    Yet they're usually open to anyone who wants to open one. They can be useful if you're struggling to, for example, manage your money, and want an account which won't let you go overdrawn. However, some banks only offer basic accounts to people who fail a credit check for their standard accounts, so it may be best to ask whether your chosen bank does this before applying.

    The only people who categorically can't have a basic bank account are people with criminal convictions for fraud (people with other convictions can still apply and be accepted, subject to fulfilling the other account-opening criteria) or people who fail the bank's ID checks.

  • Although few banks in the UK charge you to use their current accounts (for instance, packaged bank accounts), most accounts have overdrafts, which you pay for. These tend to make banks enough money, meaning they can offer 'free' banking to those not in their overdraft (the banks call it a 'cross-subsidy').

    But with basic bank accounts, there's no chance for the bank to make money from you as a customer. Instead it makes a loss, because of the administration costs of, for example, setting up your account, and producing and sending your debit card and statements.

    Often banks don't tell you about these accounts, as they don't really want people to have them – you'll often find them hidden away in the corner of the bank's website, or you'll need to open them in a branch rather than applying online.

    It's best to ask for these accounts by name, to avoid applying for standard current accounts and getting rejected.

    We'd like it to be the case that if you apply for a normal account, and are rejected due to the credit check, the bank should be forced to offer you its basic account there and then. Sadly, that's not the case at the moment. We've our top picks below in this guide, but this is the full list of banks that are required to offer basic accounts:

    • Bank of Scotland
    • Barclays
    • Co-operative Bank
    • Halifax
    • HSBC
    • Lloyds
    • Nationwide
    • NatWest
    • Royal Bank of Scotland
    • Santander
    • TSB
    • Ulster Bank
    • Virgin Money (including Clydesdale and Yorkshire Bank)
  • Provided the money is in a UK-regulated bank or building society account, it's protected under the Financial Services Compensation Scheme, meaning...

    Up to £85,000 per person, per financial institution is guaranteed.

    In basic terms, this means that the money in your current account is safe if the bank were to go bust.

    It does get a bit complex if you have a decent sum saved in other accounts with the same bank or banking group, as the £85,000 applies across all accounts, it's not a limit per account.

    So for the exact rules on the links between institutions (and how it works for joint accounts), see the detailed Are your savings safe? guide.

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Easiest-to-get basic bank accounts

While many banks offer these accounts (and the nine largest banking groups have to), the anecdotal feedback we have is that three banks seem to welcome basic bank account customers, and are far more proactive in helping them.

The accounts which get this thumbs up are Co-op's CashminderSantander's Basic Current Account and the Virgin Money M Account. All three accounts allow you to set up direct debits/standing orders and give you a debit card which means you can withdraw cash from UK ATMs.

You can also set up all three as joint accounts, provided you both qualify. Two of these providers also let you open a basic bank account online. While all of the accounts below run a credit check to confirm your identity when you apply, The Co-operative Bank and Santander only carry out a soft check – this means that only you can see it on your credit report, and it won't affect your ability to get credit in the future.

Below is a summary of the three accounts, so you can decide which is the best fit for you.

Top-pick basic bank accounts

TABLE_CELL_STYLE Co-op Cashminder Santander Basic Current Account Virgin Money M Account
Accepts those with an undischarged bankruptcy
Accepts those in an IVA, DMP, DRO or discharged bankruptcy (1)
Accepts those with a record of fraud
Minimum age 16 16 16
Proof of address plus one piece of ID required (2)
Credit check to confirm identity? (3)
 
(3)
Allows direct debits and standing orders
Free access to UK ATMs
In-credit interest Nil Nil Nil (4)
Unpaid direct debit charge Nil Nil Nil

Open it Online/ branch Online/ branch Phone/ branch (5)

Operate it Online/ app/ phone/ branch Online/ app/ phone/ branch Online/ app/ phone/ branch

(1) When you are made bankrupt, your assets (your possessions, home, income etc) can be used to pay your debts. Bankruptcy usually lasts 12 months and after this time you are discharged, or freed, from your bankruptcy debts. (2) In certain circumstances, such as if a customer is homeless and therefore has no standard proof of permanent address, Santander works with them to find alternative means of confirming their identify and opening an account. (3) This is a 'soft search', which only you can see on your credit report. (4) Has a linked savings account paying 0.35% AER variable. (5) You can apply online, but bizarrely you'll need to apply for the Virgin Money M Plus account*. If you don't qualify for that, but are eligible for the M Account, it'll offer you that instead.

Alternatives to basic bank accounts

If you can't get – or don't want – a basic bank account, there are some alternatives you can try. However, they're not available to all, and in many cases, they're not cheap.

Fee-paying card-based accounts

There are a couple of bank or card-based accounts out there that don't credit check, so are open to all – they're another option if you don't want any of the basic bank accounts above, but they do tend to have some fees to get or use the accounts. Our top picks...

  • The Cashplus Freedom* account is a fully fledged bank account (though as some get the option of applying for an overdraft later on, it's not a basic bank account). It's open to all, provided you're over 18 and a UK resident.

    The Freedom account costs £9.95 to get your initial debit card. But then there's no monthly fee, and spending on the card and making ATM withdrawals is also free. You'll pay a 0.3% fee if you need to deposit cash (minimum £2) and you can only deposit at the post office, as Cashplus doesn't have branches.

    Cashplus won't credit-check you when you apply for an account, though it may check with credit reference agencies to verify your ID and address. If it can't verify you electronically, you may need to provide it with ID and proof of address to open an account.

    The big advantage of Cashplus being a bank is that any money up to a balance of £85,000 you hold with it is protected by the Financial Services Compensation Scheme (FSCS). This means that if Cashplus went bust, you'd get your money back.

  • The Monese* account is technically a prepaid card, but it acts like a bank account as it lets you make transfers and pay bills by direct debit – you can even pay your income into it. Anyone over 18 living in the European Economic Area can open an account by filling in their details and submitting a photo of their ID and a video 'selfie' – you don't have to have a UK address. There are three account options:

    - 'Simple' has no monthly fee or transaction fees in the UK, but charges a fee of £4.95 for your card, then 2% (minimum £2) for each top-up and ATM withdrawal above £200/month.
    - 'Classic' has a £5.95/mth fee, which gets you £900 free in ATM withdrawals and top-ups.
    - 'Premium' has no ATM or top-up fees, but is a hefty £14.95/mth.

    Monese holds your cash in a separate account, which is entirely ring-fenced from its own finances. This means if Monese went bust, you should be able to get your money back – though it's not FSCS-protected, and if the ring-fencing bank went under, your money could be lost.

Credit unions

A couple of credit unions across the UK now offer bank accounts, and most of these allow those with undischarged bankruptcy to get them. You'll usually have to pay a monthly fee of £2 to £5 and/or commit to keeping a certain balance in your account to be a member. However, some credit union current accounts offer cashback in certain stores which can offset the fee.

Read the Credit Unions guide for more, including to see if there's one local to you.

Want to complain about your bank account?

If your bank has charged you the wrong amount, taken the wrong amount in payment or its service has been atrocious, then you don't have to suffer in silence. It's always worth trying to call the bank first to see if it can help, but if not...

Basic bank accounts FAQ

  • Yes, if you don't meet the identification or proof of address requirements needed by the bank they can refuse you. You could also be refused if you've a criminal conviction for fraud.

    If you are refused an account, you've a right to ask the bank why, and if unhappy you could make a formal complaint. If you're still unhappy with the bank's decision, you can take it further to the free Financial Ombudsman Service.

  • Yes you can. Just open a new basic account with the new bank and it'll process the seven-day switch for you. That means they'll move over all your payments going out, coming in and notify your old bank to close the account.

    It'll also move payments meant to go into your old account into the new one, for example, your salary. If something goes wrong, the bots behind the scenes sort it, so for at least three years any money paid into the old account or wrongly earmarked to come out of that account is transferred to the new one. Also, if you're hit with any charges due to an error in the switch, this should be refunded by the new bank.

    Read full info about bank switching and how it works.

  • Direct debits are set up by the company you're paying. In most instances, the company will ask for your account details and they'll set up a direct debit for you, often online. However, sometimes they'll send you a direct debit form that you need to fill out and send back. You can't set up a direct debit yourself.

    A standing order is a payment you can set up yourself. You'll do this via your bank, in branch, on the phone or online. To set one up, you'll need the account details you're sending money to and you'll need to put in a set amount you want to send each time (you can change the amount with a day or two's notice).

  • Yes. Banks have security systems in place that ensure fraudsters can't hack into your account, whether you're logged in online or on your phone. But you still need to be careful – never ever send your online/mobile banking information to anyone.

    If you're using a mobile app, make sure you download your bank's official mobile app from your app store and make sure you update the app regularly with any new security features.

    It's also worth keeping your computer up to date with Free Antivirus Software, so you're protected from viruses and spyware.

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