Getting a bank account
When you want to get a new bank account, there are a number of things you need to think about.
You'll need to find out about:
- the main types of bank accounts, and what they are used for
- how to open a bank account
- the terms and conditions for different types of accounts
- how to change your bank or building society.
There are different types of bank account that you can use for different reasons. Here we tell you about the main types of bank account, and what you can use them for.
You can use a current account to help you manage your money day-to-day. This includes:
- paying your bills
- receiving money - such as your salary or benefits
- keeping track of where your money is going.
Some current accounts can also earn you interest on the money you have in the account, although this is likely to be less than many savings accounts.
With a current account, you will get a cheque book which you can use to take money out. You may also get a debit card which you can use in shops and cash machines. The bank may let you have an overdraft and access to other kinds of credit. You will be allowed to set up direct debits and standing orders.
Some banks will let you cash a current account personal cheque or use your cash card at the Post Office, free of charge. Ask your local post office if you can do this free from your current account.
Post Office card accounts
You can use a Post Office card account to collect benefits, tax credits and state pensions. You can't pay any other money in.
You can only get your money out of a Post Office card account with a plastic card and a Personal Identification Number (PIN) at the Post Office. You can't go overdrawn on a Post Office card account and you can't use your card in any cash machines.
You can use savings accounts to put away money that you'd like to save for the future, for emergencies or to buy expensive purchases like a new car or a holiday.
A savings account will give you interest on your money.
For more information about savings accounts, including a table comparing different types of savings accounts, visit the Money Advice Service website at: www.moneyadviceservice.org.uk.
Basic bank accounts
If you have a poor credit rating or a low income, you may have problems in opening a standard current account or savings account. You may also have problems if you already have a current account which is overdrawn. If you're in this situation, you may be able to open a basic bank account.
You can ask a bank or building society to open a basic bank account. The bank or building society must tell you whether it offers basic bank accounts. If it does, it must tell you the conditions you must meet to be able to open one.
You should still be able to get a basic account even if a credit check shows that you have:
previous bad debts
outstanding county court judgments against you
For more information about credit reference checks and outstanding court judgments, see How lenders decide whether to give you credit.
If you have a basic bank account you usually:
don't have to have any money to put in the account to open it
don't have to pay any fees
can pay your wages, salary, benefits and tax credits directly into the account
can pay in cheques and cash
can pay bills by direct debit
can withdraw money from cash machines.
There are some disadvantages to having a basic bank account. These include:
you won't be able to have a cheque book or go overdrawn
if you've set up a direct debit and there's not enough money to pay for it, you might be charged for this
Not all basic bank accounts can be accessed at the Post Office. If you want to do this, check with the bank before you open a basic bank account.
If you have an overdraft or other debts on your current account and you open a basic bank account at the same bank, they may use the money in your new account to pay off the debts in your old one. If you get benefits, tax credit or state pension, you might want to think about opening your basic bank account at a different bank or building society.
You can get more information about basic bank accounts, including a table comparing the different types of basic bank account, on the Money Advice Service website at: www.moneyadviceservice.org.uk.
You can get versions of this information in large print, Braille or audio format from the FCA's Consumer Helpline on: 0800 111 6768.
You can also open a bank account jointly with other people. For example, you might want to do this to manage household bills with someone you live with, or with your wife, husband or civil partner.
To open a bank account you usually have to fill in an application form. Often, you can do this in a branch or online, and sometimes you can also do this over the phone.
You will also have to provide proof of your identity including your full name, date of birth and address. You usually have to show the bank two separate documents that prove who you are, for example, your passport, and where you live, for example, a recent bill. If you don't have any of the documents that the bank wants, they should accept a letter from a responsible person who knows you, such as a GP, teacher, social worker or probation officer.
If you're bankrupt or have a record of fraud, you will not usually be allowed to open a bank account. Also, you may be refused permission to open a current account if you have a poor credit rating. However, if you're bankrupt or have a poor credit rating, you may be able to open a basic bank account.
A bank or building society can refuse to open an account for you. They don't have to give you a reason, and there's usually nothing you can do about it. A bank or building society isn't allowed to open an account for someone who needs leave under the Immigration Rules to enter or stay in the UK but who doesn't have it, for example, someone who has entered the UK illegally or who has 'overstayed' after their visa has run out. If you are in this category you also can't be added to someone else's account as a joint account holder or be a signatory or beneficiary in relation to any account. Your bank or building society will carry out status checks to ensure that you don't come into this category. There is more information about what you should do if your bank or building society refuses to open an account for you for this reason on the GOV.UK website at www.gov.uk.
Some groups of people such as ex-prisoners may find it particularly difficult to open accounts.
However a bank or building society isn't allowed to discriminate against you, for example, because of your race, sex, disability, religion or sexuality. If you are discriminated against, you may be able to complain to the Financial Ombudsman Service. Also, you may be able to take a case to court.
However, there are some circumstances when a bank or building society can discriminate against you, for example, they may not let you open some types of account unless you fall into a certain age-group.
For more information about discrimination, see our discrimination pages.
If you think you've been discriminated against by a bank or building society, you should get help from an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.
When you open an account with a bank or building society and use their services, you are entering into a contract with them.
The terms of the contract will change according to the bank or building society and the type of account or other service you use.
Before you open an account, you should be given information which will help you choose the account that suits you. The information should include the terms and conditions and the interest rates.
After you've opened an account, your bank or building society should keep you informed about changes to this information, so that you can make decisions on how to best use your account.
Terms and conditions for current, basic and instant access savings accounts
If you're opening a current, basic or instant access savings account, you should also be given additional information such as:
- details of all charges
- how the bank or building society will give you information about your account
- any spending limits on your account
- what to do if things go wrong.
The information should be given to you in a way which is easy for you to understand. Once you've opened your account, the bank or building society should tell you about any changes to terms and conditions at least two months before the changes are made.
If there are changes to the terms and conditions of your account, you can close the account at any time up to 60 days from the day you were told about the changes. You don't have to give notice or pay any extra charges.
Terms and conditions for savings accounts
If you're opening a savings account other than an instant savings account, you will be given less detailed information than for other types of account. It may be provided in a summary box which will help you compare different accounts from different banks and building societies.
You may have to be 18 or over to be able to open some accounts.
If you decide to change your bank or building society account, you should think about:
- what charges will be involved, for example, for closing your account or cancelling standing orders
- whether the services and facilities provided by the new bank or building society are better than those you currently get
- the fact that there may be delays in making payments by standing order or direct debit. You should take this into account when you decide the date for closing your account
- how long you will have to wait before you can use all the new bank or building society's services
You should open a new account before closing your old one and make sure you cancel any current standing orders or direct debits, or move these to your new account. Be sure to return any unused cheques or plastic cards (cut into pieces) to your old bank or building society.
If you are transferring a balance to your new account, make sure you have left enough money in the old account to cover any uncleared cheques.
If you owe the existing bank or building society any money and you wish to close the account, you may still be sued for the money you owe if you don't pay it when you close the account.
Both your old and new bank or building society have responsibilities towards you.
The level of service you should expect from your old bank or building society will depend on whether there is an arrangement in place between your old bank and the new one.
Where there is no arrangement, your bank or building society only has to provide a prompt and efficient service to help you close your account and it must return any money due to you. This includes any interest.
Where there is an arrangement in place, your bank or building society must transfer any account balance and make arrangements in respect of direct debits and standing orders. If there are mistakes or delays in the transfer process which lead to bank charges, you shouldn't have to pay for them.
For more information about banks and building societies and the services they offer, see Banks and building societies.
You may also find the following information helpful:
The Money Advice Service
The Money Advice Service is a free, independent service. Their website has lots of useful information about financial products such as bank accounts, including comparison tables for different savings accounts. Their Money Advice Line can answer general enquiries about financial products and services.
Their Money Advice Line is 0300 500 5000.
Their website is www.moneyadviceservice.org.uk.
Financial Conduct Authority
The Financial Conduct Authority (FCA) is the body responsible for regulating banks and building societies.
They aren't able to get involved in individual complaints, recommend firms or give legal or financial advice. However, the FCA is interested in hearing about cases where a bank or building society appears to be in breach of its obligations. The FCA may, where appropriate, fine the bank or building society.
Their Consumer Helpline is 0800 111 6768.
Their website is www.fca.org.uk
The Financial Ombudsman Service
If you've gone through your bank or building society's complaints procedure and they haven't been able to help you, you can make a complaint to the Financial Ombudsman Service.
You must give your bank or building society at least eight weeks to sort the problem out, unless they send you a letter of deadlock before the eight weeks is up. This is a letter telling you there is nothing more they can do to help you.
You must complain to the Ombudsman within six months of getting the letter of deadlock, or from the end of the eight week period if you don't get a letter of deadlock. Make sure you keep a record of the date when you first made your complaint to the bank.
Financial Ombudsman Service
Consumer helpline: 0800 023 4567 (free for people phoning from a landline) or 0300 123 9123 (free for mobile-phone users who pay a monthly charge for calls to numbers starting 01 or 02) (Monday to Friday from 8.00am to 8.00pm; Saturday from 9.00am to 1.00pm)
For more information about the Financial Ombudsman Service, see How to use an Ombudsman.