Choose the type of account that suits your needs
Current accounts
Most people use a current account with a bank or building society to manage their day-to-day money.
It allows you to:
- pay bills by Direct Debit or standing order
- receive automated payments, such as salary, wages or benefits
- have an overdraft, although the bank will need to authorise this
- pay for things with a debit card and withdraw money from cashpoint machines.
To help you manage your money, you can:
- use the secure bank app, to check and make payments
- set up text alerts, to warn you of a low balance.
If you’ve dipped into your overdraft in the past, make sure you check fees and charges for going overdrawn.
Packaged current accounts
Top tip
If you’re thinking about opening a packaged account, check out how many of the extra benefits you would actually use and whether you can get them cheaper elsewhere.
Some current accounts offer extra features, which they charge a fee for. This can be as much as £25 a month.
These are known as packaged accounts.
Extras include:
- special offers, such as preferential interest rates on overdrafts
- car breakdown cover
- insurance cover, such as travel or mobile phone insurance
- extra services.
Fee-free basic bank accounts
A fee-free basic bank account might be worth considering if you can’t open a standard current account. This could be because your credit rating is low or because you haven’t got a credit history.
When you’ve had a fee-free basic bank account for a while, a bank might offer you a current account.
A basic bank account doesn’t have an overdraft facility, but it does allow you to:
- pay bills by Direct Debit or standing order
- receive payments such as salary, wages or benefits.
Jam jar budgeting accounts
These accounts are sometimes called budgeting accounts or rent accounts. They’re designed to help you budget.
High-street banks rarely offer these accounts. Instead, you’ll have to apply via a credit union or your housing association.
Often, there’ll be a fee for these accounts of around £3-£15, although your housing association might pay it for you.
A jam jar account lets you divide your money into different ‘pots’ or ‘jars’.
You decide how much money goes into each pot. You do this by working out how much you need for your bills and how much is left over for spending or saving.
They also allow you to:
- pay bills by Direct Debit or standing order
- receive payments such as salary, wages or benefits.
A jam jar account might be right for you if:
- you want an account that helps you to budget
- you want to avoid charges for refused Direct Debits
- you rent a council or housing association property – in which case your landlord might pay the monthly fee for you.
Bank accounts for students and graduates
Most banks offer a specific student account, usually with an interest-free overdraft up to an agreed amount.
Banks often offer attractive accounts to graduates to try to secure them as long-term customers.
Bank accounts for prisoners or people with convictions
If you’re in prison or have a conviction, you might be able to get a basic bank account.
Banks don’t have access to criminal records. But they do have systems to detect applications from people who have a record of fraud or related illegal activities.
All banks and building societies can reject applications from people who have a record of fraud.