If you have previous or existing debt problems, then obtaining a bank account has been very difficult, if not impossible, in the past. Your credit record will often mean that you fail the traditional credit scoring test (based largely on information about your financial history supplied by a credit reference agency) and that your application is turned down. You therefore miss out on the important benefits that holding a current account can offer.
The Government set a deadline of October 2000 for the banks to make a “basic bank account” available to the public. This should mean that even if you have debt problems you’ll be able to open a current account. The idea of the “basic bank account” is that it should provide the basic banking services to anyone, including those with problematic credit records.
Holding a Bank Account
There are some important benefits and advantages available to you by holding a bank account:
- provides a route to many other banking services
- helps you to build up a banking history
- enables you to make automated payments (e.g. pay your electricity bill by direct debit). This means you can take advantage of the discounts often offered if you pay by this method, so you save money
- budgeting is easier as you can spread payments out on a monthly basis if you can pay by direct debit
- cashing personal cheques can be difficult and expensive if you don’t have a bank account
- Fee free
- Free automated transactions (e.g. direct debit/standing order)
- Cash card for use at cash machines
- Phone banking available
- No overdraft facility
If you have a problematic credit record then you would be best to try either Bank of Scotland Easycash Account or Lloyds TSB Bank Account. Bank of Scotland does not make a credit history check on applications for the Easycash Account. Lloyds TSB’s Bank Account is available to anyone regardless of credit rating, but not if you have been declared bankrupt.
The others are far less clear as to who they will allow to have an account with them and who they will turn down. Barclays say that their Cash Card Account is available to people who would normally be excluded from holding an account using standard criteria. If you have CCJs or a poor credit rating then you won’t automatically be excluded but the personal banker at the branch may decline your application in some circumstances.
The winning Bank Account
The overall leader just has to be the Bank of Scotland’s Easycash Account which already has 130,000 customers. They really seem to have thought out and addressed the real concerns of customers who will use this account. Most of the other banks give the impression that they are doing the minimum necessary to comply with the Government deadline, and are not really interested beyond that.
The Bank of Scotland’s Easycash Account was launched in March 1998 and was the first of these type of accounts in the UK. It was recently given an award by the European Institute of Financial Services for the work that the Bank has done in tackling financial exclusion by launching this account. As well as the facilities set out above, it offers the following additional benefits:
- A built in £10 buffer facility allows customers to access all the cash in their account from a cash machine – good if you’re budgeting tightly
- A bank card which can be used to make purchases in the same way as Switch but without the risk of going overdrawn – the account balance is automatically checked each time
Just one example of the 130,000 people holding an Easycash Account is Mr X, who has three children. He was made bankrupt when his business failed and his existing bank account was frozen. He was still working with a charity from which he earned a monthly salary. When he tried to open an account, a number of banks turned him down. However, he was able to open an Easycash Account with Bank of Scotland, lessening the disruption and problems faced by him and his family.
We would be interested to hear about your experiences, good or bad, when applying for a bank account. Please post your thoughts and ideas on our Forum.
Debt consolidation is the process in which debt is restructured into one low affordable amount which you agree to pay.
If you want honest, free advice on how to get out of debt without a debt consolidation loan then CONTACT US NOW.