Having a bank account makes it a lot easier and cheaper to pay bills. Most employers will only pay you through a bank account, and it’s safer than keeping lots of cash about the place.

So what sort of account?

Most bank accounts fall into three categories:

  • A basic account. You can deposit money into your account, get cash from an ATM and pay regular bills. You cannot overdraw and so you can avoid the risk of running up debts and incurring charges. They may be particularly suitable as a first account. You can find out more about basic accounts here
  • A current account. This is the most common. It does everything a basic account does but includes features like a cheque book and cheque guarantee card, a debit card (that allows you to buy things in shops and pay for them out of your current account) and the opportunity to negotiate an overdraft with your bank. Nobody has a right to an overdraft. Borrowing in this way costs money. If you become overdrawn without getting your bank’s agreement they might refuse cheques and direct debits and other payments.
  • A packaged account. Customers pay a monthly fee for packaged accounts in exchange for benefits like free international travel insurance, mobile phone cover, extended warranty on electrical items and vehicle breakdown cover. Many people find this and easier and cheaper way to combine payments for financial products they might ordinarily purchase separately at greater accumulative cost.

Is everyone entitled to open a bank account?

Anyone can apply to open a bank account, but occasionally some people may find it difficult to find a bank willing to accept them. Children under the age of around 15 will not normally be offered a cheque account, although savings accounts will be encouraged. If you have been taken to county court for non-payment of debts, or if you have been declared a bankrupt, you may not find it easy to open anything other than a basic or savings account.

What are my responsibilities in having a bank account?

Keep track of your money. Always make sure there is enough money in your account for the cheques you have written and any other payments, such as direct debits and standing orders.

If you think you are going to run out of money and need a temporary overdraft, contact your bank. Many providers will arrange this over the phone. Don’t assume that the bank will lend you the money – it belongs to other customers and they have a duty to ensure they lend it sensibly.

When you receive a bank statement, check it carefully to ensure that it is accurate. Mistakes are rare but can occur. Tell your bank immediately if you think something is wrong.

Report immediately to the bank any thefts or loss of cheque books or any cards.

What are the bank’s responsibilities to me?

The bank is bound by both the law and by the FCA Banking Conduct of Business Sourcebook (BCOBS) which explains how your account should operate.

Under BCOBS, banks have to provide certain standard information to you, usually at the time when you open an account. This information includes a written outline of the key features as well as the terms and conditions of the service. You should also receive a published tariff of charges, any cash machine/ ATM charges, any additional charges and interest. The bank should also be able to provide this information to you, on your request, at other times.

The bank must not disclose information about your account to anyone except you. The only exceptions allowed in law are where they are required to do so by law, if there is a public duty (e.g. trading with an enemy in wartime), it is in the interest of the bank (e.g. in court cases), or you have consented.

The bank must maintain the account accurately and not pay out money unless it is in accordance with the instructions you have given them.

Banks

Which bank?

Not all banks are alike and it certainly pays to shop around. Here are some tips on what to think about:

  • How much interest do they pay?
  • How close is a branch or cash machine to where you live, work or shop? What is the parking like or can I get there on public transport?
  • Does the bank allow you to use post offices to pay money in, pay bills and withdraw cash?
  • Do you have any particular needs, such as braille statements, and how good the bank is at meeting those needs?
  • Are there special services you will use a lot, such as sending money abroad? Take a look at the banks’ websites and see which bank you think is best.
  • Do you want a small overdraft facility, to cover temporary shortages and how much will the bank charge for this?
  • Does the bank subscribe to the Banking Code?

As all banks are different, some are better at certain services than others, so you may want to have an account with more than one bank. You could save with one bank, have a current or basic account with another and ask for a personal loan from a third, and it’s easy to set up standing orders to pay money from one account to another.

Don’t be afraid to ask bank staff about their products and services and especially about anything you do not understand. Some people find it useful to have a checklist of questions.