Bank Accounts

It is important to have a good functioning bank account that is right for your needs. Some people will have post office accounts but these will need to be replaced with a bank account if you are getting benefits especially Universal Credit.

Comparison websites are a good starting point for anyone trying to find a current account tailored to their needs.

We recommend the following websites for comparing current accounts:

More information about bank accounts and eligibility requirements can be found on the Money Advice Service website.

From September 2016, you are entitled to open a basic bank account unless it would be unlawful for the firm to open the account. A basic bank account will not give you an overdraft facility but allows you to pay money in, withdraw money, set up direct debits and credit transfers, and make card payments (in shops and online).

Opening a basic bank account - Banks and building societies have agreed to make it as straightforward as possible to open basic bank accounts but there are still a few things you need to know.

Proving your identity - When you apply to open an account you have to prove your identity so the bank can be sure you are who you say you are. You will usually also have to prove your address. The bank should tell you what ID you need to provide, such as a passport, driving licence, statement or bill from a utility company, or document confirming rental or ownership of a property.

If you cannot provide the documents the bank requires, you can ask if it will consider other documents in certain situations, such as:

  • if you are claiming benefits, an entitlement letter or identity confirmation issued by the government or a local authority
  • a letter from a care home manager or warden of sheltered accommodation or a refuge
  • a letter from a probation officer or a hostel manager

A bank does not have to accept these alternative forms of ID, but if it will not accept one you should ask it to explain why. You can complain to the bank if you are not happy with the way it deals with this.

A bank or building society will also check that you have not been refused permission to remain in the UK. If you do not have this permission you will not be able to open a new current account or add your name to an existing account.

Checking your financial history - A bank may want to look at what other accounts you have and your record of borrowing and repaying money. This check will be done on what is known as a credit report.

Charges and fees - All charges and fees for the normal running of the account must be clearly set out – it is not enough for your bank to refer you to a website or posters in the branch.

Details of transactions - Your bank has to give you details of each transaction to and from your account. Depending on the type of account you have, you should be able to keep an eye on it with a passbook, monthly statement, online banking, telephone banking or mobile banking.

Making and receiving payments - You may be able to make payments through a card, online banking, telephone banking and/or mobile banking. Your bank must explain how to use each of the available payment options and keep them secure. A bank must also be clear about what you have to do to authorise a payment. This might be a signature, online authorisation or PIN (personal identification number). 

Making a complaint - A bank must tell you how you can complain if you have a problem and its process for dealing with complaints. But there are four simple steps you can usually follow. See more details on how to complain below.

The Money Advice Service's website has more information on basic bank accounts.

A current account is great for managing your day-to-day money. You can receive regular payments such as wages, benefits, tax credits or pensions into your account, and set up payments out of your account in whichever way you find convenient.

What you can do with a current account?

  • Receive payments directly into your account
  • Pay cheques into your account – cheques are free to pay in and take six business days to clear
  • Pay for things with a debit card
  • Withdraw cash over the counter or from a cashpoint machine
  • Check your balance using telephone or internet banking, at a cash machine or over the counter
  • Set up Direct Debits and standing orders to pay your bills
  • Write cheques to pay bills and individuals
  • Transfer money via telephone or online banking services
  • Apply for an overdraft allowing you to spend an agreed amount more than you have in your account

You can access most current accounts through a high street branch, online, using mobile banking or over the phone.

Who can get a current account?

  • Over 16. You need to be over 16 to open a current account, although for some banks the minimum age is 18. If you are under 18 you might be able to open a current account with your parents’ help. If your child can’t open a current account you might want to look at savings accounts for children as some banks offer accounts that the child can access from the age of seven.
  • Minimum monthly payment. Banks might ask you to pay a minimum amount into your account every month, usually from wages, benefits or a pension.
  • Good credit history. Because many current accounts allow you to have an overdraft facility, you might need to pass a credit check when you open the account.
  • Proof of identity and address. All banks or building societies will ask for proof of your identity and address before you can open a bank account.

If you are not eligible to open a current account, you should consider a fee-free basic bank account.

How much does a current account cost?

As long as you have money in your account, you don’t usually have to pay for current account services.

Overdrafts and current accounts

An agreed overdraft is a way of borrowing money from the bank through your current account, allowing you to spend more than you might have in your account. Banks usually charge you interest or a fixed amount for lending this money. The interest is often at a higher rate than a personal loan. However, some offer interest-free overdrafts.

You could be charged higher fees if:

  • You spend more than you have in your account without arranging an overdraft.
  • You go over the agreed overdraft limit.

Transaction fees if your overdraft is unauthorised

If you go over your authorised overdraft limit you might be charged for every cash withdrawal or cheque or card payment you make, even if the bank doesn’t allow the payment to go through. These fees can be £10-£25 for each transaction.

You might also be charged for refused Direct Debits and standing orders – see below.

Charges for refused Direct Debits and standing orders

If there is not enough money in your account to cover a standing order or Direct Debit it might be refused and you will usually have to pay charges. It can be as much as £25 for each refused payment.

Find out more about how to use Direct Debits and standing orders without paying charges:

 

Cash machines (ATMs)

Withdrawing money from a cash machine at a bank or Post Office in the UK is usually free.

Private cash machines, such as those found inside shops, will charge but will ask you to agree the fee before you withdraw your cash.

You will usually be charged to withdraw cash from your current account while abroad.

How to open a current account

You can usually apply in person, by post, over the phone or online. If your application is turned down, don’t be afraid to ask why.

How to switch current account

Banks and building societies all offer a free seven-day Current Account Switch Service. It’s backed by a guarantee that means you will be refunded any interest and charges on your old and new accounts if anything goes wrong.

Find everything you need to know about switching bank account on the Current Account Switch Service website.

Credit union current accounts

If you have had difficulty opening an account with a bank or building society, a credit union current account could be a good option for you. Credit unions are also popular with people who prefer to manage their money through a not-for-profit organisation.

For more details on Manchester Credit Union and South Manchester Credit Union please see our ‘Saving Money’ section.

What you can do with a credit union current account

What a credit union current account offers you will depend on which credit union you use.

Here’s what you can do with most credit unions’ current accounts:

  • Have wages, salary, benefits, pensions and tax credits paid straight into your account
  • Pay cheques in for free, as long as the amount is in British pounds sterling
  • Get money out over the counter or from some cashpoint machines, including LINK
  • Pay money in over the counter at the credit union
  • Check your account balance over the counter or from some cashpoint machines, including LINK
  • Get budgeting advice and support

And with some credit union current accounts, you can also:

  • Pay your bills by Direct Debit or standing order
  • Have separate ‘jars’ in your account to help you budget for rent, different types of household bills and other spending
  • Pay for things using a pre-paid card or a debit card

Whichever credit union you use, there’s no minimum monthly amount that you have to pay into your current account. Plus you won’t need to pass a credit check to get an account because credit unions don’t provide overdrafts.

If you need to borrow money, you can apply to the credit union for a loan. It would look at your income, savings and past history before making a decision.

For further details see our 'Money Saving' section or go to:

Packaged accounts

Some current accounts offer extra features for which they charge a fee (often between £10 and £15 a month). These are known as packaged accounts. Extras include:

  • Special offers (eg preferential interest rates on overdrafts)
  • Car breakdown cover
  • Insurance cover (eg travel or mobile phone insurance)
  • Extra services

If you’re thinking about opening a packaged account, be sure to check out how many of the additional benefits you would actually use and whether you can get them cheaper elsewhere

If your bank or building society moves you to a packaged account

Your bank or building society should not automatically move you from a free account to a packaged account without your permission.

If your bank does move your account without your permission, or if you feel you’ve been miss-sold, find out how to make a complaint, more details below.

Making a complaint

If you are unhappy with the service you got from your bank, it is always worth raising a complaint to the bank initially and taking it further if you do not get a satisfactory response.

Key steps to take if you want to complain:

Step 1 – Talk to your bank

Often you can sort out a complaint quickly just by talking to your bank. Tell them why you’re unhappy and what you’d like them to do to make things right. If they can’t give you a reasonable explanation of what’s wrong and don’t try to fix things, you might be able to take your complaint to an ombudsman service such as the Financial Ombudsman Service (FOS). Full details below.

Step 2 – Make a formal complaint

All financial firms ought to have a formal complaints procedure to follow when you complain. It tells you:

  • Who you should talk to or write to
  • When you should expect a reply, and what to do if you’re not satisfied with the answer you get

You should be able to find their complaints procedure online – but if you can’t find it, ask for it.

If the complaints procedure involves something you’ve already done, like visiting your bank, make sure that the person you spoke to understands that they need to treat your complaint formally. And, try to put everything in writing, rather than talking over the phone.

You should get a final decision within eight weeks, explaining exactly how the firm will deal with the problem.

Step 3 – Get an impartial decision

After making a formal complaint, if you think the firm’s answer is unreasonable, or if you don’t hear from them within eight weeks, you have the right to take your complaint further. You can get help from the Financial Ombudsman Service who are a free, official and independent complaints service, who can often order the bank to put the issue right and even pay compensation.

 There are time limits for complaining to the Financial Ombudsman Service. You must complain:

  • Within six months of the firm sending you their final response, and
  • Within six years of the event you’re complaining about, or (if it’s more than six years) within three years of the time you could reasonably have known you had cause to complain.

Financial Ombudsman enquiries and consumer helpline

Monday to Friday – 8am to 8pm       Saturday – 9am to 1pm

  • 0800 023 4567- calls to this number are free on mobile phones and landlines
  • 0300 123 9123  - calls to this number cost no more than calls to 01 and 02 numbers

They will phone you back if you are worried about the cost of calling.

You can also text on 07860 027 586 and they will call you back. Make sure you don’t send any account numbers or bank details in your message.

Email

complaint.info@financial-ombudsman.org.uk  - emails are automatically acknowledged – so check your "junk-mail" folder or "spam" filter if you don't get a reply.

Postal address:

The Financial Ombudsman Service
Exchange Tower
London E14 9SR