Basic bank accounts

A basic bank account is a type of account for people in financial difficulty or with a poor credit history, who may not be eligible to open a standard current account.

A fee-free basic bank account will enable you to do a range of normal banking activities, including:

• Using a debit card

• Setting up direct debits for bills and other payments

• Paying for goods and services online and in stores

• Withdrawing cash from ATMs

• Receiving your wages, benefits or other income.

However, unlike with a regular current account, you won’t receive interest on the money in your account.

If you've struggled in the past to open a current account, a basic bank account could be an option. It could even help you begin building your credit score, allowing you to open a standard current account in the future.

Depending on the provider, you may be able to:

• Deposit and withdraw money over the counter at a bank branch or Post Office

• Access online and mobile banking

• Set up spending alerts via text or app

• Use Apple Pay, Google Pay and Samsung Pay

• Earn cashback when you shop or pay bills.

If these options are important to you, check carefully before you apply to make sure the account offers everything you need.

Typically, all these services are available without charges. These accounts are known as fee-free basic bank accounts.

You can’t currently compare basic accounts with us, but we have a range of other current accounts to choose from.

It’s completely free to open a basic bank account. There are no setup or monthly fees, but there will probably be charges for certain types of spending and withdrawal. Find out more below.

Basic bank accounts don’t offer overdrafts, but in rare cases your balance could still go below zero if a payment is processed before funds are available in the account. If this happens, the bank isn’t allowed to charge fees or interest.

Banks may charge you if you spend in a foreign currency (for example using your debit card abroad) or if you pay foreign currency into your account.

There are no bank fees for failed payments, but you may still be charged a fee by the organisation you owe money to.

If you use a ‘pay-to-use’ cash machine, such as those found in some shops, you may be charged a fee, the same as with any other type of current account. You’ll be asked to agree to the fee, usually between £1.50 to £2, before you take your money out.

If you want to make a high-value, same-day payment via CHAPS (Clearing House Automated Payment System), you’ll be charged a fee – this can vary between £20-£30 depending on the bank

You may be eligible if:

• You have a poor credit history, county court judgements (CCJs) or have been declared bankrupt. Basic bank accounts don’t provide an overdraft, meaning you won’t be a credit risk to your provider.

• You have no credit history. This can sometimes be just as damaging as a poor credit history, as providers have no record of your ability to reliably borrow or spend responsibly. Using a basic bank account can be a good way of building up your credit score and proving your reliability.

• You’ve recently moved to the country. While you may have a strong credit history where you previously lived, you may find yourself in a totally different credit situation when you move to the UK.

Be aware that if you’ve been convicted of fraud or have failed ID checks, you might not be eligible for a basic bank account.

Many banks now let you open a basic bank account online, though some may require a branch visit. Often, banks will assess your application for a current account first and, if you’re not eligible, offer you a basic bank account instead.

You can’t currently compare basic accounts with Compare the Market.

Yes, it is possible to get a basic bank account if you have a bad credit history.

Many people search for basic bank accounts for bad credit because these accounts typically don’t need a credit check or offer overdraft facilities. This makes basic bank accounts more accessible if you’ve struggled financially.

If you’re being made bankrupt, you may need to wait until the bankruptcy order is in place before you apply.

Using a basic bank account can help you manage your money better and start to rebuild your credit history.

If you're worried about your finances, you may want to get some free, impartial advice to help you manage. You can get help from:

• Money Advice Service

• StepChange Debt Charity

• Citizens Advice

• National Debtline

Your bank might close your account under the following conditions:

• You fail to meet the terms and conditions of your account

• You use the account for illegal or fraudulent activity

• You provide false or inaccurate information about yourself

• Your account remains inactive for more than two years

• You open a current account with another provider.

If you meet any of the criteria above, your bank will likely send you written notice of your account’s imminent closure. Banks are required to inform you at least two months in advance of the account closing. If you feel that your account shouldn’t be closed, you can appeal against the decision.

Any bank or building society can offer a fee-free basic bank account. The nine largest banking groups have been required to offer a basic bank account since September 2016. These include:

• Allied Irish Bank (UK)

• Bank of Ireland

• Barclays

• Danske

• Halifax

• HSBC

• Lloyds

• Nationwide

• Santander

• Royal Bank of Scotland (RBS)

The easiest basic bank account to open will depend on your personal circumstances. It’s worth checking each bank’s eligibility criteria before applying.

Usually, you’ll need one of the following forms of ID and proof of address:

• Full, current UK passport

• Current UK photo card driving licence

• Identity card issued by the Electoral Office for Northern Ireland

• Benefit entitlement letters such as pension, child benefit, income support, disability living allowance (DLA) or jobseeker's allowance

• HMRC tax notification or assessment letter.

If you’re finding it hard to open a basic bank account online because you don’t have the required ID, you may still have options.

Contact the bank directly to explain your situation. Some may accept alternative forms of identification. These can vary between banks, but may include a recent letter confirming your identity and address from one of the following:

• HMRC

• Department for Work and Pensions (DWP)

• JobCentre+

• GP

• Local council

• Minister of religion

• Social landlord

• Armed forces officer

• Warden of a hostel, refuge or sheltered accommodation

• Care home manger

• Employer, college or training provider

Other acceptable documents may include letters related to your benefit payments or state pension, or Blue Badge scheme.

Some banks may also consider other documents if you’re a:

• Migrant worker

• International student

• Refugee or asylum seeker

• Prisoner or on probation

In some cases, being registered to vote could also help as banks sometimes use the electoral register to confirm your identity.

If you’re still unable to meet the ID requirements for a basic bank account, you could explore prepaid card accounts as an alternative. These accounts usually don’t require formal ID and you can still use them to receive payments and make purchases.

A bank might refuse to open a new basic bank account if:

• You can’t give them proof of your ID or address

• You’re eligible for a standard current account or other bank account

• You refuse a credit check (although you can open one of these accounts if you have a low or no credit rating)

• It is concerned that you will use the account unlawfully or fraudulently.

If you’re refused a basic bank account when you apply, you are entitled to ask why. Your bank or building society should tell you the reason in writing unless it suspects you of fraud or money laundering.

If you don’t agree with the decision and think you’re entitled to open a fee-free basic bank account, you can appeal to your bank or building society. If you’re still not satisfied, you can take your case to the Financial Ombudsman Service.

A few credit unions in the UK now offer bank accounts that people who have been made bankrupt can apply for.

They usually charge a monthly fee and you may be expected to keep a minimum balance in your account to become a member.

The services you can access will depend on which credit union you use. You can pay money and cheques into most accounts and get money out over the counter or using a LINK cash machine.

Some accounts will also allow you to pay bills by Direct Debit and use a debit card to pay for things. You won’t be able to get an overdraft, but you may be able to apply to the credit union for a loan.

Banks can review all their basic bank accounts periodically. When they do, they may move some customers to a current account based on:

• Eligibility criteria

• Customers’ financial circumstances

• The pattern of use on the account.

The bank must give customers at least two months’ written notice, explaining why it intends to move the account. It must also treat customers fairly when making the decision.