Top 7 Best Basic Bank Accounts in the UK -

Financial solutions for challenged circumstances

A bank account serves as a lifeline to manage your everyday finances in the UK. However, what if your credit history isn’t quite perfect? What if you’ve experienced financial difficulties? Or perhaps, you are a newcomer to the UK. Under these circumstances, it may seem incredibly challenging to open a standard current account. Opting for basic bank accounts could be the perfect solution for you; these are often referred to as bank accounts for bad credit.

From my thorough investigation into basic bank accounts in the UK, I’ve found they largely share similar features. You may favour one over the other depending on your specific circumstances (later on this). The best basic accounts are outlined below. It’s worth mentioning that the accounts detailed in this guide are free of monthly fees.

When it comes to recommended Basic Bank Accounts in the UK, two stand out from the crowd due to their favourable conditions and perks. These are the NatWest Foundation Account and the Nationwide FlexBasic.

#A Brief Overview

These basic accounts work like any other current accounts. They simplify day-to-day financial transactions. For instance, you can receive your income and pay your bills. Additionally, accessing your money is relatively easy, either over the counter, from a cash machine, or even on your mobile. You do have the ability to pay regular bills by direct debit or standing order, just as you would with a normal account. You will also have a debit card, of course, for purchases online and in brick-and-mortar shops.

It’s important to note that you are unable to access any category of credit facilities. This includes overdrafts, cheques, or any form of borrowing. Consequently, you won’t be able to spend more money than what you currently have.

At first glance, this might seem limiting. But, it’s a key feature.

It enables you to avoid spiralling into debt and instead leads you towards healthier financial habits.

Simply put, a basic bank account is usually free of charge. It doesn’t offer overdrafts but gives individuals the essential banking features they need.

Searching for standard current accounts? Consider our current accounts guide

#Choosing an Account Wisely

Frankly speaking, it appears that the majority of basic bank accounts are alike. It’s your unique circumstances that really determine which one is the perfect fit for you.

For instance, you might need to switch to a different account prior to a Trust Deed or IVA coming into effect to prevent any issues, like a frozen account or unexpected closure. The chances of such problems arising can be minimized if you opt for a new basic bank account with a bank you don’t owe any money.

Steer clear of banks known for low customer service ratings. Choose one that comes with a robust and easy-to-use app and modern tech features. I cannot stress this enough. A working mobile banking app is essential today. Thankfully, the ability to manage your account from your phone is becoming the norm rather than the exception in the banking industry.

Most banks now offer a current account switch guarantee that makes it easy to switch. On average, it takes only 7 days to transfer direct debits and standing orders. However, you’ll need to arrange for your income to be paid into the new account. It is not automatic.

It’s absolutely essential to read and fully understand the terms and conditions before you sign up. You need to be crystal clear on any fees, features, and potential obligations.

#Fee-Free Banking for All

Firstly, as outlined on the government’s website, these accounts are provided free of charge. This is a result of an agreement between the government and major banks. This initiative aims to help millions of people manage their finances effectively. Ensuring no one is excluded from the banking system due to poor credit, financial difficulties or non-UK residency. The lack of fees or charges makes these accounts more accessible for those struggling financially.

However, it’s important to note that not all basic bank accounts are created equal. The largest banks have been required to offer fee-free basic bank accounts since January 2016. That includes the mammoth likes of Barclays, Lloyds, Santander, and HSBC. Nevertheless, other smaller banks and building societies can also provide these accounts. The difference might lie in the fine print. So, it’s always advisable to go through the terms and conditions before choosing a bank.

While researching, I’ve noticed that some other providers offer ‘basic accounts’ with a fee. These typically do not fall under the categorisation of Basic Bank Accounts though. They promise a no credit check bank account with easy applications, and clear terms. At first glance, these might seem appealing. especially if you’re struggling with debt.

However, it’s important to weigh the cost.

I advise against paying a monthly fee for a basic account that should be free. Remember, every £10-£20 matters when you’re on a tight budget. Those extra pounds every month could be better allocated within your financial plan.

#Participating Banks

Nine banks offer free basic accounts, including:

• Barclays
• Co-operative Bank
• HSBC
• Lloyds Banking Group (including Halifax and Bank of Scotland)
• National Australia Group (including Clydesdale and Yorkshire)
• Nationwide
• RBS Group (including NatWest and Ulster Bank)
• Santander
• TSB

#Eligibility

Basic bank accounts are designed for individuals who:

• Have poor credit history
• Have gone bankrupt
• Are international students
• Are migrant workers
• Are refugees
• Are asylum seekers
• Have been recently released from prison
• Are homeless
• Are immigrants

#Insights on Fees and Charges

There may be small charges associated with particular types of transactions. For instance, using your debit card abroad will typically attract non-sterling transaction fees. It’s good to be aware of these so you won’t be caught by sneaky charges.

Here’s a roundup of some fees and charges you may come across:

• Non-sterling transaction fees: As I’ve mentioned earlier, when you use your debit card outside the UK to withdraw money or pay for goods and services, you could be hit with non-sterling transaction fees. This is typically a percentage of the transaction value.

• Cash withdrawal fees from certain machines: Some ATMs, particularly those in convenience stores or pubs, may charge you to take out money. These fees can vary, so always double-check before proceeding with the withdrawal.

• Sending or receiving money internationally: If you need to send or receive funds outside the UK, you might face an international transfer fee. This can be substantial depending on the amount and location, so keep this in mind if you frequently move money across borders.

• Additional statement or document fees: It’s mostly free to access your bank statement online or through mobile banking. However, requesting physical copies be mailed to you or requiring an extra, one-off statement can accrue a small charge.

• Card replacement fees: Should you lose or damage your debit card, you may have to pay for a replacement. Some banks offer the first replacement for free, but subsequent replacements might carry a nominal fee.

#Opening a Basic Account

Firstly, opening a basic bank account typically begins online, either on a bank’s website or by scheduling a physical appointment at your preferred bank. To kick things off, I’d suggest looking at the list provided above for an extensive network of banks offering this service. You’ll find the best basic bank accounts available in the UK. It’s also designed to take you straight to the banks which cater to your specific needs.

Secondly, once you’ve shortlisted your preferred banks, ensure that you have all the paperwork in place. The most common documents are proof of your identity, such as a passport or driving license. You also need tangible proof of address, typically a utility bill. But bear in mind, that the requirements could vary between the banks. I recommend that you check the bank’s website. Or, get in touch with their customer service to make sure you’re well-prepared.

Keep in mind that perhaps you can’t apply for a basic account directly. Instead, you may need to apply for a standard current account. The bank will then review your financial situation and circumstances. If you don’t qualify, they’ll steer you towards a basic bank account.

Once your account is up and running, it’s worth taking some time to familiarise yourself with all of its features.

Lastly, remember, these bank accounts are described as ‘basic’. But, there’s nothing basic about the financial freedom and flexibility they can offer to those who need it most.

In certain scenarios, the steps might be slightly different. However, it’s crucial to emphasise: no matter your circumstances, even if you’re in prison, banking options are available to you. I believe it’s vital to highlight schemes like the Prisoner Banking Programme. It offers fantastic support for those transitioning from prison life back into the community.

#Your Money is Safe

Basic bank accounts are also protected by the Financial Services Compensation Scheme (FSCS), covering up to £85,000 for each banking group.

I have been mentioning this frequently on our website. You must always remember is that the protection provided by the FSCS applies to the banking institution you’re with, not the individual accounts you hold. Therefore, I recommend spreading your money across multiple banking groups to maximise the FSCS protection.

#Understand Your Rights

One thing I’d like you to remember: you’re entitled to a bank account in the UK, regardless of your credit rating or residency status. Accessibility to these accounts should never be a concern. In fact, it’s a governmental policy that every person should have access to basic banking services. So, don’t for a second believe you can’t have a bank account. You absolutely can.

Now, in terms of the small print, you might be concerned about hidden fees. I get that. But, you also have the right to clear information about your account. The banks ought to provide you with easy-to-understand information on any associated charges.

And if you ever face a problem, remember, you have the right to complain to the bank and escalate it to the Financial Ombudsman if necessary. The banks are required to deal with complaints promptly and fairly, within a reasonable time.

#FAQs