Those who have bad credit may well be turned down when applying for a current bank account. A bad credit history, CIFAS flags, IVA’s and bankruptcy could well result in your business being unwelcome by many of the leading high street banks. It is still worth enquiring though as they may be amenable to offering you a basic bank account which carries no cheque book or cheque guarantee card, and could well be a cheaper option than specifically designed basic bank accounts for bad credit.
If the traditional banks do turn you down for even a basic account, it is still possible to open a basic bank account for bad credit, from an untraditional source. These can be used in order to rebuild your financial reputation and aid in the transition from a basic bank account to a standard current bank account. If a basic bank account is managed in a responsible manner they could be a temporary solution until traditional accounts accept you.
Basic bank accounts for bad credit generally charge an initial set up fee, then a monthly fee. They offer direct debits and standing orders, and usually either a prepaid card or a cash withdrawal card. Some may provide debit cards. Cheques and cheque guarantee cards are not part of the package.
The Secure Trust Bank operates an online current basic account with no credit checks on applicants. There is fee of £12.50 to open an account. Salaries can be paid directly into the account and cash may also be paid in at Pay zone outlets. The account is advertised as having a flat monthly fee with no extra bank charges, but it is not clear what the monthly fee is until the application is completed. The account comes with a prepaid MasterCard and operates both standing orders and direct debits to take care of bills.
The Thinking Bank is not actually a bank but a company which holds funds in the Royal Bank of Scotland, and offers a basic bank account for bad credit. It is connected with the debt management company Gregory Pennington. The account has a MasterCard debit card and operates as two accounts. One account is the salary account which receives your salary. Direct debits and standing orders are held on this account to pay monthly bills and the fee to the Thinking Bank for managing your account. The balance is transferred to your card account for you to spend as you like.
Fees are £14.50 a month or £19.50 for a joint account, and there is an initial set up fee of £25.00 or £30.00 for a joint account. There is no facility for account holders to go overdrawn, and the way the account is managed as two accounts ensures that bills will be paid as a first priority. This makes the account ideal for those people who are very disorganized when it comes to managing their own money.
Card One Banking operates an identical kind of account to the Thinking bank. It comes with a pre paid MasterCard and guarantees acceptance to anyone who applies, even un-discharged bankrupts and those with IVA’s. Fees are similar to those levied by the Thinking Bank.
If you haven’t established a credit history yet or have no IVA’s or CCJ’s then try and open a basic bank account from a traditional lender first. However those who are flatly turned down in their attempts to open a current cheque account have the available options of the Secure Trust Bank, the Thinking Bank and the Card One Banking to consider as viable alternatives.