Despite easier than ever access to personal finance services, there are still 3 million adults in the UK today who are completely outside the banking system, and don't have access to a bank account.
Many of these people are unable to get a standard account because they have a poor credit score, either because of past financial difficulties or simply a lack of positive financial history. While high street banks are always keen to deal with people with good credit ratings, they can be cautious about making credit facilities such as overdrafts available to people with sub-prime ratings.
A new kind of bank account was needed if the industry's government prompted goal of increasing financial inclusion was to be met, and Basic Bank Accounts were born.
Basic bank accounts, also known as starter accounts or introductory accounts, are a very simple type of account which offer little in the way of credit or ways for accountholders to get into debt. There is usually no overdraft facility, no cheque book, and no debit card. The accounts simply provide a way for money to be paid in either over the counter or by electronic transfer, and withdrawn by cash machine.
This lack of features means that there is little risk or cost involved for the banks, and so their approval rates are much higher. In fact, about the only people who will have their applications rejected are undischarged bankrupts, or those with a history of fraud or very serious bad debt.
So how can getting a basic bank account benefit you? Firstly, most accounts will let you set up direct debits to pay your bills, and this will save you money as many companies will give you a discount if you pay in this way.
Also, the government is moving towards paying all benefits and pensions direct into bank accounts rather than in the old way over the Post Office counter, and basic bank accounts will let you receive money in this way.
Finally, this kind of account can be a 'stepping stone' into other financial services, helping you to build up a better credit rating, and in the future to take advantage of other services available such as overdrafts and debit or credit cards.
Since they were introduced, basic accounts have been very successful, and there have now been around 5 million accounts opened. Both the government and the banking industry say they are committed to increasing this figure even more over the next few years, until ideally every adult has some form of bank account, and so we can expect to hear a lot more about basic accounts in the near future.
Interest On Bank Accounts
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Bank accounts are the safety lockers of our lifetime investments as they offer safety and security when we deposit our investment like cash, jewellery in them. In addition to both these factors, bank accounts also allow us to earn interest on our savings. Bank accounts are the most important necessity of our life as they give us the assurance of safety of our valuables as well as investments. So, it is advisable to be informed about available and some basic information about them. Bank accounts designed to process large numbers of transactions may offer credit and debit facilities. However, there are many types of bank accounts out of which some are commonly used by large number of people. This includes savings account, current account, personal account, money market deposit account etc.
Current accounts are usually meant for businesses or personal client. They are meant to securely and quickly provide frequent access to funds on demand. They allow the account holder to receive payments by cash, cheque, direct debit, standing order, ATM card etc. Overdraft facility is also avail with this account. Saving accounts allow the account holder to set aside a portion of their liquid assets while earning a monetary return. Withdrawals from a savings account are occasionally costly and are sometimes much higher and more time-consuming. A personal account is an account for use by an individual for their own needs. Banks differentiate their services for personal accounts from business accounts by setting lower minimum balance requirements, lower fees, free checks, free ATM usage, free debit card usage, etc.There are many more bank accounts which are categorized by their operations. However, there is lot of procedural formalities involved while opening any new bank account and one has to be well informed as well as ready with proper documentation. Some banks may apply strict norms while approving any bank account. Thus, first decide your need of bank account and which type of bank account. Be well informed about that account operation, bank reputation in which you want to open a bank account, interest rate charged, transactions flexibility etc.
Both Nicholas Hunt & Shru are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Nicholas Hunt has sinced written about articles on various topics from Mortgage Insurance, Finances and Banking. Nicholas Hunt is a contributing writer at , and a more detailed version of this article can be found at. Nicholas Hunt's top article generates over 550000 views. to your Favourites.
Shru has sinced written about articles on various topics from Asset Management, Business and Finance and Finances. Myself Shruti. I am the SEO. We are provide free ideas on ,. Shru's top article generates over 6600 views. to your Favourites.
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