Basic bank accounts

Basic bank accounts
Top easy-to-open accounts with no fees and no overdrafts

If you have a low credit score, you might have faced challenges in getting accepted for a bank account. You’re not alone in this – over a million people in the UK are without a bank account. However, there is a solution: a basic bank account. This guide will explain what these accounts are, what you should know about them, and provide our top recommendations.

What is a basic bank account?

As implied by their name, basic bank accounts provide a secure spot for storing your money and managing bill payments. However, they lack overdraft facilities and many of the benefits that come with standard bank accounts.

With a basic bank account, you still have access to essential features, allowing you to:

✔️ Make payments using a debit card
✔️ Make contactless payments using Apple Pay, Google Pay and Samsung Pay
✔️ Withdraw money from cash machines for free (unless the ATM itself charges)
✔️ Receive payments, including benefits, pensions and wages
✔️ Pay bills using direct debits and standing orders
✔️ Access online banking services, including mobile banking apps
✔️ Access phone banking services
✔️ Access in-branch banking services

However, you won’t get:

❌ A chequebook – this means you can’t spend more than what you have
❌ An overdraft – again, this should help to curb unnecessary spending and debts
❌ Perks such as cashback, interest or other rewards
❌ Access to other forms of credit, for example cards or loans.

If you don’t need a basic bank account, see our Best bank accounts guide for more info on how traditional accounts operate, as well as our best buys. You can also see our Top digital and app-based bank accounts guide if online access is particularly important to you.

When should you consider getting a basic bank account?

A basic bank account can be useful for if you’re in financial difficulty or if you’re struggling to access mainstream banking products – because, for example:

• You have a poor credit history or no credit history;
• You’ve been declared bankrupt;
• You’re using a debt management product, such as an individual voluntary agreement (IVA), a debt management plan (DMP) or a debt relief order (DRO).

To open an account, you must be at least 16 years old, although some banks require you to be 18 or older. Be aware that a credit check might be conducted, and you will likely need to provide proof of identification and address.

Since you can use the account similarly to a standard current account—such as receiving wages and setting up direct debits for bills—it can be beneficial for managing your personal finances.

Basic bank account need-to-knows

Before applying for a basic bank account, there are some key points about them you should be aware of…

1 – You usually don’t need to pass a credit check to open one, though banks will still check your identity

To obtain a standard bank account, you must undergo a credit check, where the bank evaluates whether it wants you as a customer. Each bank has its own criteria for an ideal customer, so if one bank turns you down, it doesn’t mean that others will too.

The credit check is usually not overly stringent, but if you have a poor credit history with significant defaults, county court judgments, or bankruptcy, it can be challenging to pass the credit check and secure a standard bank account.

In such cases, you will likely need to open a basic bank account while you work on improving your credit situation. Although a basic bank account may still involve a credit check (which might appear on your credit report), it is typically only for identity verification purposes. Don’t worry, you’re not alone – there are nearly eight million basic bank accounts currently open in the UK.

If you want to improve your credit rating, or find out more about why banks might reject you for an account, see our Credit Scores guide.

2 – You’ll need some form of ID and proof of address to open an account

You can open a basic bank account by visiting a branch, and in some cases, you can also do it online or over the phone, depending on the bank. Along with completing an application form, you’ll be required to provide identification and proof of address.

To verify your identity, you’ll typically need one of the following original documents:

• Full, current passport
• Current UK photocard driving licence or UK full paper driving licence
• Current European Union member state identity card
• Identity card issued by the Electoral Office for Northern Ireland
• Benefit entitlement letters, including pensions, disability payments and universal credit (or benefits such as income support and jobseeker’s allowance if you’ve not yet been moved on to universal credit)
• HM Revenue & Customs tax notification or assessment letter

Banks provide their own lists of acceptable identification, so it’s advisable to review these as well. If you are uncertain, it is often more straightforward to call the bank or visit a branch to inquire about the required documents and whether any alternatives are acceptable.

If you lack the necessary identification, you might be unable to open the account. However, if this occurs, it’s not the bank being uncooperative – it needs to verify specific ID documents to adhere to anti-money laundering regulations (essentially, to ensure you’re not committing fraud and are opening the account for legitimate reasons).

However, two banks have initiated pilot programs aimed at assisting individuals who might struggle to meet the aforementioned criteria. These programs are designed to support people in a few particular circumstances…

• HSBC – will open accounts for those with no fixed address

HSBC is collaborating with the charities Shelter, Crisis, and Refuge (and their respective networks) to facilitate the opening of bank accounts for individuals lacking a permanent address.

This initiative can serve as an initial step toward accessing benefits and entering local authority housing programs. If you know someone who could benefit from this, encourage them to get in touch with one of the mentioned charities.

To open an account, visit one of the designated HSBC branches with your caseworker from one of the aforementioned charities. Bring any identification or official documents you possess; these will be useful. However, if you have no documentation, your caseworker can confirm your identity at the branch. You can use the charity’s address, your safe house address, or a PO Box address for the application.

You can find a full list of the branches taking part on this HSBC page.

• Halifax – will open accounts for those soon to be released from prison

Halifax has collaborated with the Ministry of Justice, the Prison and Probation Service, the Scottish Prison Service, and individual prisons to establish a program for opening bank accounts for inmates nearing release.

The initiative begins the bank account setup process prior to an inmate’s release, aiming to facilitate their reintegration into society by providing them with an active bank account.

3 – Basic bank accounts are free for day-to-day banking, but still have a few fees

Banks are not permitted to charge fees for the routine operation of a basic bank account. This means you won’t incur charges for issues like unpaid direct debits or standing orders, or for overdraft fees (since basic accounts typically don’t offer overdraft facilities).

However, it’s important to keep track of your account balance and manage it diligently, as you could still face charges from service providers if there are insufficient funds to cover a bill.

Additionally, there have been instances where banks have canceled direct debit facilities or closed accounts due to multiple bounced payments. While this isn’t common, it’s something to keep in mind. Banks are generally required to notify you before taking such actions.

Be aware that basic accounts may still impose fees for certain services, such as using your debit card abroad or making specific types of special payments, like same-day CHAPS transfers. You will usually be informed about these charges in advance.

If you need assistance with managing your finances, our Budget Planner offers helpful hints, tips, and strategies to track your spending and reduce expenses.

4 – They’re not just for those with bad credit, many people open them to keep control of their budget

Basic bank accounts are crafted to support individuals with poor credit histories who might not qualify for regular bank accounts due to credit checks. Therefore, issues like county court judgments, defaults, or recent bankruptcy typically don’t disqualify you.

These accounts are generally accessible to anyone interested in opening one. They can be particularly beneficial for those who find it challenging to manage their finances and need an account that prevents overdrafts. However, it’s worth noting that some banks may restrict basic accounts to those who do not pass the credit check for their standard accounts. To avoid any issues, it’s a good idea to check with your bank beforehand.

The only individuals who are definitively ineligible for a basic bank account are those with fraud convictions (although those with other types of convictions might still qualify, provided they meet the other requirements) or those who do not pass the bank’s identification verification.

5 – Some banks don’t publicise these accounts, so you may need to ask about them

In the UK, while only a few banks impose fees on their current accounts (such as those with additional features), the majority of accounts come with overdraft options that do incur costs. These overdraft fees generally provide banks with sufficient revenue, allowing them to offer ‘free’ banking services to customers who don’t utilize an overdraft, a practice known as ‘cross-subsidy.’

Conversely, basic bank accounts don’t generate income for banks, resulting in a financial loss for them due to the costs associated with account management, such as setting up the account, issuing debit cards, and sending statements.

Banks often keep these basic accounts under wraps, as they prefer customers to opt for other types of accounts. You might find them buried deep on the bank’s website or only available through in-branch applications rather than online.

To increase your chances of successfully opening an account, it’s advisable to request specific types of accounts by name rather than opting for standard current accounts, which might lead to rejection.

Ideally, if you apply for a standard account and are declined because of the credit check, the bank should be obligated to provide you with a basic account immediately. Unfortunately, this is not currently the practice. Below, you’ll find our recommended choices, but here is the complete list of banks that are required to offer basic accounts:

• Bank of Scotland
• Barclays
• Co-operative Bank
• Halifax
• HSBC
• Lloyds
• Nationwide
• NatWest
• Royal Bank of Scotland
• Santander
• TSB
• Ulster Bank
• Virgin Money (including Clydesdale and Yorkshire Bank)

6 – Up to £85,000 per person, per financial institution is protected in basic bank accounts

As long as the funds are held in a bank or building society account regulated by the UK authorities, they are safeguarded by the Financial Services Compensation Scheme. This means…

Up to £85,000 per person, per financial institution is guaranteed.

Simply put, your funds in a current account are protected if your bank fails.

However, things can get a bit tricky if you hold a substantial amount in other accounts with the same bank or banking group. The £85,000 protection limit covers the total across all accounts, not per individual account.

For specific details on how different institutions are linked and the protection for joint accounts, refer to the comprehensive “Are Your Savings Safe?” guide.

Easiest-to-get basic bank accounts

Although numerous banks provide these accounts— and the nine largest banking groups are required to do so—feedback suggests that three particular banks stand out. They appear to be notably more welcoming and proactive in assisting basic bank account customers.

The accounts which get this thumbs up are Co-op’s Cashminder, Santander’s Basic Current Account and the Virgin Money M Account. All three accounts allow you to set up direct debits/standing orders and give you a debit card which means you can withdraw cash from UK ATMs.

You can establish all three accounts as joint accounts if both parties meet the necessary qualifications. Additionally, two of these institutions offer the option to open a basic bank account online. Although a credit check is performed by all of these providers to verify your identity during the application process, The Co-operative Bank and Santander utilize a soft check. This type of check is visible only to you on your credit report and does not impact your future credit opportunities.

Here is a summary of the three accounts to help you determine which one might be the most suitable for your needs.

Top-pick basic bank accounts

Alternatives to basic bank accounts

If obtaining or choosing not to pursue a standard bank account is an issue, there are alternative options worth considering. Keep in mind that these alternatives might not be accessible to everyone and can often come with higher costs.

Fee-paying card-based accounts

Several banking or card-based accounts do not require credit checks and are available to everyone. These can be an alternative if you prefer not to use the basic bank accounts mentioned earlier. However, be aware that they often come with fees for either opening or using the accounts. Here are our top recommendations…

Top card-based accounts

Credit unions

Several credit unions throughout the UK have started providing bank accounts, with many of these accepting individuals with undischarged bankruptcy. Typically, you’ll need to pay a monthly fee ranging from £2 to £5 and/or maintain a minimum balance to be eligible for membership. Nevertheless, some credit union current accounts offer cashback at selected retailers, which can help counterbalance the cost of the fee.

Best bank accounts: Can you get a ‘standard’ bank account?
Packaged bank accounts: £100s of insurance from £12.50/mth

Want to complain about your bank account?

If your bank has billed you incorrectly, withdrawn an incorrect amount, or provided poor service, you don’t need to endure the inconvenience quietly.

Initially, it’s advisable to contact the bank directly to seek resolution. If that doesn’t resolve the issue, you can utilize the free complaints service, Resolver, to address the problem. The tool helps you manage your complaint, and if the company doesn’t play ball, it also helps you escalate your complaint to the free Financial Ombudsman Service.

Basic bank accounts FAQ

Q – Can I be refused a basic bank account?

A – Yes. Indeed, if you fail to meet the bank’s identification or address verification requirements, they have the authority to deny your application. Additionally, a criminal record involving fraud could also result in a refusal.

Should your application be rejected, you have the right to inquire about the reasons for the refusal. If you are dissatisfied with the explanation, you may file a formal complaint. If you’re still unhappy with the bank’s decision, you can take it further to the free Financial Ombudsman Service.

Q – Can I switch basic bank accounts using the seven-day switching process?

A – Absolutely, you can do that. Simply set up a new basic account with your new bank, and they’ll handle the seven-day transition process for you. This means they’ll take care of transferring all your outgoing and incoming payments, and they’ll inform your previous bank to close the old account.

They will also redirect payments that were intended for your old account, such as your salary, to the new one. In the event of any issues, the automated systems will resolve them. For up to three years, any funds deposited into the old account or mistakenly drawn from it will be redirected to your new account. Additionally, if you incur any fees due to errors during the switch, the new bank will reimburse those charges.

Read full info about bank switching and how it works.

Q – How do I set up a direct debit or standing order? 

A – Direct debits are arranged by the company that will receive the payments. Typically, they will request your account details to establish the direct debit, often through an online process. Occasionally, they might provide a form for you to complete and return. Unlike standing orders, you cannot set up a direct debit independently.

On the other hand, a standing order is a payment arrangement you can initiate on your own. This can be done through your bank, whether in person, by phone, or online. To create a standing order, you will need the recipient’s account details and must specify the fixed amount to be sent each time. This amount can be adjusted with a few days’ notice.

Q – Is internet and mobile banking safe?

A – Yes. Indeed, banks implement robust security measures to protect your account from unauthorized access, whether you’re using online banking or a mobile app. However, it’s crucial to remain vigilant—never share your online or mobile banking details with anyone.

When using a mobile app, ensure you download the official app from your bank directly through your app store. Also, keep the app up to date by regularly installing any new security updates provided.