Banks and Building Societies
If you haven’t got a bank or building society account, now might be the time to start thinking about it. It’s a safe way to keep track of your money – and maybe even save some of it! If you start work, your wages may need to be paid into an account and if you claim benefits you will also need an account.
What sort of account is right for me?
Most bank accounts fall into three categories:
Savings account
This account pays a higher rate of interest and can help you save up for things. Usually there is no cheque book or credit card with this account and you can’t pay bills from it. Some accounts, especially those paying the highest rates of interest, may require you to give notice before you can withdraw your money or may limit the number of withdrawals you can make.
Basic account
With this type of account you can pay money into your account, get money from a cash machine and pay regular bills. You can’t overdraw on this account so you won’t run up debts and pay bank charges.
Current account
This is the most common type of bank account. It does everything a basic account does but also has features like a cheque book and cheque guarantee card, a debit card (which allows you to buy things in shops and pay for them out of your bank account) and the chance to arrange an overdraft with your bank. But remember borrowing on overdraft costs money. If you go overdrawn without getting your bank's agreement it might refuse to pay cheques and direct debits etc.
Exactly what you get as part of the current account depends on the bank and on your circumstances. For example a bank may not give you a cheque book and guarantee card until you are 18. (You are not responsible for your debts until this age.) However as your situation changes you will find banks can be flexible in the services they offer. Current accounts can include the following:
- Cheque book and cheque guarantee card
A guarantee card will authorise your cheque up to the amount written on the card. This is normally £50 or £100;
- Cash machine card.
Allows you to take money out from hole-in-the-wall machines as long as your account can stand it. Usually there is a daily limit to what you can withdraw. Many cash machines also allow you to transfer money from one of your accounts to another and to print out a balance statement.
- Switch or Delta debit cards.
Lets you to use your card in place of a cheque or cash - the card is swiped through the till, you sign a sales voucher and the money is taken from your account.
- Switch Solo and Delta Electron cards
These check that you have enough money in your account before the transaction goes ahead.
- Overdraft facilities
If your bank has agreed to give you an overdraft, you can take out more money than you have in your account.
- Direct debits and standing orders
These are useful ways of paying regular bills such as gas and electricity bills. With direct debits you give permission for your bank to pay out money to an organisation. Usually the organisation must inform you if there is a change in the amount of the payment. A standing order is an instruction to your bank to pay a fixed some of money every month to the same person or organisation. This may be a rent payment for example.
- Interest payments
Many banks and building societies now pay interest on the money you have in your account.
Opening a Bank Account
By law, bank staff must check your identity and your address when you open an account. You can ask them what documents they will accept. Common ones are:
- Driving licence
- Current passport
- Medical card
- Gas, electricity, water or phone bills
- Council tax bill
- Mail order statement
If you do not have the sort of documents the bank accepts, talk to the staff and explain what sort of documents you can produce.
Staff may ask you questions about what you plan to use the account for. They will do so to help you to choose the right one and to see if there are any other products or services you might be interested in.
Last updated: 01-Oct-2009
