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Advice on Bank Accounts With Debt

Getting a new bank account can be challenging if you’re in debt or have a poor credit history. Many banks may reject your application or put certain limits on your account. In this article, we take a look at the type of bank account you can get and how to protect your money from being taken by your bank if you have unpaid debts within your account. 

Free-basic bank account

A free-basic bank account differs from a current account as it provides you with fewer options. However, it’s a good choice for people that don’t qualify for a standard current account. You might not qualify for a standard current account if you have a poor credit score or haven’t been able to build up any credit history. A free-basic account won’t provide you with any credit facilities such as an overdraft or a chequebook, but it will allow you to pay in money, withdraw money and pay in cheques. You will also be provided with a card which you can use to pay for things in shops or withdraw money from cash machines. This type of account is a great option for people who struggle with money management and those who don’t want overdraft access. It can help prevent issues with overspending and the accumulation of more debt.

Avoid your bank taking money 

If you have money in your bank account and have debts with the same banking group, your bank can take your money without asking you and use this money to pay off your debts. This can be troublesome and cause more debt problems or leave you unable to pay for essentials such as food. You might be worried about this situation and want to ensure you have enough money for the essentials. In this case, you can open a free-basic bank account with a bank or building society that’s not associated with your banking group. Your wages and income can be paid into this account, and the bank you have debts with won’t be able to access this money. However, this doesn’t mean you can ignore your debt and will no longer have to pay back the money you owe. It simply means you can keep your money from being taken without your consent. If you’re struggling to manage debt, you might want to consider getting debt advice and looking at a debt solution. Many options are available, including IVAs, bankruptcy, debt management plan and debt relief order. The option most suitable to you will depend on your circumstances; a professional can give you IVA advice and advice on all forms of debt management. Facing your debts head-on and tackling them is the best way to get yourself back on track.

Choosing a free-basic bank account

When choosing a free-basic bank account to open, you should look at several options. Each account will have different charges and rules which you should be aware of before opening a new account. You should also check that you can use your local cash points for free and that you can pay in money at a local branch. These things will make it easier and cheaper if they’re local.

Managing your basic account

When you have a free-basic bank account, you’ll still need to take some steps to ensure that you’re managing your money appropriately. Set up direct debits after you’re paid, so you will always have enough money to pay the balance. For example, if you’re paid at the end of the month your direct debits can be set to the first of every month. This way, all of your payments will come out before you have a chance to use the money on non-essential items. You may be charged if you don’t have enough money in your account, or your bank could cancel the direct debit. Regularly check your account balance; you can do this in several ways. If you use online banking, you can sign up for this and access information about your money through the banking app. Alternatively, you can visit a cash point to view your balance if you prefer to avoid internet banking. Alerts can also be helpful; you can set these up, so you receive a text or notification when your balance is below a certain amount. 



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