How to open a bank account in the UK
Learn with Latest Deals how to open a bank account. Opening a bank account is an important step to your financial success, and here you can find some tips and bits of advice about how to do it properly.
Types of bank accounts
Before opening a bank account, you need to choose what type of bank account you want. There are many different types of bank accounts. Below you can find some of them:
A current account is a type of account that helps you to manage your money day-to-day.
Everyone needs a current account to receive money, such as your salary or benefits, and pay for things. You can also use this account to keep track of your spending habits.
Usually, with a current account, you will get a debit card that you can use in shops and withdraw money from your bank account at cash machines.
With this account, you can set up direct debits and standing orders to cover recurring monthly payments.
Most current accounts also allow you to get an overdraft. An overdraft is an amount of money you borrow from the bank or building society you hold the account with.
The amount of money you could borrow will depend on your case. It's important to remember that getting an overdraft can put you in debt if you spend more than you earn and can't cover the overdraft payments. In addition, this could affect your credit score.
IMPORTANT NOTE: Within the current account type, you have the option to choose between a "free account" or a packaged account. Package accounts come with many benefits, but you need to pay a monthly fee.
Another type of account is a savings account. As the name suggests, you can use this account to save money. Usually, a savings account will give you interest on your money.
You can save money for many different reasons, and depending on the reason, you will need a specific type of savings account. Here is a guide about savings accounts and their types.
Help to Save
If you receive tax credits or Universal Credit, you could be eligible to join the government's Help to Save scheme.
Basic bank accounts
If you have a bad credit score, you may not be able to open a current account or a savings account, so the solution for you is to open a basic bank account.
In addition, if you have just moved to the UK and don't have a credit history, you will be offered this type of account.
Some banks and building societies that offer this type of account have different policies about applying for one. Some of them will require you to apply for a current account first, and only if you are denied, you can then apply for a basic bank account.
The advantage of this type of bank account is that you can't produce any more debts as you won't have access to any credit. This account is also free of any charges.
IMPORTANT NOTE: If you are opening a basic bank account to avoid paying debts from your previous accounts, it's essential that you open an account with another bank or building society.
If you open a basic account with the same bank or building society you already have debt, they might use the money you have in this new account to cover your old debts.
The last type of bank account is a joint account. You can open a joint account with anyone you want, but it's essential to remember that your credit score will be linked to the other person's credit score. You will also be responsible for any financial commitments the other person makes using the joint account and vice-versa. It's a big responsibility to have a joint account.
We have a complete guide about joint accounts.
Other options if you can't get a basic bank account
If you can't open a basic bank account, there are some other options:
Monese is technically a prepaid card, but it acts like a bank account. To open a bank account with them, you don't need proof of address. They aren't under the Financial Services Compensation Scheme (FSCS). To check their products and services, access here.
Credit unions bank accounts
If you can't get a basic bank account, you can try a credit union bank account. Money Helper, a governmental organisation, has a complete guide explaining more about them.
Another option if you can't get a basic bank account is to open an account with Cashplus.The most significant advantage of Cashplus is that the Financial Services Compensation Scheme (FSCS) protects your money up to £85,000. Learn more about Cashplus Bank here.
|Bank or Building Society’s Name||Basic Bank Account Information|
|Barclays||Basic Current Account|
|HSBC||Basic Bank Account|
|Lloyds Bank||Basic Account|
|Santander||Basic Current Account|
|Natwest||Everyday Bank Account|
|Metro Bank||Cash Account|
|Bank of Scotland||Basic Account|
Which bank is the best in the UK?
There isn't an exact answer to this question because it will depend on your needs and circumstances.
The great news is that the banking industry is very competitive, so you have many options when it comes to which bank or building society to choose to open a bank account with.
The biggest four banks in the UK are Barclays, Lloyds, HSBC and NatWest. But there are other banks such as TSB, Halifax, Santander, Metro Bank, Co-operative Bank, Bank of Scotland and Nationwide.
Below you will find a list of the most relevant banks in the UK and their contact information:
|Bank’s Name||Bank’s Information|
Phone Number: 0345 720 3040
Phone Number: 0345 734 5345
Phone Number: 0345 788 8444 (London)
Phone Number: 0345 740 4404
|Lloyds Bank||Website: https://www.lloydsbank.com|
Phone Number: 0345 300 0000
Phone Number: 0345 080 8500
Phone Number: 0800 912 3123
Phone Number:020 3284 1575
Phone Number:0345 721 2212
|Bank of Scotland||Website:https://www.bankofscotland.co.uk|
Phone Number:0345 721 3141
Phone Number:0345 730 2011
Things to think about when you are picking up a bank or building society
Some things to think about when you are picking a bank or building society are:
Does the bank or building society have a good reputation?
The more stable and reputable your bank or building society is, the better.
Does the bank or building society have a nearby branch?
Most banks or building societies offer online banking, but having a nearby branch is very handy when you need to resolve a problem that is better to do in person.
Does the bank or building society pay interest?
Most current accounts don't pay interest, but savings accounts do. When picking a savings account, you need to make sure that they are paying the highest interest rate possible. Learn more about savings accounts here.
Does the bank or building society offer overdraft?
If you need access to an overdraft, you need to pick a bank or building society that offers it. Make sure you are also choosing the best deal for overdraft fees and protection.
Are you willing to pay for perks?
If you are willing to pay for perks, you could get a packaged account that usually includes additional products and services such as travel insurance, mobile phone cover and vehicle breakdown cover.
Do you want a joint account?
If you want access to a joint account, you need to pick a bank or building society that offers one.
The process of getting a joint account is different depending on the bank or building society you choose.
How to open a bank account
There are many ways to open a bank account. You will need to fill in a form, which you can do online, in a branch or even by phone. You may have to be 18 or over to be able to open some accounts.
You will need to provide some documentation, including your proof of identity and address. You will need to have a current address in the UK.
To prove your ID, you can use your passport, driving licence or identity card (if you're an EU national).
To prove your address, you can use a tenancy agreement or mortgage statement, a recent electricity or gas bill (less than three months old) or a current council tax bill. Some banks or building societies will accept other documents.
If you don't have these documents, the bank should accept a letter from a responsible person that knows you and can confirm your identity and address. A responsible person in the UK needs to be a GP, a teacher, a social worker or a probation officer. You could also use letters from Governmental Organisations such as the HMRC.
A bank or building society can refuse to open a bank account, and they don't need to give you a reason, and you can't do anything about it. Usually, this happens if you are breaking any Immigration rules.
If you have a bad credit score, you will be offered a basic bank account. In many cases, you are still able to get an account.
IMPORTANT NOTE: When you open a bank account with a bank or building society, you have a contract with them. In this contract, you should be informed about charges, spending limits, how the bank or building society will communicate with you and what to do if you have any problems.
What to do if you aren't sure what account to open?
If you aren't sure what type of bank account is best for you, you have many different resources to ask for help. The most important one is The Money Advice Service.
The Money Advice Service
The Money Advice Service is a free independent service. If you aren't sure what type of bank account is best for you, this service can help you. You can access their website here: www.moneyadviceservice.org.uk. You can also call them using this phone number: 0300 500 5000.
How many bank accounts can you have?
There isn't a limit to how many bank accounts you can have, but it's essential to understand why you need more than one bank account and how you will manage them.
Most people have a current account to manage their money day-to-day, and a savings account to transfer money for a rainy day or a specific financial goal, like buying a house or a car.
Nowadays, people also have an account with a digital bank. These banks usually offer advantages when it comes to international travelling. You can get better rates on foreign exchanges and access free international currency withdrawals (but with limits). Learn more about Monzo and Starling Bank, two of the biggest digital banks in the UK.
What are the benefits of having multiple bank accounts?
When you have multiple bank accounts, you will have access to some benefits, such as:
- Work towards different savings goals, as you can have separate savings accounts for each one.
- Earn more interest. Some savings accounts pay better interest rates than others. It's very important to research a good savings account to make the most of your savings.
- Separate different income streams. If you have more than one income stream, you can use different accounts to keep them separate.
- Keep better track of your spending. If you want to be extra organised, you can have one account to pay your monthly expenses and another for your day-to-day spending.
- Have access to your money no matter what happens. If one bank has a technical issue, you can rely on accessing your money at another one. The same if you lose your debit card from one bank and can use it from another one, for example.
- Make sure your savings are protected under the Financial Services Compensation Scheme (FSCS), as the limit is up to £85,000 per financial institution.
- Make the most of perks and rewards with a packaged bank account. These types of accounts can come with great advantages.
- Try out one of the challenger banks. Learn more about the benefits of digital banks here.
How can I manage multiple bank accounts?
If you have more than one bank account, you will need to be extra careful to know what is going on in each account. Losing track of any of them could potentially mean that you are losing money with unknown charges. Please read our guide about how to get bank charges refunded if you were unfairly charged.
You can also use applications that allow you to see all your accounts in one place. Some of these applications are free, and some are paid. You can also see all your bank accounts and other financial information with a Monzo paid account. Learn more about it here.
The best way to manage your multiple bank accounts is online. You can also raise queries over the phone and if your bank or building society has a branch, speak to them face to face.