Habagallo – Everything you need to know about bank accounts in the United Kingdom

If you’re looking for information about the best bank account to open and apply for to suit your needs, or want to find out which things to compare when choosing bank accounts or savings plans, then you’ve come to the right place. With our years of banking and finance knowledge, we make applying for a bank account to manage your money an absolute breeze.

- What is bank account?

Bank accounts come in many different guises. Aside from joint accounts, business accounts and savings accounts for children which are outlined below, there is a wide variety of types of personal bank account. Different personal accounts are designed to do different things, and each bank account will reward you in a slightly different way.

- What is a current account?

The standard option is the current account. All major and minor banks and building societies offer current accounts with choices and extras including cash and debit cards, cheque books and overdraft options. Current accounts are designed for regular deposits/withdrawals and all-round flexibility and convenience. Some accounts offer extras such as road assistance and travel insurance.

- What is a savings account?

Savings accounts such as ISAs do not offer the same level of flexibility and convenience as current accounts. Instead they offer higher interest rates, which give you a return on your money if you place lots of it in a savings account in the medium-to-long term.

- What is a joint bank account?

Joint bank accounts are popular with partners and housemates and others who have a shared financial interest. These accounts provide access to two or more people, which means that everyone who has access can manage the account and make deposits and withdrawals. Joint accounts offer convenience for groups of people who have shared expenses – such as utility bills – and for couples. The account works in the same way as a regular current account but there are multiple cards and cheque book options available.

Protective measures are available with joint accounts. For example, if disagreements or problems arise with other joint account holders, the account can be frozen so no one can withdraw money. The bank will only free up the account once all joint account holders agree as to how the money shall be divided. If legal disputes arise, the courts determine who gets the money based on who paid in the money.

- What is a business bank account?

Business accounts are important to businesses, and the nature of business means that a good business account will offer more features and choices than a private account. On the surface a business account gives you the expected basics such as paying-in books and chequebooks, but there is much more to be had besides, including interest on positive balances and free business finance managers.

Fees are common with business accounts. Some banks charge a periodic fee, such as every month or every quarter, while some charge you based on the number of transactions you make. Account usage charges are called standing charges, while transaction-based charges are called transaction charges. Transactions such as credits and debits, cheque payments, direct debits and standing orders may all be subject to transaction charges. Pay close attention to these. It is important to build a strong relationship with your business banking provider, as this can grant you access to things such as business loans in the future.

- Are there bank accounts for bankrupts and people with bad credit history?

Many standard bank accounts such as current accounts and savings accounts require the customer to have a good credit history, but there are hundreds of thousands of people in the UK that don’t. Although they are not very well advertised, there are banking options available to people with poor credit or who are bankrupt, and these are known as basic bank accounts.

The problem with bankruptcy and bad credit is that it excludes people from acquiring the most basic financial tools they need to live day to day. Basic current accounts solve this problem by providing a basic place for people with bad credit to put their money and spend it, with features such as Direct Debit to pay bills. But you don’t get many of the perks you would get with a current account, such as interest on positive credit or overdraft options.

- What is a basic bank account?

A basic bank account wont charge fees for transactions, but they do charge the same unauthorised charges and returned payment fees as standard accounts. This makes it crucial to ensure that the right amount of money is in your account when the bills are due. Banks don’t make any money out of these accounts, so they rarely advertise them. This makes it worth enquiring with banks directly to see what options are available.

Things like bad credit, CCJs and recent bankruptcies are usually not a problem when applying for a basic current account. These accounts are also not limited to people with bad credit, and they can actually be a good option for people with good credit who simply want a basic, no-frills account that does not come with the option of an overdraft.

- What bank accounts for children are there?

Bank accounts for children are a popular way to save for the future and educate kids on the importance of money awareness. Just like other types of savings account, there are two main options available: easy-access accounts and regular savings accounts. Easy-access savings account allows you or your child to deposit or withdraw money whenever, though there is a lower rate of interest. Savings accounts offer higher interest rates, but may block access or stipulate a certain saving habit for you to achieve the highest interest rate.

- What are bank accounts for students?

Student bank accounts will normally come with special features that cater to student needs. In addition to debit cards and swipe technology, these accounts may offer attractive incentives such as discounts on internet, food and rail travel. Overdraft facilities are very popular with today’s generation of cash-strapped students, and the best ones do not charge interest, however interest does usually apply at some point after graduation when the student current account changes into a graduate account.

It is important that students only take what they need. Don’t let flashy gifts and introductory promotions blind you from the real deal. Check the overdraft terms to see if there is the option to increase the overdraft when needed. Many student accounts offer tiered overdrafts, and these are good if you want more control over how much you are borrowing. The two best things you can get with a student bank account is 0% borrowing and flexible overdraft limits.