Current Accounts: Basic Bank Accounts

Basic bank accounts are designed for people with little income or who have a poor credit rating and they're an excellent start for anyone who's not used to having a bank account, not least because they're much easier to get than current accounts.

Any wages, benefits and tax credits can be paid directly into the account and you can usually pay bills by direct debit and/or standing order - something could help reduce your bills, as having a bank account means you can get discounts on services such as gas and electricity. You'll also get a debit card giving you full access to cash machines and your account can also be operated through the Post Office as well as the bank your account is with.

However, you do not get a cheque book and nor will you get an overdraft limit, although that's no bad thing if the account is being used by someone who needs to keep a tight rein on their budget. Nevertheless, having no overdraft facilities means that if a direct debit bounces, you could be charged outrageous penalties, perhaps £35 or more.

A few companies such as the Nationwide and Co-op will even offer basic bank accounts to people who have just gone bankrupt - a godsend for anyone who suddently finds themselves with current accounts that have been frozen by the Official Receiver.

Next article: Student Bank Accounts

Published on November 20, 2006