The basic bank account approach

The basic bank account approach

Have you considered the 'basic bank account approach' to managing your finances? It's surprising how reluctant some people are when it comes to exploring what different types of bank account are available, and what the best account could be for them.

Research by Halifax recently revealed that the average person in the UK has had their main bank account for more than 20 years!

Of course, choosing a bank account is a very personal decision, and will be very much affected by what kind of features and services you're looking for. But have you ever asked yourself whether the account you currently have is potentially having a negative impact on your finances from month to month?

For example, if you're regularly going overdrawn with a standard current account, you could end up paying quite a bit more in interest and charges if you don't repay what you owe quickly enough. Alternatively, you may find budgeting for bills and your other essential monthly outgoings difficult.

If this is the case, the basic bank account approach could be an idea really worth giving some thought to. Let's look at just what a basic bank account could do for your money.

Why choose a basic bank account?

Between 2002 and 2008, the Treasury estimated that nearly 50% of the 2.2 million people in the UK without a bank account had signed up to open one - and in the vast majority of cases, they chose a basic bank account.

But what exactly is a basic bank account - and how could it affect the way you manage your finances?

Basically, it's a bank account that offers a convenient place for you to keep the money you need for everyday use. You can arrange to have your wages, State Pension and benefits or tax credits paid into a basic bank account. You could also pay in cheques or cash, and set up Direct Debits to automatically pay regular bills (such as gas/heating/electricity) from your account.

Of course, many of these features also come with standard bank accounts. So when it comes to basic bank accounts, what are the benefits of this approach?

1. There's often no credit check involved. If you've had financial problems in the past, you may have seen a negative impact on your credit rating - in which case, many banks will turn you down if you apply for a standard current account. Whatever shape your credit record is in, as long as you're a UK resident, at least 18-years-old and can prove your identity, you should be able to open a basic bank account.

2. Basic bank accounts don't come with an overdraft facility. If you've borrowed money in the past but struggled to pay it all back, and fallen into debt problems as a result, having the option to go overdrawn could be an unwelcome temptation. With a basic bank account, you won't be able to spend more than the actual money you have in your account, which could really help you stay financially afloat.

3. Some basic bank accounts come with an in-built budgeting service, which could ensure your monthly income is split into two separate accounts: one for your bills and regular monthly outgoings, and another for your 'spare' cash. This means that you shouldn't have to worry that the money you need for your essential costs is being spent on other things.

So, if you think the basic bank account approach is ideal for you, why not get some more advice by speaking to a basic bank account provider today?