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BAD CREDIT BANK ACCOUNTS INFORMATION LIBRARY
Below you can find useful information and FAQs on Bad Credit Bank accounts.
- What is a Bad Credit Bank Account?
- Who Can Open a Bad Credit Account?
- Is there an Overdraft Facility?
- Can I Earn Interest?
- Can I Apply if I am Self-Employed?
- What are the Additional Features?
- What are the Fees?
- What are the Advantages?
- What are the Disadvantages?
What is a Bad Credit Bank Account?
A bad credit bank account is usually simply known as a managed bank account, online bank account or internet banking account. It is an online bank account that side-steps the traditional bank. In other words, it is offered by an independent provider and the account is run purely online – there is no high street branch.
Bad credit bank accounts can be used to:
- Manage money
- Make payments
- Make transfers
- Receive salary / wage
- Set up Standing Order
Who Can Open a Bad Credit Account?
Almost anyone can open an account like this. In other words, you are not subject to a credit check before receiving an approval to open the account. Regardless of your credit history, ability to receive financial products or job history you will be able to open a bad credit bank account.
Generally, the main criteria to opening a bad credit bank account are as follows:
- Proof of ID
- UK residence
- Over 18 years
- Permanent address
- Valid email address
- Access to the internet!
You may have to provide proof of your address.
Is there an Overdraft Facility?
No. Bad credit bank accounts of this kind do not offer overdraft facilities. This is one of the reasons why their providers are able to offer the account to all kinds of people, regardless of credit history. An overdraft facility is a type of borrowing facility – a bad credit bank account does not give you the ability to borrow money.
Can I Earn Interest?
No. As independent providers, bad credit bank account services cannot offer interest on the money in your account.
Can I Apply if I am Self-Employed?
In most cases, yes. Regardless of your employment history or present situation, you can usually open a bad credit bank account. Simply check this with the relevant provider in advance – either by calling them directly or checking their terms and conditions.
What are the Additional Features?
Bad credit bank accounts offer various attractive features, including in most cases a prepaid credit card to go with the account.
You are probably familiar with prepaid cards – they have been available in the UK for some years, and are compared on Which Way To Pay. For more detailed information on prepaid cards, please look at the relevant page in our Information Library.
A prepaid card is an ideal partner to your bad credit bank account – it allows you to make payments on the internet, in shops and restaurants and to withdraw money from ATM machines. Like your account, the card does not carry a borrowing facility – it works on a 'pay as you go' premise, meaning that it is up to you to load up the card with funds. With a bad credit account, the prepaid card will be linked to your online account.
Another excellent features to a bad credit bank account is the account manager. Your account is assigned with a personal manager based in the UK, who you can contact directly. No more call centres! This may not be offered by all providers to check in advance.
What are the Fees?
This depends on your provider, but generally there is:
- A set up / registration fee
- A regular admin fee (usually monthly)
A typical set up fee is around £25 and a monthly fee can be anything from around £10 to £15. Always check this in advance and compare providers. There are usually no penalty fees (such as a fee for bounced payments).
What are the Advantages?
A bad credit account has some obvious advantages:
- No credit checks
- Open to anyone
- Online money management
- No penalty fees
- Prepaid card
- Easy to open
- Account manager
The fact that you no longer have to worry about a refusal to open a money account is great news – and with no penalty fees and a personal account manager, you can free yourself of some of the bad features of a traditional bank account.
What are the Disadvantages?
There are one or two setbacks to a bad credit bank account, such as the monthly fee and set-up fee. Another aspect that might be less attractive to some people is that you cannot visit a branch on the high street – yet with an account manager based in the UK who can be contacted directly, you can have peace of mind that you can contact a person and not an anonymous call centre.
Another disadvantage to this type of account is that you cannot have an overdraft facility and you cannot earn interest on your money. The absence of an overdraft facility is one of the reasons that makes this account open to all – you cannot borrow, so therefore debt risk is minimised!
Please Note: www.whichwaytopay.com is not authorised to give advice under the Financial Services and Markets Act 2000.
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