Bank Accounts with Bad Credit
Until recently, if you were finding it difficult to open a bank account because of an impaired credit rating, you had few options to choose from. Although many sites offered 'guaranteed bank accounts' for which anyone could be accepted, there was a price to pay in the form of an 'arrangement fee'.
This fee could be several hundred pounds in the worst cases, and seems to us a blatant way of exploiting people's credit problems for profit.
However, there is a new option available for people who need a bank account but who have a bad credit history.
Basic Bank Accounts
Basic bank accounts are a fairly new kind of account, set up in response to the government's decision to start paying benefits direct into bank accounts rather than over the Post Office counter.
These accounts are very limited in what they offer - there's no overdraft and no chequebook, for example, but this means that it's not hard to open one. As there's no way that you can end up owing the bank money, then your credit rating doesn't really matter, and most applications will be approved.
You'll basically get an account into which your benefit, wage, or salary can be paid, along with any cheques you get given, plus a cash machine card that you can use to withdraw your money, and the ability to set up direct debits to pay your bills.
Is a basic account right for you?
Although this kind of account was set up specifically for people receiving state benefits, their simplicity and high approval rate means that they are a good option if you need access to a bank account but have been refused a mainstream account because of a poor credit rating.