Banking

Contents
1. Types of bank account 1.1. Basic bank accounts 1.2. Current accounts 1.3. Savings accounts 1.4. Bank accounts and your rights

This section contains information on different types of bank accounts and some of the services provided by banks. Below you will find a summary about bank accounts. If you want more detailed information, click on the links on the left-hand side of the page.

There are two types of bank account for managing everyday money: a basic bank account and a current account. Banks also offer a range of accounts designed for medium or longer-term savings. Savings or ‘term’ accounts usually pay more interest than basic and current accounts.

Basic bank accounts offer a convenient place to keep money you need for everyday use. You can arrange to have wages, state pension and benefits or tax credits paid into one. You can also pay in cheques or cash free of charge, and set up ‘direct debits’ which pay regular bills automatically from your account.

With a basic bank account you get a cash card which you can use at a bank machine to withdraw cash. Some also offer a ‘debit card’ that you can pay for items with, and get ‘cashback’; but with a basic account these will only work if there’s enough money in your account.

You don’t get a cheque book with a basic bank account, and you can’t take out more money than is in the account (‘go overdrawn’). For this reason basic bank accounts are useful for anyone worried about overspending.

Current accounts have more features than basic bank accounts. For example, they usually offer:

• Cheque book
• Cheque guarantee card (acts as a ‘guarantee’ so makes cheques more widely acceptable)
• Debit card (some allow payments without checking your account)
• Direct debits (automatic bill payments direct from your account)
• Standing orders (regular set payments from your account to someone of your choice)
• BACS (Bankers’ automated clearing service) – the facility to accept payments directly into your account (e.g. from your employer), or for you to make one-off payments to someone else out of the account
• Overdraft facility – the bank may allow you to go overdrawn up to a certain amount; but you need to arrange this in advance and charges apply (you pay extra charges if you go overdrawn without an agreement)

Some current accounts pay interest on money you leave in the account, but the rate is usually low.

Banks offer a wide range of savings accounts. The main differences between them are how quickly you can get at your money, the minimum amount required to keep the account open and the type and rate of interest rate paid.

The FSA ensures that banks and building societies are financially sound. You may be at least partially protected through the ‘Financial Services Compensation Scheme’ if your bank collapses.

If you want to make a complaint, banks and building societies must help by having internal procedures and by belonging to the Financial Ombudsman Service (an impartial service that can help settle disputes).

Most banks and building societies follow the voluntary ‘Banking Code’. This sets standards of good banking practice for the industry when dealing with personal customers.