What You DON’T Get with a Basic Bank Account
Over the past few years the basic bank account has become more and more popular. At the start it was there for people who had a bad credit rating that led to them not being able to get a normal current account due to the fact they would need to be credit checked. Since then it has not only been those with bad credit ratings applying, it has been people whose credit rating it perfectly healthy. This is because with a basic bank account there is no overdraft, and therefore no overdraft charges. There are however some features that you are missing from a basic bank account, and these are detailed below.
First of all is the cheque book. Although the humble cheque is being slowly phased out, it is still used and is particularly convenient when you need to send a payment through the post. The majority of basic bank accounts lack a cheque book – though almost invariably they do have the facilities to pay cheques in if you receive one.
Another lacking feature is the availability of an overdraft. As you would expect with an account specifically for those with poor credit score, there are no credit facilities whatsoever and this includes the overdraft. In fact, even if your credit rating increases over time and you get yourself into a financially sound position, you will still be unable to access an overdraft with a basic account. Instead, you would need to apply for a full current account.
The lack of overdraft does of course mean that you won’t get any kind of penalty charges either! You might think it inconvenient to not have an overdraft or to a lesser extent a cheque book, you will find it great that there is no chance of getting unnecessary charges put onto your account for unfortunate mistakes with payments. Sometimes a payment is misjudged and you don’t have enough money to cover it within your agreed limits. In a regular account this would go over your overdraft and lead to charges, but with a basic account the payment would simply not happen, the bank would decline them so therefore no charges!
Of course, for those with great credit ratings who do make sensible use of an agreed overdraft or who use cheques to pay frequently, there is no point in a basic account. But for those who would rather simply not have access to credit facilities, or for those who are unable to obtain a full current account, the basic bank account provides the necessities of day to day banking and is available to a broader range of people.
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Tags: bad credit, bank accounts, banking, basic bank account, finance, Personal Finance