Even though having an account in a bank is probably the best way to keep your money safe. However, in some cases, a person may not be eligible to have one. This could be due to various reasons, including being bankrupt. So, you might think about what is the way in such a situation to keep your money safe. In all cases, the best place to keep money would be a bank, no matter what anyone tells you. There is a way for a person who is not eligible for a standard account to still keep their money in a bank, by making a free basic bank account.
Why are you Refused a Standard Bank Account?
If you go to a bank or building society to open a standard account and get refused, there could be various reasons behind it. It could be that you have a bad credit history. In other words, you might have had trouble paying creditors what you owe in the past. This would be seen as a negative sign by a bank. They often don’t accept the application of such people to open an account, especially in case their credit file shows bankruptcy. Sometimes, you can also be refused, if you have no credit history at all.
A person who has entered the country illegally is also sure to get rejected in this matter. And, also a person who lived in the country on a visa and continues to live here even after it has expired. Not only that, but a person who has a criminal record may also be unable to open a bank account. Especially if they have records of having taken part in committing fraud or any other such activities.
In addition to the above-mentioned reasons, a person can also be denied a bank account if they haven’t reached the right age to have a standard one.
Did you face discrimination while applying for a bank account?
The thing about being refused a bank account is that they are not under any compulsion to tell you the reason. This applies to banks, as well as your building society. If you can’t understand why you were denied, you might feel discriminated against. In that case, you must know that they don’t have any right to discriminate against you on any basis, except eligibility. The Financial Services ombudsman looks into these matters. You can complain to them if you have felt discriminated against on grounds of gender, race, etc.
What is a Basic Bank Account?
Are you someone who can’t have a standard account for some reason? In that case, you must try to set up a basic one. As you might have already guessed, you’ll get a lesser number of services in that kind of type of account. Still, you won’t be missing out on the services that a bank can offer you at the least. As we shall see, you can do quite a lot with a basic account.
What is the requirement for opening one?
As a basic bank account doesn’t provide as many services as a standard one, it also has lesser requirements from you. You need to prove your identity to the bank or the building society where you’ve applied.
In addition to that, you also need to give them information about where you live and also prove it. Your age should be above 16 years at the time you’re applying. This requirement might vary depending on where you have applied. The minimum age might be 18 in some cases, so you should check beforehand.
How much would it cost you to have one?
If you’re concerned about the cost, there is no reason to be so. In general, you don’t have to pay a single penny to maintain your basic bank account. The only time you’ll be required to do that is when you’re using it abroad. The same applies when you purchase some goods in a currency other than the pound sterling.
What services will you be able to get with it?
Once you get a basic bank account, you’ll be able to enjoy some of the perks of a standard one. You probably are a person who is employed, be it either by anyone else or yourself. Just like a standard account allows you to receive your earnings, a basic one will provide you with the same facility. Not only that but you can also pay your bills from it using online transactions.
Also, you won’t have to pay any money to make payments, be it in cash or a cheque. However, the currency has to be of this country in that case. You can also make cash withdrawals from ATMs, as well as from banks. Unlike standard ones, you can’t have a negative balance in a basic bank account. So, if you have zero balance, no help would be available from the bank. If you’re eligible for any benefits from the government, you can ask them to pay the amount to you in this account.
Do you need to show your credit file?
When you submit the application, the provider can have a look at your credit file. They have permission to access this information about you. Generally speaking, you won’t be refused based on it. In other words, they won’t give you any kind of rating on your credit file. It’s just that they’ll look for some specific cases where they might want to reject you.
The reason behind this is that you can’t avail of any credit from the provider when the balance in your basic bank account is zero. So, the information shown on the file is mostly irrelevant to them, excluding in some cases.
What if you’re undergoing bankruptcy proceedings?
This is one of those few cases where your application for a basic bank account can get rejected. So, it might not be useful to go for it when you’re undischarged from bankruptcy. After you’ve completed the one-year proceeding and got discharged, there won’t be any more restrictions on you. So, you might have to wait for that time before you can go ahead with it.
Can you apply if you’re in prison or facing criminal charges?
Even though banks can access your credit file, they don’t have information about your criminal record. However, there is an exception in case you’ve been convicted of financial crimes like fraud. Only in those cases can they reject your application, which they won’t do otherwise.
Can you apply online for a basic bank account?
When it comes to applying, the procedure is as easy as in the case of a standard account. If anything, it can only be called easier as it has lesser requirements. In case you’re looking to complete the procedure online, it is possible to do so. In addition to that, you can even have it opened with a phone call. You can also get it done through post or even in person if that’s what you prefer.
Can you switch this account into a standard one later on?
When you go for a basic account, you generally would do it only when you don’t have a choice. Otherwise, you surely would have gone for a standard one. So, you might wonder if you can switch to that when there is no more reason for you to get rejected for it.
For example, when your credit record improves. It is possible in some ways, but you can’t apply for it, unfortunately. The provider may or may not switch your account to a regular one after considering your case.
Is it possible to have this type of account jointly with someone?
In case you’re wondering, yes that is completely possible. The only condition is that the other person must fulfil the requirements for a basic account. Otherwise, you can’t have yours joined with a standard one.
Can your provider close this account?
Once you have opened it, you’ll have to manage the account properly. Otherwise, in some situations, your provider might decide to close it down. Be sure to provide the correct information that they have asked you to provide. You might be able to achieve something by misleading them, but it would be bad for you in the long run.
You must follow all the terms and conditions. You’re also not supposed to open another account while using this one. Otherwise, the one that you’ve been using will be closed by the provider. Moreover, you can’t keep it unused for too long, in this case, more than two years. You must also stay away from behaving rudely with your provider, in any way that can be called threatening.
In case the providers decide to close your account, they won’t do that right away. You’ll get a notice from them, two months in advance. In that, they’ll give you the option to agree or disagree. Needless to say, they’ll have to close the account, if you choose the second option and fail to provide a proper reason.