In modern society it can be incredibly difficult to get by in day-to-day life without a bank account. However, opening up a new bank account is easier said than done if you have bad credit.

Options available

You might need to consider bank accounts for bad credit; one type that is often suitable is a bog-standard basic bank account. These accounts allow you to deposit and withdraw cash, but the other facilities (such as having a debit card, arranging standing orders, etc) will probably be fairly limited. If you have a very poor credit history, for example due to being declared bankrupt, you may not even be eligible for a basic bank account – but this only usually happens in very extreme circumstances.

Bank account benefits

You might be wondering why it is so important that you have a bank account. It is not absolutely essential for every single person to have an account, but it does make life a lot simpler and they do carry some benefits, for example:

• Most salaries and wages are paid directly into a bank account
• You can earn interest on your money
• Carrying/stashing large sums of money can be dangerous but it will be protected by safes and insurance if you have a bank account
• Your money is covered by the Financial Services Compensation Scheme (up to the sum of £85,000 per person per authorised firm – remember that one ‘firm’ may consist of several banking brands) should your bank go bust
• Budgeting is made easier because you can clearly see how much money you have
• You can set up Direct Debits (paying by Direct Debit will often earn you a discount on some of your bills, e.g. gas and electricity) and Standing Orders so you don’t forget to pay bills

Of course, it is possible to live without a bank account and, if you decide to do this (maybe because you have a bad credit history against your name or because you prefer to not deal with the banks) that is your choice. You are not legally required to have a bank account; it is simply the most common way to look after and manage your money.

Finding and opening a bank account

Let’s say you have ditched the idea of trying to struggle through life without a bank account, what options are available to you?

Well, the easiest way to find a suitable account is to carry out an online current account comparison.

Comparing bank accounts online allows you to see what is available, which accounts have the best benefits on offer, and whether there are any bank accounts aimed at people with bad credit.

When you find a suitable bank account for bad credit, it is important that you check if there are any charges and fees applicable to the account. Basic bank accounts rarely have fees for standard features. However if you are looking for enhanced facilities, you may be required to pay a monthly fee. All this information should be available when you do a current account comparison, but it is always worthwhile double checking with the provider too.

Re-building with bank accounts for bad credit

If you open a bank account for bad credit, start to use it responsibly and demonstrate to the bank that you are capable of managing your money wisely; it could help you rebuild your credit history. It is usually a good idea to talk to the bank about whether they will automatically upgrade your account in the future or whether you will need to ask for one.

Rewards

Bank account benefits probably won’t be applicable to you if you are opening a bank account for bad credit. However, once you upgrade your account, it is possible that you will be rewarded by your bank for being a loyal customer.

Carrying out the current account comparison should show you which banks offer their customers the best benefits – although it is important to note that many of these accounts do incur a monthly fee. The sort of bank account benefits you can expect to be offered if you go for a packaged account are: home insurance, travel insurance, breakdown cover, mobile phone insurance, interest free overdraft, credit card protection and other similar financial products.