Day-to-day, most people choose to manage their money with a bank account of some kind. There are a few categories of day to day bank accounts:
- Basic bank accounts
- Current accounts
- Paid current accounts
- Accounts with alternative providers such as the Post Office or Credit Unions.
The differences between the accounts are to do with their functions and services, what you can do with them, and their accessibility and cost.
Services within bank accounts include:
- Direct debits
- Standing orders
- Automated payments and BACS (an electronic payment system)
- Online banking
- Branch counter services
Basic Bank Accounts
- They will usually be a bank account where you can set up direct debits, standing orders, get wages or benefits paid in electronically or by cheque, and you will normally have a debit card that you can use in shops and cashpoints.
- You may be limited as to the services you can use within the bank itself and over the counter or paying in cheques.
- You will most likely not get an overdraft, and you will still be charged for bounced direct debits etc.
- You will not get a cheque book
- These accounts are available to people who have low credit scores or who have been bankrupt. These accounts are often not advertised in the branch because they are not ‘money makers’ but if you ask at the counter they must give you the information.
- You may earn a small amount of interest on any credit that you have in the account.
You will still need to be able to provide ID to open one of the accounts
These are the most common bank account. If you go to a bank and ask for a bank account, you will normally be given one of these.
Facilities normally include:
- Debit / visa card
- Cheque book
- Online banking (usually)
- Use of branch facilities (at the counter, and in-branch paying in machines etc)
- You will usually earn a small amount of interest on credit
- You will usually have the option of an overdraft at an arranged limit
- If you exceed your overdraft you will still be charged a fee for bounced payments
- Account facilities such as direct debits / standing orders etc.
- Some current accounts may offer cashback on your purchases
- Some accounts may offer an emergency cash option in case you lose your card
‘Paid’ Current Accounts
These are usually all of the services of a standard current account, but with perks that can include things like free travel insurance,
You will pay a monthly fee for having the account. Fees range from £2 to £17.50 or more per month. You will get the facilities of a standard current account but there are often extras which can include:
- Cashback on purchases or bills paid
- Subscriptions to film clubs such as ‘LOVEFILM’
- Passes to National Trust sites
- Linked access to high rate savings accounts with the same bank
- Travel insurance
- Mobile insurance
- Breakdown cover for your car
Other types of accounts
The Post Office have started to offer more services including current accounts. Traditionally Post Office accounts didn’t offer direct debit facilities, and were a very basic bank account. They have a partnership with the Bank of Ireland and now offer wider services so it’s worth popping in to see if your branch offers current accounts.
Many credit unions now offer ‘current’ accounts or different types of day-to-day bank accounts. Some of the accounts they offer even help you to portion out your money to help you manage it – often called ‘jam jar’ accounts. There can often be small fees to have a current account with a credit union, so do check with them.
Credit Unions are often very inclusive and less strict about only offering services to people with good credit, so people who tend to be excluded from banking can often get accounts with them.