Bank accounts for all sorts of bad credit problems, even bankruptcy · Debt Camel

In 2016 the key UK banks all offered new “basic bank accounts”. One of the principle targets was once to widen checking account get right of entry to to teams of individuals who have discovered it tough or unattainable to open an account:

  1. individuals who have long gone bankrupt in the past discovered it very arduous to get a checking account;
  2. folks in an IVA, DRO or debt control wish to exchange financial institution accounts and feature the overdraft on their outdated account incorporated within the debt answer; and
  3. many of us with deficient credit data who aren’t in any shape of debt answer are determined to flee from their outdated account with its massive overdraft, so they may be able to get started paying it off, however they’re rejected for a “standard current account” as a result of of their deficient credit score.

All those folks must be capable to get a brand new genre fundamental checking account. And those new-style fundamental financial institution accounts are nice!  This article appears at the benefits of those new accounts, which banks be offering them and which you must make a choice.

No charges – ever!

They all allow you to:

  • arrange direct money owed debits and status orders;
  • have a debit card (now not all be offering a contactless one and Santander’s is daftly sophisticated, see beneath); and
  • have get right of entry to to web banking.

And the most efficient bit is, if there isn’t sufficient cash to your account to pay an immediate debit or status order, the bills gained’t be made – so you’ll by no means move overdrawn – however you gained’t be charged a price for the DD rejection. Many individuals who have had giant cash issues know the way a lot their financial institution’s overdraft charges and costs for DD rejections all contributed to the issue.

Who provides those new accounts

You must be capable to open one of the next financial institution accounts you probably have main issues in your credit file together with being an undischarged bankrupt, in an IVA or a DRO, or having CCJs:

  1. Bank of Scotland basic account
  2. Barclays basic current account
  3. Co-op Cashminder account  
  4. Halifax Basic Bank Account
  5. HSBC Basic Bank Account  
  6. Lloyds Basic Account 
  7. Nationwide FlexBasic account
  8. RBS, NatWest and Ulster Bank Foundation Account
  9. Santander Basic current account
  10. TSB  Cash account
  11. Virgin, Yorkshire Bank and Clydsdale M Account

The simplest causes you must be refused one of those accounts are if you must get a “normal” financial institution OR if there’s a fraud marker in your account.

If you’ve an software became down, ask the financial institution why – it has to provide you with a explanation why. If you’ve had any issues opening one of those accounts please let me know, for instance by means of including a remark on the backside of this newsletter.

My best pick out is Nationwide

The Nationwide account has a contactless debit card, complete cellular and on-line banking, textual content indicators and you’ll open it on-line.

If you already had a complete present account with Nationwide earlier than going bankrupt and you weren’t the use of your overdraft, they are going to usually be offering to transform your account right into a fundamental one. Here your kind code and account quantity keep the similar and all your DDs and STOs keep in position , so it’s hassle-free.

Flex basic - Nationwide's very good basic bank account

ID issues?

If you might be having issue getting an software authorized as a result of of identification problems, Nationwide, Barclays, Co-op and Virgin Money have a name for being useful.

Two to steer clear of? Lloyds and Santander

From what I’ve been informed, you’ll’t practice for a fundamental checking account with Lloyds immediately – it’s important to move throughout the bother of making use of for a “normal” present account after which be rejected first. This is an overly deficient strategy to deal with consumers.

The drawback with the Santander fundamental checking account is that the ATM card isn’t a chip & pin one, so you’ll’t use it in a store. So they come up with a “Visa top up” card which it’s important to pre-load with cash out of your fundamental checking account. This is an absolutely useless faff – higher to visit a financial institution which will give you a correct card debit card for the account.

Open a brand new account earlier than or after you move bankrupt?

It would possibly really feel like a good suggestion to open one of the above fundamental financial institution accounts as section of your preparation for going bankrupt – this may increasingly mean you can get your wage and any advantages paid into the brand new account. If you wish to have to do that two issues are vital:

  1. you will have to take a look at that the brand new account isn’t going to be frozen while you move bankrupt!
  2. in case you personal any cash to the financial institution you’ve selected, don’t put a lot cash into it previous to bankruptcy because the financial institution would possibly assist themselves to the cash within the new account the use of the “right of set-off” clause within the details. (This isn’t an issue AFTER you’ve long gone bankrupt as then your money owed don’t exist anymore so the financial institution can’t use proper of spark off.)

You would possibly simply come to a decision it’s more effective to wait till your bankruptcy order has been made after which open a brand new account.

An selection to take into accounts – Monzo

I’ve noticed some feedback on web boards announcing that folks with a Monzo present account opened earlier than they went bankrupt have been allowed to stay it afterwards.  This isn’t a “basic bank account” and so it doesn’t have the “no fees ever” assurance.

But if you wish to have a contemporary financial institution with an app that helps you budget and makes it easy to put small amounts of money aside (I gained’t point out the cool having a look credit card) then chances are you’ll wish to give this one a check out.

Updated November 2021

More Debt Camel articles:

A checklist for going bankrupt

A tick list for going bankrupt

Making an “arrangement to pay”

Concerns about beginning a DMP

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