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An overview of the different types of bank accounts

By Edited Jul 29, 2016 0 0

Types of bank accounts

The banking sector is huge and can be a complex and confusing sector. There are many different types of bank accounts, and each one services a particular type of customer. With so many different types of bank accounts choosing best one for your specific circumstances can be difficult. So, what types of bank accounts are there to apply for?

Basic bank account

A basic bank account is a no frills bank account with a limited number of simple features. A
basic bank account allows you to receive wages from your employer by direct credit, make payments by standing order and direct debit and withdraw cash from ATMs.

There are no credit facilities with a basic bank account therefore you don’t need to have a credit check to open one. The downside of this is that there is no overdraft facility associated with a basic bank account.

A basic bank account is ideal for those people who only need a bank in which to receive their wages, salary or benefits. The basic bank account is one of the few types of bank accounts an un-discharged bankrupt may qualify for in order to get back on their feet.

Guaranteed bank account

The guaranteed bank account is the second of the types of bank accounts an un-discharged bankrupt can apply for. However, unlike the basic bank account an un-discharged bankrupt can
definitely have.

In order to have a guaranteed bank account you need to be at least eighteen years old and be able to prove your identity. There are no credit checks to pass, no red tape etc. etc.  Guaranteed bank accounts are very limited features and offer no credit facilities or debit cards however an account holder can have a prepaid Mastercard. Having a guaranteed bank account is going to cost you although they are not expensive. Unfortunately, there are no ways around this cost and you will have to suck it up but if having to pay a small amount of money means the difference between having a bank account and not having a bank account then I know what I would do.

Current account

The current account is one of the most popular types of bank accounts. A current account is
the most useful account and has many features. With a current bank account you can have your wages paid directly in to your account, make payments by direct debit and standing order, arrange an agreed overdraft to provide you with some financial buffer and withdraw cash from ATMs. With a current account you also get a cheque book and a debit card, which you can use to purchase products and services.

For personal customers a current account is generally free, although there you may incur charges for CHAPS and BACS payments. You will also get charged for bounced and returned cheques, incur interest when you use your overdraft and incur additional penalties if you exceed your overdraft limit. You can upgrade to premium current accounts, for which the bank charges a small monthly fee.

Most banks offer online banking facilities for their current account customers, which means you can keep an eye on your account and track your transactions twenty four hours a day, seven days a week. Online banking also allows you to maintain your account from the comfort of your own home, male online payments and transfers, cancel direct debits and cancel standing order amongst much more.

If you ever declare yourself bankrupt you cannot have a current account and the only types of bank accounts you will have a chance of getting is a basic bank account or a guaranteed bank account.

Childrens Bank Account

A children’s bank account is one of the types of bank accounts available solely for children and will help introduce them to the world of banking. There are no charges associated with children’s accounts either.

A childrens bank account is a great way of teaching your kids money management and how to look after their financial affairs, which will help give them a good start in adulthood.

High Interest Savings Account

A high interest savings account is one of the types of bank accounts used to generate the best return possible with surplus cash. There are many different types of high interest savings accounts, so before opening a savings account you need to do some research and investigation work to see what is best. Can you leave your money tied up for at least a year or do you want instant access? How much can deposit per month? What return are you hoping to get? These are just a few of the questions you need to answer before you open up a high interest savings account.

There is also an internet savings account, which is like a normal savings account but it is maintained solely online. There are many advantages to internet savings accounts, although these types of bank accounts aren’t for everybody so you need to do some research before opening one of these accounts.

The final word on the different types of bank accounts

There are many different types of bank accounts and what is suitable for one person may not be suitable for another. Money management is very important and you need to make one hundred percent certain you are choosing the best bank account for you. Fortunately, all banks have trained advisers who are only too willing to help you choose the most suitable bank account for you.

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