A basic bank account — as the name suggests — is an account that provides basic banking facilities.It provides a place for you to store money and pay money from, but with no overdraft services or in-credit interest. There are saving and checking accounts as different options for your bank accounts. In addition you will be given a debit card which you can use to make payments online and in shops. The account also allows you to make direct debits. This is good as it can make bills cheaper as compared to paying by cash or by cheque.
Is the account free of charges?
Not really. Just because there are no overdraft charges it does not mean that there are no charges. Charges on this account will however be incurred only when you try to make a payment with your debit card or have direct debits going out when you do not have adequate funds in your account. You will incur a charge; an ‘unpaid transaction fee’ of up to £25 for each transaction.
The basic bank account is not publicised because it does not make any money for the bank offering it unlike the standard bank account. Unless you make a mistake, the bank has no chance of making money from you as a customer.
Instead, the bank will make a loss due to administration costs related to your account, for example; setting up the account for you, producing and then sending your debit card and bank statements. This is money the bank might never recover from you. Banks therefore do not tell clients about these accounts as they are not beneficial to them and would thus prefer not to have them.
Who are these accounts for?
Anyone can open a basic bank account at a trusted bank like BB&T. If you have a very poor credit history with some serious defaults, CCJs or even bankruptcy, it will be very difficult for you to open a standard bank account. In this case, the only bank account you can own is a basic bank account as you sort out your credit issues.
You may choose to open this account even with a good credit history if you want an account that will help you manage your money with no overdraft facilities. You will have to ask for this account specifically as the bank might try to push you towards a standard account.
The only people who cannot open this bank account are those who have been convicted for fraud. Other convicts can still apply provided they fulfil other account-opening requirements. All you need to open this account is a form of identification. Without this, your application might be rejected.