When it comes to opening a bank account there are a few things that you should know. While many people will have their own bank accounts opened for them when they were children, as we grow older we may consider switching banks or taking out a credit card depending on our needs. Here, we’re taking a look back at the basics of what you should know about your bank account, to help you make the right decision.
Types Of Bank Accounts
There are a number of different types of bank account that you can choose from when you first set one up. With new rules put in place in order to make the process of opening or transferring a bank account even easier, there are more options than ever. Some of the bank accounts that you can choose from include:
- Current Accounts
- Basic bank accounts
- Credit union current accounts
- Joint accounts
- Packaged accounts
Current accounts are generally the most popular type of account to choose from and are a great option for those who are looking to manage their day to day spending. However, there are a number of different features and add-ons that you can choose from when it comes to opening a current account depending on the bank, and so it is important to look around to find the account that works best for you. Basic bank accounts however are a fee-free version, which do not offer as many benefits. They do not have any overdraft facilities and can become an easier, more hassle-free way of managing money, without any additional features.
Credit union current accounts on the other hand, provide an option for those who are struggling to open a bank account with a bank. They are also an option for those who are not interested in opening a bank account per say and would rather a not-for-profit organisation take control of their money. Joint accounts are those designed to share with someone such as your partner or even a housemate. Packaged accounts however, when opened offer a monthly fee and have benefits like travel insurance all included within the account – but these aren’t always good value for money.
Types Of Bank Cards
There are a few different types of bank cards that you may come across depending on the type of account that you set up. For example, a debit card will be the first-choice of those who are looking to stay away from borrowing credit. A credit card on the other hand, lets you buy things on credit, and you can spend up to a certain amount (known as a credit limit) which is set beforehand. There are a number of credit cards that offer a 0% introductory period, which means you are not being charged interest on top of what you already owe. Pre-paid cards are another type of bank card that you can get, that works like a pay as you go phone, but these can charge a fee.
Spending More Than What’s In Your Account
When you spend more than what is in your account, you can end up going into what is known as an overdraft. Having been compared to payday loans in recent years due to the interest that can be added onto an unarranged overdraft, they can be deemed as a problem. However there is a difference between falling into an unarranged overdraft and an arranged overdraft, and these are important to know about when you open your account.
Generic advice is not a service regulated by the Financial Conduct Authority.