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How to Set Up and close a Bank Account

1. Bills 2. How to pay your bills 3. How to set up a bank account
4. How to set up a savings account 5. Borrowing money 6. Credit score
7. How to budget and save 8. Education financial support 9. What to do if you're in trouble
10. Financial abuse  

3. How Do I Open and Close a Bank Account?

Before opening any account, it is worth looking around, and finding out what each bank does; you can do this by looking on the internet using a comparison website.  Each bank account will offer something slightly different like interest rates, different amounts you have to pay in monthly, etc.  Most banks on your high street will have people you can give you more information and advice. You can go into each bank and do this, or pick up a leaflets for you to go through in your own time.

Before signing up to a bank account, make sure you understand everything about it, including any fees and charges.  

These are the types of accounts you can apply for: 

Basic Account

This is what most people have as their first bank account, or if they do not qualify for a standard current account.  It can be used for your day-to-day life and you normally receive a debit card with this account.  However, unlike a current account, a basic account does not offer an overdraft.

A basic account offers:

  • You to have your wages, benefits and any other paid income go into the account;
  • The ability to take money out over a counter or from a cash machine;
  • The ability to set up direct debits or standing orders for regular bills;
  • A debit card so you can pay for things in shops and online;
  • You to check your balances over a counter, cash machine, online banking or on your mobile through banking apps.

To open a basic account you:

  • Need to be 16 years of age (some banks may want you to be 18);
  • Need to undergo a credit score check (you do not get an overdraft with this account);
  • Need to have proof of identity (passport, driving licence);
  • Need to have proof of address (bank statement, official letter, council tax bill);
  • Can set up a "joint account".  This is an account you can have with a partner or someone else you know.  This is useful if you share bills like rent.

The money you have in your account is the money you are able to spend as there is no overdraft.  If you do not have the money in the account to pay for a direct debit or standing order, it will not be paid but you may get charged.


Current Account

This is the most popular type of account that people use for day to day income and payments.  It is an account that most people will use to:

  • Pay their bills (direct debit or standing order).  Be aware: If you do not have enough money in the account, these direct debits or standing orders will be refused and you could be charged as much as £25;
  • Have wages or benefits go into the account;
  • Use to withdraw money at a cashpoint or over a counter;
  • Pay for things with a debit card either online, over the phone or instore;
  • Transfer money by telephone or online banking;
  • Check your balance in your account over the phone, counter, cash machine or online banking.

Some current accounts will allow you to have an overdraft.  This will be set up and authorised by the bank, with a set amount that you can borrow monthly (allowing you to spend more than you have in your account).  If you go over the overdraft agreement or do not pay it back in time, you may get charged.  You will need to check the fees and charges if you have an overdraft. 

To have a Current Account you must:

  • Be over 16 years of age (some banks may not allow until 18 years of age);
  • Have minimum monthly payments going into the account - some banks may want you to have money going into your account every month.  This is usually wages or benefits, etc.;
  • Have good credit history - due to you being able to have an overdraft, you need to pass a credit check when opening the account.  If you get declined for bad credit score, it could be because you have no credit.

When setting up the account you need:

  • To be 16 years of age or older, although some banks may want you to be 18;
  • Proof of identity - (driving licence, passport);
  • Proof of address - (bank statement, official letter, council tax bill).


Student Accounts

If you are choosing to go into higher education at university then you will be able to take out a student bank account.  A student account works a little like a current account but the main difference is the overdraft.  Some bank accounts offer up to £3,000 overdraft interest free.  This means that while you are a student and go into your overdraft, you do not need to pay the interest or pay it off until after you graduate.

Once you have graduated the account automatically turns into a graduate account and any money you have borrowed from your overdraft you need to pay back.  Bank accounts have their own limit on paying it back.  If you feel you are going to go over your overdraft limit, you must speak to your bank immediately.

If you go over your overdraft limit you might be charged.  When setting up the account you will need to discuss how much your overdraft is and if you are able to 'up the amount' throughout your studies.

With a student account you are able:

  • To have a debit bank card and use it at a cash machine, shops and online;
  • To access an overdraft at 0% interest;
  • To manage your money via online banking, in branch and over the phone;
  • To pay back your overdraft over up to 2 years


Credit Cards

Credit Cards are like a loan/borrowing money from the bank, but instead of getting the money into your account it is held on a credit card.  You MUST pay off the balance each month, otherwise you could get charged interest.

Most credit cards have 50 days to pay the bill interest free.  You will get a bill, either by post or online banking, telling you how much you need to pay and by when.  

When setting up a credit card the bank will need to do a credit score check.  This is what tells the bank if you have ever borrowed money before and been able to pay it back.

There are many banks offering credit cards, but if you are unsure if you will be accepted, you can do a credit card eligibility checker:


How to close a bank account

You can close most bank accounts whenever you want.  There are not normally any extra charges to close an account, however if you are overdrawn, you will have to pay this off first.  Once you have done this, it is a case of getting in touch with your bank account to close these down.  Some accounts you can do online.

If you have direct debits going in and out of the account you want closing, make sure you re-direct these to a new account or cancel them.


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How to pay your bills
How to set up a savings account
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