How to Open a Bank Account if you have been Refused or Declined because of your past
Poor Credit Rating.
A Bank Account has become an essential part of our every days lives however if you have suffered any form of credit problems, you may well struggle to open one, making life very difficult.
Here is a FREE guide on how to Open a Basic Bank Account and what alternatives there are if you need a bank account with all the added features like a Debit Card, making regular payments and Internet Banking.
This Guide is brought to you with the Compliments of Bank Accounts Compared
For other guides on Business Bank Accounts, Personal Bank Accounts with a good credit rating and Offshore Bank Accounts please Click here
What can you do and how to Open a Bank Account if you have been Refused or Declined because of your Poor Credit Rating.
Having a fully functional bank account in the modern world has become far more a necessity rather than a luxury especially as some employers won’t consider any other way of paying their staff other than by electronically, meaning if you have had a credit problem and can’t open a bank account, then you simply can’t get paid.
This can be especially difficult if you are trying to keep your personal finance problems confidential from your employers or work mates as word will soon spread if you get paid differently from anyone else.
Plus purchasing good and services by using a card has become essential, so for those without that facility it is very difficult to go through your normal day using only cash as your only means of payment.
So how can I open a bank account if I have been or am continually refused when
I apply to a high street bank?
The main concern when you apply for a bank account from any of the high street banks is that they will perform a credit check on you, meaning they will look into your past credit activity which may not be a problem if you have a good credit history, but it will almost certainly cause you problems if you have had any bad or poor credit activity.
The main reason for this is that they don’t want to be dealing or offering any credit facilities with anyone who has a track record of missing payments or failing to repay monies they owe, so as your credit rating shows every piece of credit you have as well as the payment history (including any you may have missed) the fact is they can clearly see and choose who they wish to allow an account to and whom they don’t.
BANK ACCOUNT FACT – For the majority of high street bank accounts the actual bank offering the account does NOT make any money from it – in fact it costs them money to let you have your account.
Over recent years and since the financial worldwide troubles, many of the high street banks have become very choosey as to who they want as a client base and most certainly who they don’t, so those with a poor or adverse credit ratings will also be rejected as the individuals concerned will not be considered as a people they would wish to business with either, meaning that the ‘earning’ potential from clients with a poor credit rating will be drastically reduced so not as profitable.
All banks however will be happy to deal with those with a good or ‘clean’ credit history simply because the potential for earning more money by introducing other products is much greater.
BANK ACCOUNT FACT – Do you know that in the majority of other countries everyone HAS TO PAY
for the use of their regular current account and it is only in England where you may
get a free-to-use bank account?
So the big question is, if you have a bad credit rating and have been declined for a high street bank, how on earth can you open a bank account in order to get paid?
Well believe it or not EVERY high street bank offers basic bank accounts, so if you really want a high street bank account you WILL be entitled to it – HOWEVER – before you get too excited and carried away, as with most things in life, there are reasons and conditions why you may not have known about these before.
Firstly, all the major high street banks have to, by law, offer a basic bank account whether they wish to or not. It is not just a case of them not offering them, they have to offer them BUT the main thing is, they simply don’t advertise this fact and in truth they probably would not want to encourage anyone opening one of these basic bank accounts.
So if you have had credit problems and can open a high street basic bank account, why wouldn’t you simply open one of those and use that?
Well the answer is in the main description of this bank account – BASIC. When one of the high street banks offers a bank account and describes it as ‘basic’ you can be sure it will be very basic. In fact many of these accounts are so ‘basic’ they will simply only allow you to pay money it at the branch and withdraw cash in exactly the same way.
Whilst this may be of some use, the truth is that unless you can have the use of a debit card and have the ability of making regular payments from that account, then it could be regarded as hardly worth having, as without these basic functions the bank account is almost useless.
BANK ACCOUNT FACT – Did you know that every time you withdraw money out of an ATM it will COST your bank money as they have to pay a processing fee?
So having a basic high street bank account will give you access to a bank account but not the other features and services used on a daily basis by those with a ‘normal’ bank account. Without the use of a ‘debit’ card it restricts your ability to gain access to your funds, so paying for online purchases, in retail stores or over the phone would be impossible. If you could only withdraw cash from your branch access to your money would be severely restricted.
Whilst not proven, it is hardly surprising that the opening of these basic bank accounts are neither advertised or made readily available by the high street banks plus even if they were advertised, who would want a bank account that was so basic it rendered it almost unusable?
BANK ACCOUNT FACT – Are you aware that EVERY high street bank will offer a basic bank account but will not necessarily advertise the fact?
So what are the options for those who only qualify for a basic bank account?
Well there are several things you can do in order to help you and the first thing you should consider is how can you improve your credit rating in order to qualify for a ‘proper’ bank account.
The first thing you can do is to contact a credit reference agency to see where your credit problems are and what you can do to try and improve it. If you think that your credit rating should be better it may be that there is something simple you can do to correct your problems.
If on the other hand your credit problems are more severe or you have had serious problems, then you may want to find a credit-repairing organisation that will offer the service of helping you improve your credit rating.
The main issue with this will be that it will cost you some money plus it will be time consuming, so if you require a bank account quickly, it will not necessarily help you as it could take several weeks or longer, for your credit repair service to work.
For those who are or who have been bankrupt or gone through bankruptcy it may be harder to repair but as always, worth speaking to a specialist credit repair company as they may well have some good advice as to ho you can improve you credit rating.
BANK ACCOUNT FACT – Were you aware that if you pay by Direct Debit and the payment
gets returned because you do not have enough money in your account, your bank will be
charged a fee for having to ‘claw’ back the funds it paid on your behalf?
(That is why they will sometimes impose a charge on you)
So if you need a bank account and have been refused for a regular type high street bank what are your options and can you afford to wait until your credit rating improves?
Put simply there are very few options if you need more than a basic bank account however there is a new breed of Managed Bank Accounts which have become available that works well for those with a poor, adverse or severely bad credit rating.
BANK ACCOUNT FACT – Did you know by signing a DIRECT DEBIT you ALLOW the company to
TAKE MONEY directly from your account and out of your control, where as a STANDING ORDER
gives YOU CONTROL over what gets paid and whilst it is normally a fixed amount,
you can make the payments variable.
Managed Bank Accounts have, over the past couple of years, become very popular for those who have been refused or declined for a high street bank account as they offer some excellent banking facilities for those who need more than the basic facilities offered by regular basic accounts from the high street banks.
So what is a Managed Bank Account and what are the main features?
Well the first thing to understand is that these managed bank accounts will come with a cost, some charge a set-up fee whilst others don’t but they will ALL come with A MONTHLY FEE which will allow you to enjoy all the facilities normally only reserved for regular high street bank account holders.
It’s important for you to understand and accept there is a charge each month however the costs of these accounts can vary, just like the service they each offer, so it will be important to look at all on offer and decide which bank account would work best for you.
BANK ACCOUNT FACT – Managed bank accounts allows you to put aside your money for your regular monthly bills and only spend the money you can actually afford ensuring you never get charged for going overdrawn.
A managed bank account is a new concept where your monthly (or weekly) salary is paid in, your monthly outgoings for things like rent or utilities will automatically be put to one side ready to be paid, with the remaining balance transferred over to your payment card, which works just like a debit card in that you can only spend what you have. It is this feature that will help you manage your money and ensure you meet all your monthly commitments whilst giving you full access to any remaining balance.
It is one of the main features of these accounts that EVERY ONE regardless of the provider will come with a type of Debit Card (Normally a MasterCard®), which is an essential feature needed for everyday use. The vast majority of the accounts offer a Pre-paid MasterCard® which like a debit card allows you to use this anywhere in the world that shows the MasterCard® sign.
It is that feature alone which gives you almost instant access to your money and unlike a regular high street bank, there is no chance you can go overdrawn, as there are strictly no credit facilities.
Whilst this may make things difficult as you will not be permitted to go overdrawn even a small amount, the real benefit of this is that you are GUARANTEED NO LATE PAYMENT FEES, so unlike many of the high street bank accounts, you will not get any unwanted penalties or late payment charges for going even slightly overdrawn.
So whilst there is a modest monthly charge, most around £12.50 a month, they work out considerably cheaper than the charges you are likely to be liable for if any credit were on offer and you missed a payment.
BANK ACCOUNT FACT – With a Managed Bank Account your past credit rating will never be considered when opening a bank account, so even those with a severe credit problem (even Bankrupts) can open an account assuming they can be properly identified.
What are the main differences between the various managed bank accounts on offer? Well there are very few in reality but the most important factor needs to be can you pay in over the counter or online and will a debit card be included, these are the two really important things you MUST have with any bank account.
The reason for that is you want an easy and convenient way to have money paid in, then you need the ultimate in convenience with a payment card that gives you instant access anywhere in the world.
Assuming your managed bank account offers these, the next question to ask is can you have Internet access, make payments, use telephone banking and get your current balance by text?
Again with most of these new types of managed bank accounts all of these features will be included for their monthly fee however we always suggest you check first to make sure you don’t get any additional charges you were not expecting.
BANK ACCOUNT FACT – Some ATMs will charge you for withdrawing money so don’t forget you can normally get ‘Cash Back’ from most supermarket stores for free, so use that option instead of
paying to take out your own money.
CONCLUSION.
We know how difficult it is living in the modern world without a bank account and that paying with cash for everything is not really an option, so having a bank account, no matter how basic, is essential, so you have two choices if you have had credit problems in the past and been declined for a ‘normal’ high street account.
Choice 1 – Open a Basic Bank Account with one of the high street banks for free but be very restricted in how you use it and the features it offers or Choice 2 – Open a Managed Bank Account and have all the features needed for the modern world but at a modest monthly charge or Choice 3 - Pay a Bank Account Intermediary to open a high street bank account for you.
OUR ADVICE.
DO NOT PAY FOR A BANK ACCOUNT UNLESS YOU NEED TO - however, if your Credit History is such that you cannot open a regular high street bank account, then your options may be limited and an opening fee, a monthly management fee or an bank account intermediary fee may have to be paid.
If you DO NOT need a fully functional bank account, apply for a basic bank account at one of the high street banks (see below) and see how you get on. They are generally free to open so you have got nothing to lose. YOU MUST however ensure when applying you ask for their BASIC bank account and explain why, that way there will be more chance you’ll be accepted. In some cases, if you have one of these accounts for a certain amount of time they may consider upgrading you to their full banking facility.
High Street Bank Name |
Features |
Link to website |
| Nat West | Basic Account | Nat West Basic Account |
| Halifax | Basic Account | Halifax Basic Account |
| Santander | Basic Account | Santander Basic Account |
| RBS | Basic Account | RBS Basic Account |
| HSBC | Basic Account | HSBC Basic Account |
If you need a debit card, Internet banking and all the other features of a ‘normal’ type bank account or have tried the basic bank accounts and need greater flexibility with you account, we would suggest you open a managed bank account and accept that for all the functionality you receive there will be a cost, a cost which in many cases is well worth paying as it gives you much more financial freedom whilst managing your money at the same time.
Managed Bank Accounts |
Basic Costs Set-up & Monthly fee |
Apply Here to website |
CardOne Bank Accounts |
Free & £12.50 |
|
Think Banking |
£25.00 & £14.50 |
|
Secure Trust Bank |
£12.50 & £12.50 |
So we would always suggest trying to open a bank account without the need of paying however if you over apply your credit rating may be effected, so think very carefully about what account to choose if re-applying
The Information published here is done so for no charge and we accept no responsibility for the information or web links listed here and suggest you seek professional advice before making any final financial commitment.
All information was correct at the time of publishing but are subject to change without notice.
Apply Here to Open a Bank Account if you have a bad credit rating.
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