Bad Credit Bank Accounts Information Library

BAD CREDIT BANK ACCOUNTS

Bad Credit Bank Accounts Information Library

Below you can see useful information and FAQs on bad credit bank accounts. Just scroll down the page to get to your relevant topic, or click on the keywords.

What is a Bad Credit Bank Account?

A bad credit bank account is a straightforward online money account, which allows you to manage your everyday money.

How does it Work?

You simply open an account via a quick online form or by calling the provider directly. They will ask you for the necessary paperwork/proof to make sure you are who you say you are! Your account is quickly set up – use it to:

• Receive your salary / wages
• Set up Direct Debits
• Set up Standing Orders
• Make payments
• Make transfers
• Overview of your finances
• Check your balance

Who can Apply?

Bad credit bank accounts are open to everyone, irrespective of their credit history. So, if you have had problems accessing a traditional bank account due to:

• Poor credit
• CCJS
• Defaults
• Self-employed
• Irregular income
• Newcomer to UK

...you will still be able to open this type of account. Best of all, the account comes with all kinds of attractive extra features.

What are the Extra Features?

OK, so this account is open to almost anyone, but what else is beneficial? One of the most appealing features to this type of money account is that it generally comes with a prepaid credit card as standard.

This helps you to make payments on the go – prepaid credit cards are also free of credit checks and do not allow you to borrow, so they are low risk. Because they are issued by Visa or Mastercard, you can use them in almost any corner of the world.

Another great feature of a bad credit account is that it usually comes with its own account manager. In other words, a person based in the UK who you can contact directly – no more anonymous call centre representatives!

There may be other features depending on the provider, so take your time to compare offers.

What about Penalty Fees?

With this type of account, there are none! Where a traditional bank is usually notorious for charging unfair fees for things like a bounced cheque, your bad credit account will not charge such fees. In fact, in most cases you will be given notice of a bounced payment but will not have to pay for it!

Are there any Other Fees?

Generally you will have to pay a set-up fee to open a bad credit account. This varies but can be up to £25, but is a one-off so you only have to pay it once. Other fees might include a monthly admin fee, usually no more than £15 a month. Always check and compare the fee structure of a bad credit account before you open it up!

Will I Get an Overdraft?

Unfortunately not. Most bad credit account providers cannot provide an overdraft facility – this is one of the reasons why their service is open to people of all financial backgrounds, as an overdraft is a borrowing facility. This does mean that your debt risk is greatly lowered!

Is there Interest on Credit?

No. You cannot earn interest on the money in your account.

Is it Safe?

Yes – bad credit account providers should be fully regulated in order to offer their services. Nevertheless, it is worth checking their credentials and track record thoroughly before you open an account. In most cases, it is unlikely that they can control the threat of ID fraud, which is a threat on all internet services. Make sure you find out what the risks are and ask for a provider's security measures if you are unsure.

What are the Benefits and Disadvantages?

There are plenty of benefits to a bad credit bank account. You can open account if:

• You have a bad credit history
• You have problems being accepted elsewhere
• You are self-employed
• You want a simple way to manage your money
• You want low debt risk
• You want a personal account manager

Plenty of advantages to choose from. But are there any disadvantages? Well, it depends – if you want a method of borrowing / overdraft, this is not a suitable account. If you wish to earn interest on your money, you will be unable to. And there are fees to contend with – yet there are no penalty fees. It is up the individual to decide whether the admin fees on this account outweigh penalty fees on a regular bank account.