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Information about types of bank accounts and how to open them

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When you want to get a new bank account, there are a number of things you need to think about.

You'll need to find out about:

Types of bank account

There are different types of bank account that you can use for different reasons. Here we tell you about the main types of bank account, and what you can use them for.

Current accounts

You can use a current account to help you manage your money day-to-day. This includes:

paying your bills

receiving money - such as your salary or benefits

keeping track of where your money is going.

Some current accounts can also earn you interest on the money you have in the account, although this is likely to be less than many savings accounts.

With a current account, you will get a cheque book which you can use to take money out. You may also get a debit card which you can use in shops and cash machines. The bank may let you have an overdraft and access to other kinds of credit. You will be allowed to set up direct debits and standing orders.

Some banks will let you cash a current account personal cheque or use your cash card at the Post Office, free of charge. Ask your local post office if you can do this free from your current account.

Post Office card accounts

You can use a Post Office card account to collect benefits, tax credits and state pensions. You can't pay any other money in.

You can only get your money out of a Post Office card account with a plastic card and a Personal Identification Number (PIN) at the Post Office. You can't go overdrawn on a Post Office card account and you can't use your card in any cash machines.

Savings accounts

You can use savings accounts to put away money that you'd like to save for the future, for emergencies or to buy expensive purchases like a new car or a holiday.

A savings account will give you interest on your money.

For more information about savings accounts, including a table comparing different types of savings accounts, visit the Money Advice Service website at: www.moneyadviceservice.org.uk.

Basic bank accounts

If you have a poor credit rating or a low income, you may have problems in opening a standard current account or savings account. You may also have problems if you already have a current account which is overdrawn. If you're in this situation, you may be able to open a basic bank account.

You can ask a bank or building society to open a basic bank account. The bank or building society must tell you whether it offers basic bank accounts. If it does, it must tell you the conditions you must meet to be able to open one.

You should still be able to get a basic account even if a credit check shows that you have:

For more information about credit reference checks and outstanding court judgments, see How lenders decide whether to give you credit.

If you have a basic bank account you usually:

don't have to have any money to put in the account to open it

don't have to pay any fees

can pay your wages, salary, benefits and tax credits directly into the account

can pay in cheques and cash

can pay bills by direct debit

can withdraw money from cash machines.

There are some disadvantages to having a basic bank account. These include:

you won't be able to have a cheque book or go overdrawn

if you've set up a direct debit and there's not enough money to pay for it, you might be charged for this

Not all basic bank accounts can be accessed at the Post Office. If you want to do this, check with the bank before you open a basic bank account.

If you have an overdraft or other debts on your current account and you open a basic bank account at the same bank, they may use the money in your new account to pay off the debts in your old one. If you get benefits, tax credit or state pension, you might want to think about opening your basic bank account at a different bank or building society.

You can get more information about basic bank accounts, including a table comparing the different types of basic bank account, on the Money Advice Service website at: www.moneyadviceservice.org.uk.

You can get versions of this information in large print, Braille or audio format from the FCA's Consumer Helpline on: 0800 111 6768.

Joint accounts

You can also open a bank account jointly with other people. For example, you might want to do this to manage household bills with someone you live with, or with your wife, husband or civil partner.

How to open an account

To open a bank account you usually have to fill in an application form. Often, you can do this in a branch or online, and sometimes you can also do this over the phone.

You will also have to provide proof of your identity including your full name, date of birth and address. You usually have to show the bank two separate documents that prove who you are, for example, your passport, and where you live, for example, a recent bill. If you don't have any of the documents that the bank wants, they should accept a letter from a responsible person who knows you, such as a GP, teacher, social worker or probation officer.

If you're bankrupt or have a record of fraud, you will not usually be allowed to open a bank account. Also, you may be refused permission to open a current account if you have a poor credit rating. However, if you're bankrupt or have a poor credit rating, you may be able to open a basic bank account.

For more information about bankruptcy in England and Wales, see Bankruptcy. For more information about bankruptcy in Scotland, see Help with debt.

A bank or building society can refuse to open an account for you. They don't have to give you a reason, and there's usually nothing you can do about it. A bank or building society isn't allowed to open an account for someone who needs leave under the Immigration Rules to enter or stay in the UK but who doesn't have it, for example, someone who has entered the UK illegally or who has 'overstayed' after their visa has run out. If you are in this category you also can't be added to someone else's account as a joint account holder or be a signatory or beneficiary in relation to any account. Your bank or building society will carry out status checks to ensure that you don't come into this category. There is more information about what you should do if your bank or building society refuses to open an account for you for this reason on the GOV.UK website at www.gov.uk.

Some groups of people such as ex-prisoners may find it particularly difficult to open accounts.

However a bank or building society isn't allowed to discriminate against you, for example, because of your race, sex, disability, religion or sexuality. If you are discriminated against, you may be able to complain to the Financial Ombudsman Service. Also, you may be able to take a case to court.

However, there are some circumstances when a bank or building society can discriminate against you, for example, they may not let you open some types of account unless you fall into a certain age-group.

For more information about discrimination, see our discrimination pages.

If you think you've been discriminated against by a bank or building society, you should get help from an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by email, click on nearest CAB.

Terms and conditions

When you open an account with a bank or building society and use their services, you are entering into a contract with them.

The terms of the contract will change according to the bank or building society and the type of account or other service you use.

Before you open an account, you should be given information which will help you choose the account that suits you. The information should include the terms and conditions and the interest rates.

After you've opened an account, your bank or building society should keep you informed about changes to this information, so that you can make decisions on how to best use your account.

Terms and conditions for current, basic and instant access savings accounts

If you're opening a current, basic or instant access savings account, you should also be given additional information such as:

details of all charges

how the bank or building society will give you information about your account

any spending limits on your account

what to do if things go wrong.

The information should be given to you in a way which is easy for you to understand. Once you've opened your account, the bank or building society should tell you about any changes to terms and conditions at least two months before the changes are made.

If there are changes to the terms and conditions of your account, you can close the account at any time up to 60 days from the day you were told about the changes. You don't have to give notice or pay any extra charges.

Terms and conditions for savings accounts

If you're opening a savings account other than an instant savings account, you will be given less detailed information than for other types of account. It may be provided in a summary box which will help you compare different accounts from different banks and building societies.

You may have to be 18 or over to be able to open some accounts.

Changing your bank or building society

If you decide to change your bank or building society account, you should think about:

what charges will be involved, for example, for closing your account or cancelling standing orders

whether the services and facilities provided by the new bank or building society are better than those you currently get

the fact that there may be delays in making payments by standing order or direct debit. You should take this into account when you decide the date for closing your account

how long you will have to wait before you can use all the new bank or building society's services

You should open a new account before closing your old one and make sure you cancel any current standing orders or direct debits, or move these to your new account. Be sure to return any unused cheques or plastic cards (cut into pieces) to your old bank or building society.

If you are transferring a balance to your new account, make sure you have left enough money in the old account to cover any uncleared cheques.

If you owe the existing bank or building society any money and you wish to close the account, you may still be sued for the money you owe if you don't pay it when you close the account.

Both your old and new bank or building society have responsibilities towards you.

The level of service you should expect from your old bank or building society will depend on whether there is an arrangement in place between your old bank and the new one.

Where there is no arrangement, your bank or building society only has to provide a prompt and efficient service to help you close your account and it must return any money due to you. This includes any interest.

Where there is an arrangement in place, your bank or building society must transfer any account balance and make arrangements in respect of direct debits and standing orders. If there are mistakes or delays in the transfer process which lead to bank charges, you shouldn't have to pay for them.

Further help

For more information about banks and building societies and the services they offer, see Banks and building societies.

You may also find the following information helpful:

The Money Advice Service

The Money Advice Service is a free, independent service. Their website has lots of useful information about financial products such as bank accounts, including comparison tables for different savings accounts. Their Money Advice Line can answer general enquiries about financial products and services.

Their Money Advice Line is 0300 500 5000.

Their website is www.moneyadviceservice.org.uk.

Financial Conduct Authority

The Financial Conduct Authority (FCA) is the body responsible for regulating banks and building societies.

They aren't able to get involved in individual complaints, recommend firms or give legal or financial advice. However, the FCA is interested in hearing about cases where a bank or building society appears to be in breach of its obligations. The FCA may, where appropriate, fine the bank or building society.

Their Consumer Helpline is 0800 111 6768.

Their website is www.fca.org.uk

The Financial Ombudsman Service

If you've gone through your bank or building society's complaints procedure and they haven't been able to help you, you can make a complaint to the Financial Ombudsman Service.

You must give your bank or building society at least eight weeks to sort the problem out, unless they send you a letter of deadlock before the eight weeks is up. This is a letter telling you there is nothing more they can do to help you.

You must complain to the Ombudsman within six months of getting the letter of deadlock, or from the end of the eight week period if you don't get a letter of deadlock. Make sure you keep a record of the date when you first made your complaint to the bank.

Financial Ombudsman Service
Exchange Tower
London
E14 9SR

Consumer helpline: 0800 023 4567 (free for people phoning from a landline) or 0300 123 9123 (free for mobile-phone users who pay a monthly charge for calls to numbers starting 01 or 02) (Monday to Friday from 8.00am to 8.00pm; Saturday from 9.00am to 1.00pm)
Email: complaint.info@financial-ombudsman.org.uk
Website: www.financial-ombudsman.org.uk

For more information about the Financial Ombudsman Service, see How to use an Ombudsman.

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When you want to get a new bank account, there are a number of things you need to think about. You'll need to find out about: There are different types of bank account that you can use for different reasons. Here we tell you about the main types of bank account, and what you can use them for.

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A step by step guide to the Student Finance process

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Get undergraduate student finance: step by step

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Check if you're eligible for a student loan, find out how much you can get, how to apply and when you start repaying.

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Introduction to student finance for part time students

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Tips for making the most of your money

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It might be hard to think about setting aside any money as savings, but at the very least it's a good idea to try and have some emergency savings.

Emergency savings is money to fall back on if you have an emergency, such as a boiler breakdown or if you can't work for a while.

You want to be able to pay for an unexpected repair, but it's also important to have enough money for a few months in a sticky situation.

Say you lost your job or split up with your partner, and needed some time to get back on your feet - you'll want a bit more than the cost of a new boiler or washing machine.

Don't worry if you can't save this straight away but keep it as a target to aim for.

The best way to save money is to pay some money into a savings account every month.

Once you've set aside your emergency fund, possible savings goals to consider might include:

buying a car without taking out a loan

taking a holiday without having to worry about the bills when you get back

having some extra money to draw on while you're on maternity or paternity leave.

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It might be hard to think about setting aside any money as savings, but at the very least it's a good idea to try and have some emergency savings. Emergency savings is money to fall back on if you have an emergency, such as a boiler breakdown or if you can't work for a while.

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An Advanced Learner Loan can help with the costs of your course

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The Care to Learn Scheme can help with childcare costs while you study

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Information about Debt Management Plans and how they work

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If you're struggling to keep up with debt payments on things like credit cards, loans and store cards, a debt management plan (DMP) may be right for you.

This page explains what a DMP is, how it works and what you need to think about before getting one.

What are priority and non-priority debts?

Priority debts include:

mortgage or rent arrears

gas and electricity arrears

council tax or rates arrears

magistrates' court fines

arrears of maintenance payable to an ex-partner or children

income tax or VAT arrears

TV licence or TV licence arrears.

They're called priority debts because the consequences of not paying them can be more serious than for other debts. You can't include these debts in a DMP so you need to make sure you've got a way to deal with your priority debts before you set up a DMP.

Non-priority debts are less urgent and include things like bank loans, credit cards, student loans, water charges and benefits overpayments.

What is a DMP?

A DMP is an informal agreement between you and your creditors for paying back your non-priority debts. Non-priority debts are things like credit cards, loans and store cards.

You pay back the debt by one set monthly payment, which is divided between your creditors.

Most DMPs are managed by a DMP provider who deals with your creditors for you. This means you don't need to deal with your creditors yourself.

A DMP is not legally binding, meaning you're not tied in for a minimum period and can cancel it at any time.

Is a DMP right for you?

A DMP may be a good option if the following apply to you:

you can afford the monthly repayments on your priority debts (such as mortgage, rent and council tax) and your living costs, but are struggling to keep up with your credit cards and loans

you'd like someone to deal with your creditors for you

making one set monthly payment will help you to budget.

However, you need to be sure you understand the impact a DMP will have:

it may take longer to pay back your debt because you'll be paying less each month

your creditors won't necessarily freeze the interest and charges on your debts, so the amount you owe might go down by less than you think

your DMP provider might charge you a fee, although there are several free providers you can use so there's no need to pay if you don't want to

your creditors might refuse to co-operate or continue to contact you

the DMP may show on your credit record, making it harder for you to get credit in the future.

If you're unsure about whether this sounds like it's right for you, you might want to think about other options for dealing with your debts.

Joint debts and DMPs

If you have a debt in joint names with someone else, this can be included in your DMP. However, your creditors may still chase the other person for all of the debt. This is because whenever you take out a credit agreement, such as a loan or bank account, with another person, you're both liable for the full amount of the debt. This is known as joint and several liability.

If both you and your partner are struggling with debts, you might want to consider setting up a joint DMP where you'd both be equally responsible for the repayment plan. It doesn't matter if you have different levels of income or debts. You can also include debts that are only in one name in a joint DMP.

How to get a DMP

If you've decided a DMP is right for you, you'll need to follow these steps to set one up:

make sure you've sorted out your priority debts first

work out your budget to see if you have enough available income to make your monthly payment

choose a DMP provider, remembering that you can choose a free provider

check the agreement or contract carefully.

Next steps

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Debt management plans - what you need to know

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If you're struggling to keep up with debt payments on things like credit cards, loans and store cards, a debt management plan (DMP) may be right for you. This page explains what a DMP is, how it works and what you need to think about before getting one.

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How a DMP may affect your credit

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If you're in a debt management plan (DMP), it may have an impact on your credit rating. This could mean you find it more difficult to get credit in the future.

This page explains what you need to know about how a DMP could affect your credit rating.

What is your credit rating?

When you apply for a loan or other type of credit, the lender has to decide whether or not to lend to you. Creditors use different things to help them decide whether or not you are a good risk, including a credit rating they work out from your credit reference file.

Your credit reference file is held by the three credit reference agencies and contains information about you, including how you've managed existing bank accounts and credit commitments, whether you've ever had your home repossessed and people you're financially linked to. When you apply for credit, the credit provider will search your credit reference file to see how much of a risk it is to lend to you.

Will a DMP show up on your credit file?

Your DMP may show up on your credit reference file. Some creditors may ask for a note to be put on your file to say that you have a DMP. This would reduce your chances of getting credit if you applied for it while on your DMP, as it would show you've had trouble keeping up with repayments. However, if you kept up with your DMP repayments, the DMP would look better on your credit reference file than unpaid debts or debts that you were only making infrequent payments towards.

The note may also stay on your file for a time after the DMP has ended, so you may struggle to get credit for some time afterwards.

If you miss payments on a credit debt, this is also recorded on your credit reference file. Even if you're in a DMP, your creditors may still record that you've missed payments, as you'll be paying less than you agreed to when you took out the original credit agreement. This will mean you could find it harder to get credit while you're making reduced payments and for some time afterwards.

How can you check your credit file?

You can check what information the credit reference agencies are holding about you and change any incorrect information.

Next steps

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Credit rating - impact of debt management plan

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If you're in a debt management plan (DMP), it may have an impact on your credit rating. This could mean you find it more difficult to get credit in the future. This page explains what you need to know about how a DMP could affect your credit rating.

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A guide to the information that should be provided in your payslip

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Whether it's your first payslip or if you've been working for years, it's still important to know how your pay is worked out. Your payslip contains important information, including your payroll number, your gross and net pay, and normally your tax code too. In this guide we'll help you understand your payslip and explain how to make sure you're being paid the right amount.
Your right to a payslip

Got a question?

Our advisers will point you in the right direction.

Start a webchat online or call us on 0800 138 1677.

All employees and workers are entitled to an individual, detailed written payslip - at or before the time they are paid.

Your written payslip doesn't have to be on paper - it can be sent to you by email or accessed through a website.

The right to a payslip applies to casual staff as well as employees. It doesn't apply to independent contractors or people working freelance.

What information your payslip must contain

Remember to check your payslip regularly and check it shows the same tax code as your latest tax invoice.

Your payslip must show:

Gross pay. Your full pay before any tax or National Insurance has been taken off.

The total amount of take-home pay after deductions. This is called your net pay.

The amounts of any deductions that change from payday to payday, known as variable deductions. For example tax and National Insurance, and what the deductions are for.

The total amount of any fixed deductions. These are deductions that don't change from payday to payday, for example, union dues. An employer does not have to give details of what these deductions are for, as long as they give a separate statement with these details at least once a year.

The amount and method of any part payment. For example, separate figures of a cash payment and the balance credited to a bank account.

From April 2019, show hours on payslips where the pay varies by the amount of time worked.

Your employer might include additional information on your payslip which they are not required to provide, such as your:

tax code

National Insurance number

pay rate (annual or hourly)

additional payments, such as overtime, tips or bonuses (these must be included in your gross pay figure).

Understanding your payslip
1. Your personal information
Your name and sometimes your home address will be shown.
2. Your payroll number
Some companies use payroll numbers to identify individuals on the payroll.
3. Date
The date your pay should be credited to your bank account is usually shown.
4. Tax period
The number here represents the tax period for that payslip, for example, if you're paid monthly, 01 = April and 12 = March.
5. Your tax code
Your tax code will be sent to you by HM Revenue & Customs (HMRC).

The code tells your employer how much tax-free pay you should get before deducting tax from the rest. If the code is wrong, you could end up paying too much or too little tax, so you should check this against your latest tax code letter.
6. Your National Insurance (NI) number
You must have a NI number to work in the UK.

You have the same NI number throughout your whole life - even if you change your name.

It's your personal number for the whole of the social security system. It's used to make sure all your contributions are recorded properly and helps to build up your entitlement to state benefits - like a pension.
7. Payments, wages, bonuses, commission
This will show how much you have earned in wages before any deductions are made.

It might also show how your pay was calculated, for example, your hourly rate and the number of hours worked.

It could also show any extra payments you have earned on top of your basic pay like bonuses, commission or overtime.
8. Expenses
Your employer might pay any expenses owed to you via the payroll.

Some employers will list each expense payment separately on the payslip. Others combine them to show a taxable or non-taxable amount.
9. Deductions - tax and National Insurance
Your payslip must show the amount of variable deductions, such as tax and National Insurance.
10. Pensions
If you're paying towards a workplace pension that your company has set up or arranged access to, the amount you're contributing will be shown.

If your employer is contributing too, that amount might also be shown.
11. Student loan
If you're making repayments on a student loan, this will be shown on your payslip.

If you're an employee, you'll normally start making student loan repayments from the April following the date you graduate or leave your course. HMRC will tell your employer how to work out and deduct the right amount.

Once a year, HMRC tells the Student Loans Company what has been repaid. This means it's a good idea to keep your payslips and P60 as a record of the repayments in case of any problems.

Some employers put running totals of tax and deductions on your payslip. These are particularly useful for keeping track of your total student loan repayments.
12. Court orders and child maintenance
A court can order deductions directly from your pay, for example for unpaid fines or for debt repayments to be handed to your creditors.

Child Maintenance Service (CMS) can also ask for a Deduction from Earnings Order (DEOs) for the maintenance of a child.

If these orders are made for deductions, the employer can, if they choose to, take an additional £1 as an administration fee.

This fee can only be charged if a deduction or partial deduction has actually been made.

Employers often waive the fee but if they deduct it, it must be shown separately on the payslip with a description.
13. Sick pay
What is shown on your payslip will depend on how long you have been ill and your company's sick pay policy.

Your employer is liable to pay you Statutory Sick Pay (SSP) if you're off work sick for four days or more in a row, and you meet certain conditions.

SSP is treated like the wages or salary it replaces, so your employer will make deductions for tax, National Insurance and student loans, etc.

Under your contract, you might also be entitled to occupational sick pay.

This will usually be shown as a separate figure - any SSP is likely to be deducted from occupational sick pay.
14. Maternity, paternity and adoption pay
If you're a mother who isn't at work because you've just had a baby and you're getting Statutory Maternity Pay (SMP), this will be shown on your payslip.

You might also receive maternity pay, which will usually be shown separately.

If parents choose to share time off, and take Shared Parental Leave (ShPL), they might be paid Shared Parental Pay (ShPP).

If a child is adopted, Statutory Adoption Pay (SAP) will be paid to the new parent staying at home for a period after the adoption. If a couple jointly adopts, the other partner can be eligible for Additional Statutory Paternity Pay (ASPP).

Again, you must meet certain conditions to be able to qualify for these payments. They're all treated in the same way as ordinary earnings for tax and National Insurance.
15. Workplace benefits
If you get health insurance through your workplace or have a company car, these will be listed on your payslip and can affect your tax code.

Repayment of season-ticket loans, cycle-to-work scheme loans and also charitable donations (using the give-as-you-earn scheme) might also be shown.

If you have signed up for one of these, then it should show up on your payslip.
16. Other deductions
Any other deductions, like trade union subscriptions, for example, should be shown.
17. Summary of the year to date
Your payslip might show how much you have been paid so far in this financial year. A financial year runs from 6 April to 5 April.

It might also show totals for how much you have paid in tax, National Insurance, student loans and pensions.
18. Net pay - what's left
For many people, the most important figure on their payslip is net pay.

So, what is net pay? It's the amount you get once all the deductions have been made. You should check this against your bank statement to make sure it matches what is paid in.
19. Important messages
Some employers use a space on the payslip for important messages. These might give you extra information about your pay or other information they want to share.

Keeping your payslip

It's important to keep your payslips in a safe place - here are our top three reasons why:

1. Security. Payslips contain a lot of personal information about you and your earnings, including your National Insurance number. Keep them safe to help avoid them being used for identity fraud.

2. Record keeping. It's a good idea to keep a record of all your earnings and tax payments in case there's a problem and you need to check old details.

3. Evidence of earnings. For some financial products, such as loans, you might be asked to prove your earnings by showing your last three payslips.

Payslip Law changes from April 2019

From April 2019, if your pay varies depending on how long or when you work, your employer will have to include details of the hours you worked as well as how much you've earned on your payslip.

If you earn different amounts for different types of work, separate figures for both will have to be included on your payslip.

This change to legislation is aimed at employees who work variable hours and whose pay changes accordingly. This will make it clearer if you're being paid the minimum of the National Minimum Wage.

Zero hours contract workers will particularly benefit from this new legislation.

Payslip problems

If you don't understand anything on your payslip or think there might be a mistake, speak to someone in the payroll section of your company.

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Whether it's your first payslip or if you've been working for years, it's still important to know how your pay is worked out. Your payslip contains important information, including your payroll number, your gross and net pay, and normally your tax code too.