Choosing a Bank Account When In Debt
If you’re in debt, it’s important to remember that creditors can dip into your bank account in some circumstances. For example; if you hold a loan account with your bank and you fall behind on the repayments, the bank could take the cash from your current account. This is called the right of offset; it can unfortunately strike anyone in debt at any time, and the after-effects can be catastrophic.
In order to protect yourself against this practice, it’s wise to prepare well in advance.
The first thing you should do is open a second bank account. If your credit report is scattered with late payments and defaults, this might not be easy to arrange, but most banks will give you a basic bank account if you ask.
Basic accounts normally only come with a cash card and will not provide any credit facilities, but they will allow you to receive payments, such as your wage, and will also let you pay your bills. Most people can get one, sometimes even undischarged bankrupts.
When you set up your basic bank account, bear in mind that some banks are related to others by virtue of ownership and can sometimes apply the right of offset between themselves. You must open a basic account with a completely different, unrelated bank to your main bank. When in debt, there really is no point in being loyal to one particular chain.
About Basic Bank Accounts
A basic bank account is a very limited account, which doesn’t provide the holder with any credit facilities. That means no cheque book, no cheque guarantee card, no overdraft and no frills, just an account with basic facilities.
Basic bank accounts normally provide the account holder with a cash card and possibly basic debit card facilities, although this is fairly unusual. Any debit card facility is unlikely to be as widely accepted as a normal debit card. Beware: holders of basic bank accounts are still charged for exceeding their overdraft limit, so payment cards should be used with caution.
You shouldn’t be credit checked when opening a basic bank account. If you’re asked to agree to a credit check, make sure the member of staff knows that you are looking for a basic account, not a current account.
If you feel your debts are out of control, and your bank is taking more and more money from your account, don’t hesitate to seek help from a professional. From IVAs to debt management plans, there are lots of ways to take control of your debts and improve your financial situation.
Contact Varden Nuttall via their website at www.Vardennuttall.co.uk