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How do I open a bank account?

There are a few different types of bank accounts and lots of different types of accounts within each type. Sound complicated? Well, it can be, but thankfully the really important stuff isn’t – we’re going to look at two different types of account here – a ‘current account’ and a ‘savings account’.

When you open any kind of account with a bank or building society, you’ll need to take along some ID – usually a passport or driving licence as well as a bill or official letter with your name and address on it. The bank or building society will tell you what you need to bring.

What is a current account?
A current account is an account that allows you to manage your finances on a day to day basis and to have instant access to your money. The services that a bank supplies as part of its current account service will depend on the bank and on how old you are. The sort of things you’ll receive, age dependent, include a cash machine card, a debit card (e.g. Maestro) and a cheque book. You can sometimes have an overdraft facility that allows you to take out more than you have in your back account – but it obviously always has to be paid back and you’d pay interest rates to use it. Most banks charge customers a fee if they go into their overdraft without arranging it first. These fees can be expensive, so it’s important to keep track of your spending.

If you start paid employment or are receiving funding for being a student, your money you’re owed will be paid into your current account.

You can also set up direct debits and standing orders on your current account. With direct debits you give permission for your bank to pay out different amounts of money to someone else or to an organisation. This is often used to pay household bills or car insurance. A standing order is where you tell you bank to pay a fixed amount of money to someone or an organisation every month – e.g. this is often used to pay rent.

If you are lucky enough to receive a cheque from someone, you can pay it into your current account.

Banks often have current accounts especially designed for young people. Some even offer gifts to persuade you to join them – it’s worth checking out what’s on offer but remember it’s better to think long term than to be seduced by a short term free bus card or some cds!

What is a savings account?
A savings account is there for you to pay into to save up your money. These tend to offer better interest rates than current accounts. There are lots of different types of savings accounts and some savings accounts offer better interest than others and different benefits so it’s worth shopping around. If you open a current account and a savings account, you can set your accounts so that a set amount of money is automatically transferred to your savings account every so often. If you have spare cash that you know you won’t need to use, it’s usually better off in a savings account than a current account.

Whatever your needs, go and visit a few banks and building societies before you open an account. Ask them for advice and get some leaflets from them and have a think about what’s on offer in your own time. Ask the banks what accounts they offer and what the benefits of each are. Bank websites can offer lots of information, but if you visit a back, you will get to see someone who will try to answer any questions you have.

In addition to the traditional high street banks, you now have the choice of telephone and internet banks. The choice is broad, don’t ever feel afraid to ask questions – especially if you’re not sure about what something means.

Before signing up to a bank, you may wish to ask them what their ethical policies are – what they do to make sure they are an ethical bank.

If you’ve decided on the account or accounts that are right for you and you’re going to head to the local branch to sign up, remember to take two forms of ID with you – one with a picture and one with your address. Don’t worry about form filling, staff should be happy to help. You’ll be asked to provide your signature so they can keep a copy of it on their files.

Scroll down to the bottom of the BBC’s ‘Your Money’ main page – address below – and you’ll see loads of dropdown menus full of links to info sheets on how to look after your money, how to invest and a wide range of money matters.

Links & contact details

Name: BBC’s ‘Your Money’ microsite
Web: www.bbc.co.uk/money
Email:
Tel:
Info: Scroll down to the bottom of the BBC’s ‘Your Money’ main page and you’ll see loads of dropdown menus full of links to info sheets on how to look after your money, how to invest and a wide range of money matters.

Name: Citizen Advice Bureau (CAB)
Web: www.citizensadvice.org.uk
Email: Find local CAB contact details on website
Tel: Find local CAB contact details on website
Info: Citizens Advice Bureaux provide free, confidential and independent advice from over 3,000 locations around the UK. Advice available on a wide range of issues, including: housing, debt, benefits, legal, discrimination, employment, immigration, consumer and other problems.

Name: TheSite
Web: www.thesite.org/homelawandmoney
Email:
Tel:
Info: Really useful website for young people – loads of info on saving, investing and money matters.

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