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Banks and building societies offer many different deals for first time account holders so it’s wise to shop around and choose an account that suits your lifestyle. When opening an account you will need to provide some forms of identification. If you are under 16 you may need your parent or carer to open the account on your behalf.
Most employers pay staff their wages or salary directly into your bank account using a system called Bankers Automated Clearing System (BACS). This means that your money goes directly into your bank account, so it is important that you have one set-up. You may receive payments from other people that will go directly into your bank account such as:
When opening an account it is important to find out the following:
- How much interest is being paid? - This can vary considerably from account to account
- Can I withdraw my money easily? - Some accounts ask for a period of notice before you can withdraw your money, in some cases this is up to 90 days. Accounts where you do not have to wait are known as instant-access.
- Do I have to put in a minimum amount? – To open some accounts there is a minimum amount of money that you must have and some accounts require that you deposit a certain amount each month or year.
There are many different types of bank or building society accounts including online and phone accounts. These include:
- saving accounts - pays interest on what you put in and it's a good place to put your cash if you are saving up for something. A saving account often offers a higher level of interest then a current account. Some saving accounts however are not instant-access
- current accounts - lets you put money in and take it out easily, but does not pay much interest, you may get a cheque book and cash point card at age 16 or 18
- Individual Saving Accounts (ISAs) – ideal for long term saving as these are tax-free, however there is a limit on how much you can put into these accounts each year
- student accounts – these are accounts specifically for students who are studying at university
You can usually only withdraw money that is available in your account. Some accounts however will come with an overdraft facility. Overdrafts occur when you withdraw more money from your account than you actually have! Some accounts will allow you to get overdrawn so that the account provider can charge you interest on the money which you borrow. An overdraft limit can be agreed with the account provider, so interest is charged at an agreed rate. If you exceed the agreed amount then you may get charged an additional fee or be subject to a higher interest rate.
If you need help opening an account you can talk to one of our Personal Advisers in your local Connexions Centre who will be happy to help.
MoneyMadeClear
The MoneyMadeClear site has lots of information on what a bank account is, how to open one and why you need one.
BBA
The British Bankers Association has information on how to open an account and what to do if you are refused a bank account.
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