Access to 'basic' bank accounts to get easier

Posted in 'Declined Credit' by Richard Catlin

27 July 2010

The Government has called for people who have been declared bankrupt to be given easier access to bank accounts, as part of its wider investigation into consumer credit.

A study by the Citizens Advice Bureau (CAB) found that only 2 of the 17 banks who offer ‘basic’ accounts will accept people who have been made recently bankrupt. This presents a number of problems, not least when it comes to getting wages paid into accounts.

A staggering 35,682 people were declared bankrupt in the first 3 months of 2010 alone, the fifth consecutive quarterly increase, and up almost 18% from the same period in 2009. Figures are expected to continue to increase through the rest of the year.

Banks argue that they are restricted by law as to what they are able to offer, but as long as the account carries no credit facility such as an overdraft or cheque book, restrictions shouldn’t apply. A couple of the big banks, including Lloyds TSB, have said that they are now ‘reviewing’ their policies.

Until such time as Government legislation or increased appetite from lenders makes basic bank accounts more accessible, what are the alternatives?

The ThinkBanking account is designed specifically for people who may have been turned down for a basic current account elsewhere.

It allows you to have your wages paid straight in, lets you set up direct debits and because you get a ThinkBanking branded MasterCard, you can withdraw cash or pay for goods and services anywhere you see the MasterCard logo.

There are no credit checks involved and so you don’t have to worry if you’ve had credit problems in the past. Because there is no credit facility, there is no danger of going overdrawn or incurring fees for bounced payments.

The account costs £25 to open, and carries a £12.50 monthly fee, but this also gives you access to a personal money manager and text message balance updates. You can find more information about the account here.

It’s not just bankrupts who are turned down for credit of course. Most bank accounts are subject to money laundering and credit checks which, whilst not as strict as those for credit cards, loans or mortgages, could still see applicants with an even slightly impaired credit rating turned down. A mainstream current account offering to consider, if you are having trouble opening an account and if the ThinkBanking account isn’t for you, is the Santander Preferred in Credit Rate Account.

If you’re unsure what your own credit rating is, you can find out by checking your credit report online. checkmyfile is the only place you can a report based on data from all three credit reference agencies together, all in the same easy-to-understand format.

Check your credit report