If you’re looking for a bank account but have had credit problems in the past, you will probably already be aware of the difficulties of getting something as simple as a bank account. Let me assure you, you’re not alone.
With the recent economic conditions, an increasing number of people have found themselves in difficulty when trying to pay bills. Through no fault of their own, they may have defaulted on mortgage payments or credit card bills. Even though this may have been because of being made redundant or illness, the credit reference agency will not consider the circumstances and just see the missed payments. Right now, many are recommending a guaranteed bank account as a viable alternative to a current or basic bank account. But is it really as good – and what will it cost you?
Reducing stress with a guaranteed bank account
The surge in guaranteed bank accounts can be explained by banks’ extreme prudence in terms of taking on new customers. As part of the cautionary measures introduced after the debt level hit dangerous levels, thorough financial tests are conducted on everyone requesting a current account. And so, for a bankrupt, even thinking about getting a bankruptcy bank account can be a major source of stress. After everything they have been through financially, the last thing they want to go through again is scrutiny by a bank when trying to set up a bank account. For them, a guaranteed bank account is excellent news. With this type of bank account, after all, there are no credit checks, no uncomfortable meetings with bank managers and no fear of being rejected. As it says in the title, you are guaranteed to be accepted.
Almost as good as a basic bank account
But is a guaranteed account really as good as a current account or a basic bank account? The answer depends on your personal preferences to a certain degree. Both a basic account and a guaranteed account will naturally deny their customers the kind of generous overdraft facilities of a current account. Other than that, however, the differences between them are all but negligible: A guaranteed bank account will give you access to banking facilities such as a prepaid Mastercard, online banking and the facility to withdraw money. Some even offer you the chance to set up direct debits and standing orders. Other benefits can include payment protection, banking assistance from experienced personnel and can even help you rebuild your credit score. And in comparison with a basic bank account, some guaranteed bank accounts offer easy and extensive online banking options which may actually make them seem more attractive than a basic bank account.
But what about the fees of a guaranteed bank account?
I know what you’re thinking: All of this sounds too good to be true. And admittedly, the downside to a guaranteed bank account is that there are fees involved. This is a necessary disadvantage, as there is no credit involved so the bank can only make money from the bank account holder by charging fees. They typically range from a monthly fee of around ten to twelve pounds fifty, a fee for using the ATM machines and the occasional top up fee. Some banks may also charge a transaction fee, although the ones that do this are unlikely to charge a hefty monthly fee as well. This may make a guaranteed bank account seem like an expensive alternative – and yet, the indirect costs of a standard bank current account or a basic account add up over time as well. So it’s important to do some research before deciding on which bank account is for you.
The most important message, however, is that guaranteed bank accounts have brought a fresh perspective to banking – and those in financial difficulties are likely to profit most from it.
Image from Stock.XCHNG.