What Does a Basic Bank Account Offer?
Bad Credit Bank Account - CCJ's, Late Payments and Loan Default
Apr 1, 2009
Bad credit basic bank accounts allow a consumer to receive and send money. They are available to those with loan defaults, County Court Judgements (CCJ's) or missed or late payments. They are suitable bank accounts for undischarged bankrupts. Their introduction was intended to prevent financial and social exclusion for those on low income or an adverse payment history.
What does a Basic Bank Account Offer?
- Receive money. A basic bank account allows a customer to pay-in cash, as well as receiving wages and state benefits directly. Employees' don't need to wait for cheque clearance.
- Pay in cheques. Customers are able to pay cheques into a bad credit bank account, although there is normally a requirement to wait 3-5 days for the cheque to clear. This means that those with money problems don't have to rely on cheque cashing services.
- Cash withdrawals. They allow customers to withdraw up to £300 per day using a cash card. There is usually a counter service available for withdrawals over this amount.
- Direct debits and standing orders. Bills can be paid directly by standing order and direct debit. This means customers can enjoy discounts on a number of household bills. A number of businesses charge their customers more for paying via debit card.
- Debit cards. Some basic bank accounts offer customers a debit card, such as a Visa Electron or Solo card. For example, the Co-operative bank cash minder account offers a Visa Electron card.
What is not Offered by a Basic Bank Account?
- Cheque book. Customers are not offered a cheque book.
- Overdraft facility. No overdraft facility is offered to those with a bad credit rating due to the risk of the customer defaulting on any credit the bank were to offer.
- Counter service. Whilst all basic bank accounts provide a cash card, a comprehensive counter service is unlikely. Most banks will only allow customers to withdraw money in excess of the amount that can be withdrawn from a cash point machine.
- Certain debit cards. Whilst some accounts offer Visa Electron and Solo cards, other debit cards are not available. This creates issues with respect to certain online services, such as gaming, because Visa Electron and Solo cards are available to under-18's. Some businesses will request identification.
A basic bank account is a lifeline for those needing somewhere to pay their money, but have a bad credit rating due to CCJ's, loan defaults and missed or late payments. The service level on bad credit bank accounts isn't as good as mainstream accounts.
If a bad credit rating has been caused by default on a credit agreement signed-up to prior to April 2007, it is worth checking whether an illegal credit card or unenforceable loan agreement is in place. This could lead to the debt being written off and any adverse credit entries being removed.
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