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Opening a bank account: What you need to know

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Before you open a bank account, it's important to know the different types available and what you'll need to provide in the application process.
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There are lots of bank accounts on offer, from current accounts to business bank accounts. The right account depends on your circumstances and what you plan to use it for. Here we look at the most popular accounts available, how they work, and what you need to do to get one.

The most popular bank accounts are:

Choosing a bank account will depend on what you need it for. For example, if you're a student and you're opening your first bank account, a standard current account may be just fine to receive and send money. Or if you're looking to start saving for the future, you might want a savings account so you can earn interest, or an ISA to make use of the added tax-free savings.

Essentially there are really two different types of bank accounts:

Current accounts

This is a bank account that lets you manage your money on a day-to-day basis. This includes:

  • Receiving money - such as your salary or benefits

  • Paying your bills - such as rent, mortgage or council tax

  • Keeping track of where your money is going

Some current accounts can also earn you interest on any money you have in them, though it may be less than savings accounts offer.

You will get a debit card, which you can use in shops, online and at cash machines to make withdrawals.

Savings accounts

Savings accounts are used to put aside money that you'd like to save for the future. This could be to buy a car, or home, or to have an emergency fund for unexpected expenses such as a broken boiler or if you lose your job.

Savings accounts typically pay you interest on your money. How much interest you earn will depend on your bank, the kind of account you get, and the current economic climate.

Read our guide for more information about how interest works

While these are the two basic kinds of bank accounts, there are various types of current accounts and savings accounts that offer different features and benefits. For example, there are also current accounts that you pay for in return for services such as cashback when you buy things and benefits such as insurance policies. 

What are the different types of bank accounts that you can get?

When you're considering what kind of bank account to open, it's useful to keep in mind the potential benefits of different accounts available in the market. 

This could be in the form of interest, savings rates, overdrafts, and other benefits such as cashback, rewards, and the different fees you might have to pay for using the account.

Here are some of the different kinds of bank accounts that you can choose from:

  • Basic bank accounts. These accounts have limited features and are meant for customers with poor or no credit history.

  • Student accounts. These are designed to help university students and often come with features like interest-free overdrafts.

  • Standard current accounts. These are normal current accounts with all the standard features

  • Specialised current accounts. These are current accounts with benefits and extra features, such as free travel insurance or breakdown cover, that typically come with a fee.

  • Foreign currency accounts. These accounts are intended for international use.

  • Savings accounts. These bank accounts help you save money and earn interest on your money.

  • ISAs. ISAs allow you to save a certain amount tax-free every year

  • Business bank accounts. These are bank accounts that are designed for running a business.

How do you find the best bank account for your needs?

Once you know the kind of bank account you need, the simplest way to find the best bank account is to compare bank accounts from different providers to get the features you're looking for.

For example, one provider may offer cashback, while another may offer free travel insurance for the same fee.

It’s important to take the time to find an account that works for you, and to recognise that there may not be an advantage of staying loyal to one provider.

How do you open a bank account in the UK?

Opening a bank account is simple. You can choose to open an account in person by visiting the bank branch of your choice, by phone, or online on its website. Most banks now offer online applications, which you can fill out on your own.

You’ll need to provide some basic information as part of the application, which usually includes:

  • Personal information: This includes your full name, nationality, contact details, date of birth, and national insurance number.

  • Proof of identity: You can use your passport or driving licence. Some banks may accept birth certificates for a child or student account.

  • Proof of address: This can be a recent utility bill, mortgage statement or council tax bill that clearly states your name and address. You might also be required to show how long you’ve lived there.

You can make the process easier by making sure you have all these documents on hand, or in a digital format if you're applying online.

It's possible the bank may run a credit check to examine your financial history if you apply for certain kinds of bank accounts. If your application is accepted you'll be notified and receive your debit card and pin in the post – usually in separate deliveries.

You will probably need to activate your card online, by phone or by making a chip and pin purchase.

Can you open an online bank account?

Most new bank accounts these days come with online banking. However, the banking landscape has been changing over the past few years with the arrival of several exclusively online bank accounts.

These digital-only or app-based banks, have no physical branches but offer online bank accounts you manage through phone apps. Many of these online bank accounts offer attractive features such as fee-free international withdrawals, real-time spending notifications, and budgeting tools aimed at helping people manage their money.

It’s important to be aware that not all digital-only banking apps are banks. What this means is they are not allowed to invest or lend your money to anyone else. The downside of that is these companies aren't part of the Financial Services Compensation Scheme (FSCS), which protects people from losing their money up to £85,000 if a bank goes bust.

New bank accounts are offered all the time, so compare all of the best options to make sure you get the right one for you.

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