In 2016 the major UK banks all introduced new “basic bank accounts”. One of the main aims was to widen bank account access to groups of people who have found it difficult or impossible to open an account:
- people who have gone bankrupt previously found it very hard to get a bank account;
- people in an IVA, DRO or debt management need to change bank accounts and have the overdraft on their old account included in the debt solution; and
- many people with poor credit records who aren’t in any form of debt solution are desperate to escape from their old account with its huge overdraft, so they can start paying it off, but they are rejected for a “standard current account” because of their poor credit rating.
All these people should be able to get a new style basic bank account. And these new-style basic bank accounts are great! This article looks at the advantages of these new accounts, which banks offer them and which you should choose.
Contents
No fees – ever!
They all let you:
- set up direct debts debits and standing orders;
- have a debit card (not all offer a contactless one and Santander’s is daftly complicated, see below); and
- have access to internet banking.
And the best bit is, if there isn’t enough money in your account to pay a direct debit or standing order, the payments won’t be made – so you can never go overdrawn – but you won’t be charged a fee for the DD rejection. Many people who have had big money problems know how much their bank’s overdraft fees and charges for DD rejections all contributed to the problem.
Who offers these new accounts
You should be able to open one of the following bank accounts if you have major problems on your credit record including being an undischarged bankrupt, in an IVA or a DRO, or having CCJs:
- Bank of Scotland basic account
- Barclays basic current account
- Co-op Cashminder account
- Halifax Basic Bank Account
- HSBC Basic Bank Account
- Lloyds Basic Account
- Nationwide FlexBasic account
- RBS, NatWest and Ulster Bank Foundation Account
- Santander Basic current account
- TSB Cash account
- Virgin, Yorkshire Bank and Clydsdale M Account
The only reasons you should be refused one of these accounts are if you could get a “normal” bank OR if there is a fraud marker on your account.
If you have an application turned down, ask the bank why – it has to give you a reason. If you have had any problems opening one of these accounts please let me know, for example by adding a comment at the bottom of this article.
My top pick is Nationwide
The Nationwide account has a contactless debit card, full mobile and online banking, text alerts and you can open it online.
If you already had a full current account with Nationwide before going bankrupt and you were not using your overdraft, they will normally offer to convert your account into a basic one. Here your sort code and account number stay the same and all your DDs and STOs stay in place , so it is hassle-free.
ID problems?
If you are having difficulty getting an application approved because of id issues, Nationwide, Barclays, Co-op and Virgin Money have a reputation for being helpful.
Two to avoid? Lloyds and Santander
From what I have been told, you can’t apply for a basic bank account with Lloyds directly – you have to go through the hassle of applying for a “normal” current account and then be rejected first. This is a very poor way to treat customers.
The problem with the Santander basic bank account is that the ATM card isn’t a chip & pin one, so you can’t use it in a shop. So they provide you with a “Visa top up” card which you have to pre-load with money from your basic bank account. This is a completely unnecessary faff – better to go to a bank which gives you a proper card debit card for the account.
Open a new account before or after you go bankrupt?
It may feel like a good idea to open one of the above basic bank accounts as part of your preparation for going bankrupt – this will allow you to get your salary and any benefits paid into the new account. If you want to do this two things are important:
- you must check that the new account isn’t going to be frozen when you go bankrupt!
- if you own any money to the bank you have chosen, don’t put much money into it prior to bankruptcy as the bank may help themselves to the money in the new account using the “right of set-off” clause in the small print. (This isn’t a problem AFTER you have gone bankrupt as then your debts don’t exist anymore so the bank can’t use right of set off.)
An alternative to think about – Monzo
I have seen some comments on internet forums saying that people with a Monzo current account opened before they went bankrupt were allowed to keep it afterwards. This isn’t a “basic bank account” and so it doesn’t have the “no fees ever” assurance.
But if you want a modern bank with an app that helps you budget and makes it easy to put small amounts of money aside (I won’t mention the cool looking bank card) then you may want to give this one a try.
Updated November 2021
A checklist for going bankrupt
Making an “arrangement to pay”
Concerns about starting a DMP
Zaki says
Hi, I have a Flexplus nationwide account for last 5+ years which is my main account. I declared bankruptcy myself 1 week of December 2018 and 10 days later on interview OR confirmed me she will send a no objection letter to them which I received before Christmas. By the time I cancelled my OD facility myself for the account.
now almost one month gone, nothing happened to my nationwide flexplus account. You mentioned, they will downgrade to basic account but for me still remain same flexplus account. is it normal these days ?
Sara (Debt Camel) says
I don’t know. I don’t think there is an automatic change here, it just depends what the person who looked at your situation decided to do. Which in your case appears to be nothing. I suggest you let sleeping bank managers carry on snoozing and forget about the problem as you may never hear anything more about it.
Deb says
We had a Reward Current Account with Halifax (for around 20 years), plus two child accounts per child. We had to go bankrupt due to ill health which lost us our business. Calling Halifax to find out if we could down grade our account to a basic account, we were refused. We were told all accounts were frozen, including the children’s as I was the trustee. We would have to take a letter from our insolvency examiner, confirming they had no interest in the accounts, to a branch to empty the accounts and they would then be closed.
That was that. We had had a mortgage through them which we never defaulted on and a car loan which was fully paid off a few years ago.
Garry says
Yes thats same as me i have just went bankrupt and was with halifax your not allowed any account with halifax if bankrupt i tried to take money out but iv to go in and take an email from the trustee
I have a natiowide account but not tried it yet hope its ok
Susan says
This is probably a daft question but if I open a basic account a couple of days before I go bankrupt and they transfer my direct debits over from my current bank do I firstly cancel the direct debit I have to a loan company which will be included in my bankruptcy, I am sure the answer is yes but I just don’t want to do anything wrong. Thank you
Sara (Debt Camel) says
yes, don’t transfer over any DDs which you will not be paying after your bankruptcy.
Two quick points – have you taken advice on going bankrupt? This is always a good idea! And have you checked your new basic bank account will not be closed when you go bankrupt?
Susan says
thank you for your reply – can I ask another question when I fill in the application form to go bankrupt the question about income and expenditure do I include the payments I am making at the moment to the loan company and credit cards in the other expenses column
thank you
Sara (Debt Camel) says
No, because once you are bankrupt you won’t be making these payments.
HAve you taken advice on your op[tions? Talking to a debt adviser can be very helpful.
Helen Potton says
I have the Santander Basic Account and find that having the separate cash card for one account, and the top up debit card for the other account much much easier to keep track of my money. It’s all easily transferred across immediately online or via the app should you become stuck.
It helps me make sure my bills money stays where it needs to be. I transfer the rest over to the debit card account and this way I know I’ll never dip into the bills money. There is also a saving account that runs along side which I transfer my rent into so that doesnt get accidentally dipped into either. Again, any transferring can be done easily and quickly should you get stuck s it really is no hassle at all. The only downside is that the debit card isnt contacted, but that’s no biggy really, just remember your pin.
If you’re rubbish with your money I would highly recommend this basic account with Santander. It’s really helped me keep an eye on what is where and I have had absolutely no problems with it at all.
Azzz says
I have received bankruptcy order, but Im still not listed on website insolvencydirect.bis.gov.uk/eiir/ and my accounts are still active.
Also it says: “it is ordered that M Azzz Zaaaa be made bankrupt.”
be made meaning is something to be done in the future…
Am I already bankrupt or still waiting for OR for the condirmation?
Sara (Debt Camel) says
What date is this order? Did you apply or did a creditor apply?
Polly says
Hello Sara,
Just a query, once declared bankrupt is it a stipulation that I need to reopen a basic bank account? I am in the process of preparing to file for bankruptcy in August (Just me), so I have transferred my tax credits and child benefit to go into my husbands sole account to avoid disruption and will be setting up my essential Direct debits from his account as well. If the OR need bank statements during the 12 months I am bankrupt we can supply them with the statements from my husbands account no problem. So do I have to open a basic bank account?
Many thanks
Sara (Debt Camel) says
No, you don’t have to.
Angi says
Hi I have debts around £21000. I am on ESA and also have received PIP for the last 8 months. Currently I do have a little surplus from my PIP money some months( not every month as I have been purchasing essential items to help with my disability as well as paying for acupuncture to help my symptoms. I want to go bankrupt and I am planning to move in with my partner within the next couple of months. But I am concerned that if assessed by the OR now they will consider that I have surplus each month or some months. But when I move in with my partner I lose my ESA and cannot claim any benefits due to his financial circumstances. At this point I will be using all of my PIP and will barely have enough money to cover my day to day expenses and disability/healthcare costs. Would it be best to move in with my partner first and then file for bankruptcy? My concern is that in my current situation I would end up with an IPA for 3 years and I would be unable to pay it.
Sara (Debt Camel) says
When you are in receipt of PIP, you can include a line in your expenses which says disability expenses which equals your PIP. It’s up to you what you want to spend it on – taxis, a gardener, extra heating, items for the house, acupuncture whatever. If you are on ESA and PIP, you should not have an IPA imposed so you can go bankrupt now.
Angi says
What would an ipa entail? I won’t have esa when I move in with my partner, only pip.
Sara (Debt Camel) says
You shouldn’t have an IPA now, nor when you move in with your partner.
Can I suggest you talk to National debtline on 0808 808 4000 about whether bankruptcy is the right option for you – i have no reason to think it isn’t, but this is always worth checking! – and they can talk about an IPA.
Lisa Rowe says
My son owes money to hmrc ‘re a business his ex girl friend used to own but she has now gone bankrupt and disappeared. They say he owes £14.000 for vat and also fines as he didn’t put forms in for a partnership which he never had!! To cut a long story short he owes other money to banks ect. he wants to go bankrupt will it wipe the money off his HMRC they say he owes. He has asked for a face to face meeting with HMRC and they refused and are charging him £10 per day fine. Neither him or me can use the internet and we are both on brink of a breakdown. He rings them every week with a tracker number proving he sent the forms in but they just keep sending the fines. Would be so obliged if you can give advice please.thank you.
Sara (Debt Camel) says
In general HMRC debts can be included in bankruptcy. I think he needs to talk to a debt adviser. I suggest Business Debtline on 0800 197 6026. They can advise both on the business debts and his personal debts. Even if he thinks he has no other option, he should talk to them first.
Bellaire says
Hello I’m so confused. I am looking at bankruptcy. Through no fault.of my own. Can someone please explain in basic detail what happens with my bank. My child benefit? ( it currently goes into her account to which I am the lead name on it) do I get my husband to take it over??
Sara (Debt Camel) says
I think you should talk to a debt adviser about your situation and whether bankruptcy is a good option for you and what the other options might be. The child benefit is not money to be saved for your child, it is meant to be helping you to pay the extra costs you have because you have a child, so you need to look at whether going forward how this “extra” money will change your financial situation and your debt options. Phone National Debtline on 0808 808 4000 – they will also be able to answer your questions about bank accounts after bankruptcy.
Me says
I was discharged from bankruptcy in 2012. I still use my basic account, I’ve applied for an isa savings account with the same bank and was refused!! They won’t tell me why. I never let my account dip below 4 figures so why am I being refused a savings account. I’d like to apply for a current account and get a chequebook (for the infrequent occasion that they are handy) but I’m guessing it’s pointless applying as I’m just going to keep getting rejected and will never be able to build my credit score back. I was under the impression that a current account would help build score better vs the basic account. It’s like having a permanent noose around my neck I’ll never be free of.
Sara (Debt Camel) says
What is your credit score like at the moment?
Honestly basic bank accounts are brilliant because of their no fees. If you can afford to save regularly, look at LOQBOX which sets up a one year monthly saving plan as a “loan” you are repaying (no interest!) soit helps your credit record. See https://debtcamel.co.uk/loqbox/
Dave says
I have a question about bankruptcy and bank accounts
I have 3 bank accounts, a full account with Barclays, a savings account with Barclays and a full account with Santander
I don’t have any debts with any of the banks, but I’ve just opened a Flexbasic account with nationwide and a cashminder account with co-op as I wasn’t sure which bank would accept me
I’m going to request that the Flexbasic will be my main account (there’s no money in there at the moment)
My benefits get paid into my barclay’s account on 5th Dec and all my direct debits come out that day, leaving me with £150 for food for the month.
Is it a good idea to draw that money out to cover food and leave whatever else is left in there for the OR?
I do have £800 in Santander but that’s going to pay for the bankruptcy fee.
Will I just have the one bank account when I go bankrupt, and what would happen if say Nationwide close the flexbasic account after me stating on BR it would be the main account, would I then be able to nominate another account?
Should I convert the Barclays full account to a basic one, just to be on the safe side
Many thanks
Me says
Hi
I have been bankrupt in December 2018. My all accounts were closed. September 2019I had to sign BRU. It will be cleared in 5 years time. I have no bank accounts at the moment. I tried Santander immediately after bankruptcy they rejected . Two months ago I tried Halifax . They accepted everything, i also received my debit cards. Suddenly they changed their minds and closed it. I tried metro bank even without credit check, i was declined. Last week i applied coop Cashminder no credit check, I received a letter today saying no. I am so confused. Why can not open a bank account? They were all basic accounts i tried but no chance. I don’t know what to do.
Sara (Debt Camel) says
Do you have any fraud markers on your account? See https://debtcamel.co.uk/name-fraud-database/
Abi says
Hi i am going to have Iva and tried to open nationwide starling tsb n santander basic account but all are rejected. What could be reason plz thanks
Sara (Debt Camel) says
Do you have a fraud marker? See https://debtcamel.co.uk/name-fraud-database/
Sooze says
My husband has recently gone bankrupt. He had a current account with Lloyds, who have blocked his a/c and are refusing to allow it to be reinstated, despite us showing them a letter from his OR saying he had no objection to the a/c staying open. They have bounced a DD and wouldn’t allow his 2 private pension payments to go in, although they did allow me to transfer a small amount of money from my account to his the day after they bounced the DD (I transferred £10 into his a/c as an experiment). They couldn’t or wouldn’t explain why they allowed this. They’ve said he can try applying for a basic a/c but weren’t very encouraging that it would succeed. Meanwhile, he tried to open a Cashminder basic a/c with the Co-op bank, which has been turned down, we appealed but that was also rejected, they refused to give a reason, citing data protection.
He needs a bank account in order to receive his 3 private pensions. What can we do if the banks all refuse to let him have even a basic bank account, what is the point of these accounts if bankrupts are refused them? There must be many thousands of bankrupts, how do they all manage?
Sara (Debt Camel) says
This is not normally a problem! He should not have a problem opening a basic bank account unless he has a Cifas fraud marker against his name.
If he hasn’t got a fraud marker, Lloyds will not let him have a current account but should allow him to open a basic bank account. He could put in a complaint to Co-op saying he should not have been refused a basic bank account and he wants to know the reason. Or he could simply apply to another bank – Nationwide has a good reputation.
If he has a fraud marker, then the simplest option may be for him to get his pensions paid into an account in your name.
Sooze says
Thank you for the very quick reply. Unfortunately Nationwide isn’t an option, as he has a historic debt with them. There’s no reason why he would have a fraud marker, so I can’t see that would be the reason why he’s been refused. Lloyds were extremely unhelpful and intransigent, and unwilling or unable to answer my questions. To add to the problems, he also has historic debts with Barclays, NatWest and Halifax, so can’t apply to any of those. I did look at Monzo for him, but see it’s conducted via an app on a smartphone….husband is a pensioner technophobe who doesn’t have a smartphone.
Sara (Debt Camel) says
Nationwide may well still give him an account. Give them a try.
Sooze says
Hi Sara, just an update……we had an interview with an accounts manager at Lloyds yesterday, who admitted they’d made errors and apologised. They then opened a basic account for husband there and then (after going through the rigmarole of applying for and being turned down for their current a/c first, despite them knowing that would happen – how ridiculous!). The a/c is all set up and running ok now, thankfully. Thanks for your help. This website of yours has been so helpful and informative, thanks very much.
Sara (Debt Camel) says
excellent news. Well persevered.
LJ says
Hello,
If I were to deposit british currency in a Spanish bank account, after my DRO is finished, will it be considered suspiscious by the bank? Do they run checks on the person to see if there has been an insolvency in his recent past, in the UK?
Sara (Debt Camel) says
Sorry, I have no idea what checks a Spanish bank might run.
Sara Peacock says
If I have a monza or prepaid card are they frozen should I go bankrupt please?
Sara (Debt Camel) says
are you using one as substitute for a bank account?
Shoaib Khalid says
I never had a bank account before. I try to open my first account in the UK but i get refused from all banks for bad credit history.
Pls help me thanks
Sara (Debt Camel) says
Have you applied for a normal current account or a basic account?
Shoaib Khalid says
For classic account.
They told me I can no longer open with them
In the future
Sara (Debt Camel) says
That is a normal current account. I suggest you apply to a different bank for a “basic bank account” as the article above explains.
bluemoon says
Hi,
I’m preparing to apply for bankruptcy early next year and it is the best option for me.
With regards to bank accounts and salary do I post bankruptcy application then literally apply for a new account for my salary to be paid into and essential bills to be paid out.
Stepchange have advised I open a new one ASAP.
Am currently with lloyds and dont have an overdraft with them.
Many thanks
Sara (Debt Camel) says
I am assuming that StepChange has advised that bankruptcy is a suitable option for you.
Bankruptcy applications are normally approved within a few days. The simplest option is to plan to open a new account the day that you are notified your application has been approved, not before or there is a risk it will get frozen.
I have heard anecdotally that Lloyds can be friendly in these situations – you could ask them if you could have a basic bank account? Or if you want a clean start with a new bank, Nationwide is good.
Kevin says
Hi
I am considering bankruptcy but I’m unsure as to how I should proceed as my situation isn’t straightforward.
Myself and my wife currently have 7 credit cards between us totalling 30k of debt that have been accrued due to my historic mental health issues dating back to 2009. I’ve been on PIP since 2015, tried my best not give up and remain in work up until April of last year but the inevitable has happened and I’m now in receipt of LWRCA via universal credit benefits.
The illness has been diagnosed as an incurable lifelong issue and I will require medication and treatment for the remainder of my life.
My wife is employed and earns approximately 20k annually and we have a joint account with Nationwide (two of the credit cards are with them) 2 are Barclays, 1 Halifax, 1 Tesco and 1 Capital one.
If we entered into bankruptcy I’d assume we would have to open a basic account somewhere in order to pay our direct debits, council tax and rent etc.
My biggest concern is continuation and access to my wife’s salary and my benefits as we have a daughter. We don’t have much in the way of assets aside for a car and our household belongings that I’m also scared we would lose. (My wife needs the car to commute to and from work)
Is bankruptcy the best course of action in our case as I think IVA repayments would still hold us in financial
Any advice will be much appreciated.
Sara (Debt Camel) says
I am sorry to hear of your long struggles, I hope treatment may make things a bit easier for you.
Can you say in whose name each of the debts is – what do your cards add up to? what do your wife’s add up to?
Are you up to date with rent, council tax and bills?
How much is the car worth and is this in your name or your wife’s?
Steve says
I have been bankrupt for nearly a year 3 weeks left, however I am still being refused a basic bank account any reason why this might be.
Sara (Debt Camel) says
Do you have any fraud markers on your account? See https://debtcamel.co.uk/name-fraud-database/
Ali says
Hi there,
I need your help I have a CCj which is 5 year old and whenever I apply for bank account I get approved for account but after few mins they close my account. So far two banks nationwide and tsb has done the same. I am in stress don’t know what to do. I checked my name in Ciara and nationdebt collector but there is no information about me. Please can you guide me what should I do ?
Thanks
Sara (Debt Camel) says
do you currently have a bank account?
what sort of accounts are you applying for – a current account or a basic account?
I assume you mean Cifas and National Hunter?
PA says
Can I Downgrade an account?
I am with HSBC and want to keep my DDs and STO on place.
Sara (Debt Camel) says
Are you looking at a form of insolvency? Or would you just prefer to have a basic bank account?
mohamad says
HI there
lloyds bank are not opening any accounts for me not even a basic account i have bad credit history i just want to Bank with Lloyds
they are saying that they dont want to do Business with me
Sara (Debt Camel) says
Try to open a basic bank account with a different bank or building society such as the Nationwide. If that too is refused, read https://debtcamel.co.uk/name-fraud-database/ to see if you have A fraud marker against your name.
Kim B says
Hi there.
Have been bankrupt the last 2 years and was able to.open a basic account with Nat West and also Monzo (which are great btw) Lloyd’s were my bank for over 15 years but they just didn’t want to know. By law you are able to open a basic bank account. Nat West were top of my search and gave me no problems.
Good luck x
Aswin Ramamoorthy says
Hi there,
I have a cifas marker on my name and poor credit history for too much debt but i am trying the pay the debt slowly. I have been rejected basic bank account from santander, lloyds and nationwide.
Please advise me how to proceed after this and what are the options to open an bank account after this.
Sara (Debt Camel) says
Do you accept the CIFAS marker is fair?
Aswin says
Yes, but i am ready to pay the debt, because of my poor financial management in the past i made some mistakes of not paying the repayments regularly.
Sara (Debt Camel) says
you don’t get a CIFAS marker because you didn’t make the repayments regularly – it is a sign that the lender thought you may have committed fraud in some way.
Aswin says
How can i prove myself that didnt commit a fraud?
Sara (Debt Camel) says
I am asking if you feel the CIFAS marker is fair. If you don’t, go to your local Citizens Advice and ask them for help to challenge it.
If you do think it was fair, then things you could look at include:
– talking to a local credit union
– getting your wages paid into a relative’s account and them giving you cash
– getting a prepaid debit card in your name, see https://www.moneysavingexpert.com/credit-cards/prepaid-cards/
Aswin says
Is there any chance to come out of this issue and build my credit score ?
Sara (Debt Camel) says
not until the CIFAS marker drops off or you manage to get it removed
Aswin says
Do i have to hire a legal advisor to clear the marker or i can do that on my own?
Sara (Debt Camel) says
I’m sorry but you haven’t said anything about the reasons for gettin* it removed. If you have some, then your local Citizens Adice
should be able to help you and that would be free. If you don’t have any then paying a solicitor probably won’t work and is a waste of money
Joe says
Hi Sara I have car finance with Moneybarn unfortunately due too my partner trashing my credit report this was my one & only choice, last year due too a serious back injury I was on ssp for over 8 months & was entitled too other benefits after applying consistently .
I informed my situation too Moneybarn but they offered me no help what so ever saying my only option was too hand back my car I told them this was not a option as I lived in the middle of no where and without my my car, when I could I wouldn’t be able too get too work & family and friends used my car too help me out with shopping & prescriptions ect….
. I tried my hardest too keep up my payments but unfortunately missed two during this time.
I arranged too catch up with these which I’m doing on a monthly basis is small amounts the problem is they are TOTALLY TRASHING my credit report reporting late payment marker every month is there anything I can do about this or will this just continue until my arrears are cleared??
Sara (Debt Camel) says
How long ago did the car finance start? How long until it ends?
Joe says
Will have been running 3 years this August & has two years left was a 5 year contract.
Sara (Debt Camel) says
ok so you may well have paid most or all of the amount you borrowed, the loan amount, not including the high added interest. Can you add up what you have paid so far?
Was it hard to make the finance payments even before you were ill? If it was, you may be able to win an affordability complaint about this. See https://debtcamel.co.uk/unaffordable-car-finance/. If you can win one, your credit record will be cleaned. But you do need to have repaid at least what you borrowed, or may win the complaint and lose the car. And you do need to keep paying while the complaint goes through.
If not, then I am afraid while there are arrears on the account it is correct for moneybarn to show them on your credit record.
Clare b says
I am currently in the process of applying for a DRO through money wellness. I have a bank account with an overdraft(not ever used) and a credit card with them that is being included in the dro. Is there any chance nationwide will let me keep the account without an overdraft? If not when is the best time to apply for a new basic account?
Sara (Debt Camel) says
They may agree to convert the account into a basic bank account. I suggest you talk to them now.