Bank account cheat sheet
The right kind of bank account can really help you build a brighter financial future. There's plenty of options available. Our handy bank accounts cheat sheet breaks down every type of account, arming you with the know-how you need to choose the best way to look after your money.
To help you out, we've created a simple cheat sheet outlining the different types of accounts available.
Bank accounts cheat sheet
| Bank accounts cheat sheet | ||
|---|---|---|
| Account type | Choose it if | Things to know |
| Current Account A day-to-day account with a bank or building society |
You need full banking facilities including: ✔️ Setting up Direct Debits, standing orders & access to the Faster Payments Service ✔️ An optional overdraft ✔️ A debit card to use for online purchases, in stores and at ATMs in the UK |
❗ Sometime these accounts are free, sometimes there’s a monthly fee ❗ Additional charges may apply for things like withdrawing cash abroad or going over the overdraft ❗ Usually will require a hard credit check to open the account |
| Basic account (also known as a cash account) A current account with limited features |
You just need an account for your income and making payments With a basic account you can usually: ✔️ Set up Direct Debits & standing orders ✔️ Get set up with online banking ✔️ Use your debit card at UK ATMs ✔️ open one without a credit check |
You won't be offered: ❌ Cashback ❌ Overdrafts ❌ Cheque books ❌The chance to earn interest |
| Student Account A current account for people in higher education |
You need an account during your studies that also offers: ✔️ A 0% overdraft for anyone aged 18+ ✔️ Perks like railcard discounts |
❗ Overdrafts are debt. Be careful of overspending during your studies, or you may leave education with additional debt to pay off when the 0% interest period ends ❗ You’ll need to provide proof of your education status ❗ Usually will require a hard credit check to open the account and/or apply for the overdraft |
| Packaged Account A current account with added benefits |
You think you’ll use the packaged products, which could include things like: ✔️ Travel insurance ✔️ Mobile phone insurance ✔️Vehicle breakdown cover ✔️ Higher interest rates ✔️ Discounts |
❗ Usually has a monthly fee |
| Joint account An account shared by two or three people |
✔️ You want to allow multiple people to access an account’s money and facilities ✔️ You want to manage shared finances with your partner, housemates or family members ✔️ Current accounts ✔️Savings accounts ✔️Packaged accounts ✔️Credit cards |
❗ When you open a joint account, you agree for your credit reports to be linked ❗ Other people’s financial behaviours could impact your personal credit score ❗ Accounts can often be opened online or in branch ❗ All named parties will need to be present to close the account ❗ Everyone named will be equally responsible for the account, i.e. paying fees ❗ All parties have the right to withdraw all the money at any time |
| Children’s account An account to help your child get used to responsibly managing their money |
✔️You want your child to learn good money habits ✔️They are below the age of 18 ✔️ You want an account that helps to stop them overspending |
❗ If the child is under 16, a parent or guardian will typically need to open the account on behalf of their child ❗ These accounts usually have restrictions to help control the account |
| Instant access savings account An account that helps you save, but still withdraw money any time |
✔️ You want to keep savings separate from your day-to-day accounts ✔️ You want instant access to your money |
❗ Without full transactional services, you’ll normally need a current account too |
| Fixed term savings account An account where you commit your savings for a set period |
✔️ Want higher interest rates on your savings ✔️ Are happy to lock your money away for a large chunk of time |
❗ There are usually penalties for removing your money early, such as paying a fee |
| Cash ISA (individual savings account) A savings account where you won’t pay tax on interest you earn |
You want: ✔️ Tax-free savings ✔️ A good rate of interest |
❗ You’d lock your money away for at least a year ❗ The amount you can save each year is limited (£20,000 in total) |
| Investment ISA An ISA where your money is invested for a potentially bigger return – but you also risk getting back less that you put in |
✔️ Want a way to start investing with little effort | ❗ Make sure you understand (and are happy with) the risk involved |
| Lifetime ISA (Lifetime Individual Savings Account) A savings account for long-term goals of buying your first home or for retirement |
You: ✔️ Are saving a deposit for your first home valued at £450,000 or less (the UK Government is currently topping Lifetime ISA deposit savings up by 25%! That’s an extra £1,000 for every £4,000 you save in a tax year) ✔️ Are saving a personal pension for your retirement ✔️ Want your savings locked away until you’re ready to either buy your first property, or to retire (60 onwards) |
❗ You need to be aged 18-39 to open a Lifetime ISA ❗ If you withdraw early/don’t use the money for the house deposit/retirement, you will lose the 25% Government top up ❗ People diagnosed with terminal illness can withdraw without losing the 25% ❗ You’re only eligible to use it to purchase property if you have never owned property before ❌ You can’t pay in after 50 years old |
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