In debt? The basic bank account solution

Having debts to repay can feel like a major additional strain on your finances, especially during times like these, when many of us are having to stick to tight budgets. Taking steps to ensure you can make your monthly debt repayments can improve your financial confidence, and reduce the likelihood of racking up bank charges, damaging your credit rating and/or facing County Court Judgments (CCJs) or other legal action. 

If you're repaying debts and want to improve your financial secaurity, getting a basic bank account could help you to budget for all your monthly costs and steer clear of unexpected fees and charges. Even if you've had debt problems in the past, a basic bank account should still be open to you - and could make it easier to get your finances back on the strait and narrow. 

Two ways a basic bank account could help you with debt:

1. They're open to everyone*

If you've had problems with your finances in the past, you may have damaged your credit rating. If you've defaulted on a loan or missed debt repayments, for example, this can appear on your credit file - and it'll remain there for six years. Some banks feel that customers with poor credit histories are too risky, and will often refuse to let them open a standard bank account. 

However, basic bank accounts won't turn you down for having a bad credit rating (as they wouldn't give you access to any form of credit, e.g. an overdraft or credit card). So your financial past shouldn't hold you back from sorting out your debts in the present - after all, simply having a bank account can make it so much easier to make and receive payments and budget more effectively - and that's a key part of repaying the money you owe. 

* Basic bank accounts typically require you to be at least 18 years of age and a UK resident. Many of them may not be available if you're an undischarged bankrupt.

2. They could help you avoid more debt

Getting a bit of extra help with your finances may be high on your list of priorities if you've had debt problems in the past. Some basic bank accounts offer help with budgeting, by dividing your money up into separate accounts: one for your essential bills (such as your utilities and Council Tax) and another for your 'spending money'. An example of this type of basic bank account can be found here.  

Setting aside enough money for your essential costs should help you steer clear of spending on luxuries when you can't really afford it. This can help you avoid the kind of mistakes you may feel you've made in the past with your money. 

Everyone has different requirements when looking for a bank account, so it's important to research what options are available. Using comparison websites and/or speaking directly to bank account providers could be a good place to start.