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Safe bank accounts (Scotland)

This fact sheet covers Scotland. We also have a version for England & Wales if you need it.

Use this fact sheet to:

  • understand why you may need a safe bank account;
  • help you recognise the benefits of a basic bank account; and
  • try to find a suitable bank account for you to open.

What is a safe bank account?

If you owe money to your bank or building society, it is important to make sure that any income, for example your wages or benefits, do not go into that account. This is because in some circumstances, banks and building societies can take money from an account you have with them to pay towards a debt that you owe them. This could leave you with too little money to pay your essential bills, such as your gas, electricity and food shopping.

A safe bank account is an account with a bank or building society that you do not owe any money to. This includes money owed to credit cards, loans and overdrafts.

When you apply to open a new safe bank account, the bank will usually check if you are eligible for their current account first. If you are eligible, the bank are likely to offer you this type of account.

If you do open a current account and don't want to get into debt with the bank, request that you are not given an overdraft facility. This is because if you use your overdraft facility, the bank is likely to start charging interest on your account. An overdraft is also repayable on demand, so your money would no longer be safe.

It is also important to know that some banks belong to the same banking group, for example Royal Bank of Scotland and NatWest. When you open a safe bank account you should try to avoid using a bank within the same banking group as a bank that you owe money to. If you do not, your money may still be at risk of being taken.

There isn't a central list of all UK banks and their membership available for you to search. However, there are several websites that give useful information about different banking groups. For example, the Lending Standards Board website lists its membership and shows which other banks they are linked to. For more information, go to www.lendingstandardsboard.org.uk and click on 'View registered firms'. If you are unsure which banks belong to the same banking group, contact us for advice.

The MoneyHelper website has useful information on how to open an account, including account features, what identification you will need and things you should think about. Go to www.moneyhelper.org.uk and search for ‘How to open, switch or close your bank account’ or call 0800 138 7777.

The Current Account Switch Service

Most banks have a guarantee that will let you switch accounts within seven days. This is called the Current Account Switch Guarantee. Banks will also guarantee that payments in and out of your new account are switched over in time so that you do not miss any regular bills and payments.

Business bank accounts

If you need to open a new business current account, take a look at the UK Finance guide for small businesses. It explains that 18 business current account providers have agreed to ask customers who want to open a new business current account for the same basic set of information. The online guide produces a checklist of the information you will need based on the type of business you have.

The rules for when a bank can take money from a business account to pay towards a debt owed to them can be very different to the rules for personal accounts. If you have a business account, contact Business Debtline on 0800 197 6026 for advice, or go to www.businessdebtline.org.

What is a basic bank account?

Personal banking

You may not qualify for a current account if you have missed payments on your bills and debts. If this is the case, a bank may offer you their basic bank account for your personal banking instead. 

A main advantage of a basic bank account is that this type of account has no fees attached to it. As basic bank accounts do not provide an overdraft facility, you won’t be charged interest on the account and fees are not added for returned direct debits or standing orders.

Since September 2016, the largest banks have been required to offer fee­free basic bank accounts. These include Barclays, Santander, Royal Bank of Scotland (including NatWest), HSBC, Nationwide, Co-operative Bank, Lloyds (including Halifax and Bank of Scotland), TSB and Virgin Money (including Clydesdale and Yorkshire Bank).

A fee-free bank account with the above banks will usually have fewer features than a current account, but you can still do the majority of things that you would need to. This includes the following.

  • Set up direct debits and standing orders.
  • Use a debit card to pay for items and withdraw money from a cash point.
  • Have your income paid into the account.
  • Check your balance at a bank, at a cash machine or online.

Other banks may also offer basic bank accounts, but they may not include all the features listed above or may include charges. It is important that you check what features an account offers and what charges the bank can add before you open a basic bank account with them.

MoneyHelper has useful information on how to open a basic bank account. Their website also has links to several banks' basic bank account information pages. This gives extra information about a particular bank's basic account, such as what identification you need to open an account. Go to www.moneyhelper.org.uk and search for 'Fee-free basic bank accounts' or call 0800 138 7777.

The Financial Conduct Authority state that, from September 2016, you will be entitled to open a basic bank account if you are ineligible to open a standard bank account, unless it would be unlawful for the firm to open the account. If you can’t open a basic bank account the bank should tell you why you have been turned down. If they do not, or you feel you have been turned down unfairly, you may be able to complain to the Financial Ombudsman Service. If you are unhappy with how a bank has dealt with your application, contact us for advice.

Business banking

Some banks provide a basic bank account for business banking if you do not qualify for their business current account. Not all banks offer this service, and some of the banks that do may charge fees. If you are turned down for a business current account, ask the bank if it provides a basic business bank account. If it does, ask what facilities the account provides and check whether the bank charges any fees for this type of account.

Bank accounts and bankruptcy

Barclays, Santander, Royal Bank of Scotland (including NatWest), HSBC, Nationwide, Co-operative Bank, Lloyds (including Halifax and Bank of Scotland), TSB and Virgin Money (including Clydesdale and Yorkshire Bank) must now allow undischarged bankrupts to open a basic bank account for personal banking. The bank will usually check your eligibility for their current account first. If the bank decides that you aren’t eligible for a current account because you are an undischarged bankrupt, they should offer you their basic account.

Other banks may let you open an account as an undischarged bankrupt, but you would need to check the bank's policy before applying.