Topic 4 - Everyday banking

General overview of current acocunts

• Usually used for everyday banking needs.

• These accounts are designed for those aged 11 and over

• People look for accounts that match their everyday banking needs (e.g. making automated payments like direct debits)

• Available from banks and building societies and maybe some retailers such as M&S or Tesco.

• All current accounts odder regular statements to monitor transactions.

Describe basic bank accounts

• Suits people who wish to avoid borrowing such as those who live on benefits or low income.

• Offers a debit card or credit card - limits possibility of getting into debt.

• Free of charge but those with with a history of fraud or are bankrupt may need to pay a charge.

• Introduced in 2004 to make sure people have access to banking services.

• Can’t pay direct debits.

Describe youth accounts

• Available for under 18s

• No overdraft services

• Ages 11-15 are offered cash cards, debit cards, standing orders, direct debits, cheque book. online banking and text alerts.

What are standard current accounts?

• Offers the full range of current account facilities.

• Usually free of charge unless account holder uses overdraft or request charged services.

• Suits those who want to pay bills as direct debits.

Describe student and graduate accounts

• Tailored to the needs of students/graduates

• Low-interest or no interest on overdrafts and discounts on contents are the key features.

• After graduating, they will need to switch to a graduate or student account.

Describe what conditions accounts which pay interest when in credit have

• Some current accounts may pay interest on credit balance

• Usually there are conditions for e.g. paying in a monthly amount.

• May also charge fees to hold the account

Joint accounts

• Held by 2 or more people

• e.g. married couple to share a rented home.

Pakcaged accounts

• Offers extra benefits for a monthly fee.

• Benefits could be for mobile phone or travel insurance.

• suitable if the costs of the benefits they will actual use are greater than the annual account fee.

Premier accounts

Designed for wealthier customers with a range of additional services e.g. a personal banker

Account holders must have a certain level of income e.g. earn over £75,000

Conditions for opening an account

• Before opening any account, the provider must be supplied with proof of identity and address- this is required to prevent money laundering.

• Original documents must be used to prove identities, expired documents will not be accepted.

• Documents that are accepted:

  • Passport

  • Driving Licence

  • Council tax bill

  • Gas/water bill

  • medical card

• Those on benefits or those who are young and don’t pay bills might find it difficult to get these documents. They could use HMRC letters and UCAS letters.

How are transactions monitored?

• Statements are provided usually once a month. It uses abbreviations to describe transitions. DC = Direct Credit BGC = Bank giro credit

• Cheques appear as the number on the cheque - it is important to write the details of the payee on their cheque so they know where the money has been paid from.

Switching and Closing accounts

• Providers offer a free service for switching between accounts at different providers.

• People who want to close their accounts can do so at any time with no cost but they must pay any money they owe.

• People would also need to tell the provider where to pay the remaining balance on the account - e.g. by using a cheque.

• Sometimes the provider may choose to close a current account for example if the account holder no longer meets the minimum deposit criteria.