What is a bank account?
Bank accounts can help you manage your everyday money. There are different types to suit your personal situation.
This section tells you about the different types of bank accounts, and how your bank or building society will do business with you from 1 November 2009. Alternatively you can get a free copy of our Your bank account booklet. You can download or order it online – see Publications.
See Jargon made clear for an explanation of some key words and phrases you may come across.
Bank accounts help you to:
- pay your bills;
- receive money – such as your salary or benefits; and
- save money for special occasions or emergencies.
Bank accounts can also earn you interest on the money you have in the account.
We cover the main types of bank account below and you can use the table at Types of bank account to help find an account to suit you.
- Basic bank account – for managing day-to-day money. It doesn't usually allow you to go overdrawn by more than £10, if at all. We outline the basics here but if you’d like more information see our Basic bank accounts printed guide. You can download it or order a free copy online – see Publications.
- Current account – also for managing your day-to-day money, but with more features than a basic bank account. There are special accounts for students. Some current accounts pay you interest if you are in credit, but a savings account will usually pay a higher rate.
- Savings (or deposit) account – for putting away money that you’d like to save, say for furniture, a holiday or emergencies. It often pays a higher rate of interest than current accounts, so your money grows.
- Sharia-compliant account – a current or savings account that is structured and run in line with Islamic law.
How much does a bank account cost?
If you have money in your account (called being in credit), you do not usually have to pay a fee for the standard services provided for your account. These may be:
- paying for goods and services with your debit card in the UK;
- most cash withdrawals in the UK;
- standard orders; and
- Direct Debits.
But there is a charge for some accounts, so do double check with your bank or building society and consider shopping around.
Special features – some accounts have additional features, for example various types of insurance, and for these you will be charged a monthly or yearly fee.
An overdraft – a way of borrowing money from your bank or building society, linked to your current account. Some banks or building societies offer an interest-free period but this is unusual, and interest rates are usually higher than for personal loans.
Charges can also be high if you go over your overdraft limit, or spend more money than you have in your account without arranging an overdraft – see Bank overdraft.
Cash machines (ATMs) – in the UK, taking money out of a cash machine with your debit card is usually free. However, some convenience cash machines such as those inside small shops, on garage forecourts and in nightclubs may charge you each time you withdraw money from them.
You will also be charged if you use a credit card, store card or charge card to withdraw money and your card issuer charges a cash-advance fee.
The cash machine will tell you up front if you’ll be charged, so you can decide whether to cancel or carry on.
You may also be charged by your bank or building society, or by the cash machine operator, when using cash machines abroad. They should always tell you before you withdraw the money how much the charge will be.
