If you're working, a lot of employers only pay their staff electronically directly to a bank account. Without a bank account, if you get paid by cheque you'll have to take it to a cheque cashing shop and pay a fee. Very few employers pay in cash, and even if they do there is the risk of losing everything if you are burgled. Even if you're not working, to receive benefits you need a bank account or at least a Post Office card account so that they can be paid electronically.
All in all, it's hard to get by in the UK without a bank account.
First Thing's First
Why do you want a bank account? Make sure you have a reason, because the person opening the account will want to know. Given that most bank accounts are free, they don't want to waste money opening an account for someone who will just leave it dormant. Being paid is a good reason, because the bank will know that you'll have a regular income and (hopefully) a positive balance1.
Proving Your Identity
The law requires that every bank ask for proof of who you are and where you live as part of the process for opening a new account. There is no exception to this - they would be in big trouble if they didn't. They have to ask for this proof because of The Money Laundering Regulations (2007)2.
However, individual banks differ in their exact requirements as to what exactly is satisfactory proof of identification. This means that what one bank may take another may turn down. Banks are not obliged to take anything from you and can opt to refuse your request for an account even if you fulfil their standard criteria.
Banks require two seperate documents from different sources, so you couldn't use a driving licence as both proof of identity and address, for example.
Commonly Accepted Identification
Banks accept certain items of identification as standard:
- Passport (with visas if appropriate) or an EU Identity Card
- Full UK Driving Licence
- Benefits book (or an original letter from a Benefits Agency)
Each bank will have its own list of acceptable identification documents. This list is just a guide and no bank is obliged to take any of it. If you don't have anything from the standard list be prepared to go to every local bank in your area to ask what they will accept. Sometimes they will accept two 'lesser' proofs instead of one 'standard' one; but, again, each bank's requirements may differ.
- Old style paper driving licence, or a provisional licence
- Armed forces ID card
- Police warrant card
- Firearm or shotgun certificate
- Student ID (for student accounts only)
- Construction industry documentation (CIS4 or CIS6)
- National Identity Card
- Disabled parking document
- Birth certificate (under 18 only)
- Travel documents, issued by the Home Office in the UK
Commonly Accepted Proof of Address
If you have a place to live then proving your address is usually the easier part. You should remember, however, that you can't use your identification document to also prove your address. If you use a letter, bill or other piece of correspondence, make sure that the documents are addressed to you. You can use a document pertaining to a joint account as long as your name is clearly displayed in the address.
- Utility bill, dated within the last six months3
- Current Council Tax notification
- A bank, building society or credit union statement, dated in the last six months
- Notice of Tax Coding (which can be ordered from your local tax office)
- Benefits book or an original letter from a Benefits Agency
- Council rent card or tenancy agreement
Other Proof of Address
Some other proofs of address may include:
- Home or motor insurance certificate, issued in the last 12 months
- Mortgage certificate, issued in the last 12 months
- Home Office letter to your home proving your right to remain, exceptional leave or refugee status
- Credit card bill, issued in the last 6 months
- Satellite, cable or internet access provider bills, issued in the last six months
- Tenancy agreement, from a recognised landlord
What Do You Get?
Bank accounts, by and large, all offer the same features. If you have a good credit rating and a proveable address history, the bank will likely grant you a full Current Account. If you find it harder to prove your identity or address and have a low or poor credit rating, the bank may only offer you a Basic Bank Account, providing only the most basic features, as listed below:
- The ability to receive money from external sources, such as your employer.
- The ability to pay money out electronically to other people, via a standing order or one-off transfer.
- The ability to allow other people to take money directly from your account, via a Direct Debit.
- A debit card to withdraw your money from cash points. Most will allow you to use the Maestro4, Solo or Visa system to pay for items in shops and over the Internet too.
- The opportunity to open a savings account to earn interest on any credit balance you wish to keep.
If you have a full Current Account, you can expect some or all of the following:
- A cheque book, along with a cheque guarantee card (generally, combined with the functionality of a debit card).
- An arranged overdraft, usually a small amount to start with, but which can be increased once you've proven you're a good customer.
- Access to other services, such as a credit cards or loans.
- Interest on your credit balance, although usually at a very low rate.
Your best bet is to shop around - banks often have introductory offers that might suit you, and different banks have different benefits.
Post Office Card Account
A Post Office card account (POca) is a very simple type of account, available to those receiving benefits who can't, for whatever reason, open a bank account5. When you sign on to receive a benefit, you will be sent an invitation document that will allow you to open a POca.
Be aware that if you manage to find a job your new employer will not be able to pay money into a POca nor can you make personal deposits into the account.
What If I'm Not in the UK?
If you're not based in the UK but want a Sterling account, there are two options. First, speak to your local bank about opening a Sterling account. Banks will usually charge a fee for maintaining such an account. UK banks will also open Sterling accounts for non-UK customers, but will again charge a fee.
If you are coming over to spend considerable time in the UK, then a UK bank will open an account if you can fulfil the standard ID and UK address proof requirements. You may have to prove that you have some funds to run the account, so they may ask you for bank statements from your current bank.