One of the first steps to taking control of your money is learning the best way to manage your bank account. There are many types of account and bank card, so it’s up to you to pick the ones that best suit your lifestyle. We’ve pulled together a list of guides that explain how to manage your bank account and make the most of your finances.
- Types of bank accounts
- Picking the right bank account
- Types of bank cards
- Making payments into your bank account
- Paying bills, friends and online shopping
- Do you need an overdraft?
- What does it cost to run a bank account?
- What if something goes wrong?
- Find out more
Types of bank accounts
Do you have more than one account? New services mean you can now see all your accounts in a single banking app. Find out more here.
First things first – you need to work out what type of bank account will suit your needs best.
The main ones are:
- Current accounts. The most popular type of account and a great option for managing your day-to-day spending. Every current account has different features, so make sure you pick the best one for you.
- Basic bank accounts. If you don’t have access to a standard bank account, a fee-free basic bank account can make it much easier to manage your money. These accounts don’t have an overdraft facility, so you won’t be able to get into debt by spending more than you have.
- Credit union current accounts. A good option if you’re struggling to get an account with a bank, or you would prefer to bank with a not-for-profit-organisation.
- Joint accounts. Designed to share with your partner or housemate. Before setting it up, make sure you’ve discussed exactly how you’ll use your joint account p.
- Packaged accounts. This type of account charges a monthly fee and comes ‘packaged’ with benefits such as travel insurance or low overdraft rates. The benefits aren’t always great value for money, so make sure you weigh up your options before signing up.
If you want to put away some money, you might be interested in savings accounts.
Picking the right bank account
New rules mean it’s quicker and easier than ever to switch bank account. It shouldn’t take more than seven days.
Once you know what type of bank account you want, it’s a good idea to see what options are available.
- You can find all the information you need in How to choose the right bank account.
- If you’re on benefits, you might be interested in Choosing a bank account for your benefit payments.
- Once you’ve got a bank account, take a look at Making the most of your bank account.
- For more about the steps you need to take, read Opening, switching and closing a bank account.
Types of bank cards
Bank accounts usually come with bank cards, which let you withdraw money and pay for clothes, food and other items in shops.
Unless you are in a 0% or other introductory period, a credit card is usually only right for you if you’re sure you’ll pay off the amount you borrow each month.
The main types are:
- Debit cards. The first-choice payment card for people who don’t want to pay on credit.
- Credit cards. These let you buy things on credit. You can spend up to a pre-set limit, which might be a few hundred or several thousand pounds. If you pass a credit check, you might be able to get a card from a bank or a credit-card provider.
- Prepaid cards. These cards work like pay-as-you-go phones – you can only spend what you put in. However, because they often charge a fee, you might be better off with a basic bank account (see Types of bank account above).
Making payments into your bank account
There are lots of ways you can put money into your bank account.
- Some of the most common include:
- Over the counter
- In-branch deposit machines
- By post
Paying bills, friends and online shopping
To make payments from your bank account, a few options are available.
Make sure you keep track of any Direct Debits you have – you might have to pay a fee if you don’t have enough money in your account to cover them.
- Direct Debits and standing orders. A great way to automate bill payments from your bank account. Particularly handy for regular monthly payments, such as energy bills.
- Phone and online bank transfers. A fast and easy way to make one off payments.
- Banker’s drafts and cheques. A useful way to send money or pay one-off bills. Write the details of your payment in your chequebook and give the cheque to the person you’re paying, or send it by post.
- E-payments. Use technology such as PayPal or Apple Pay to shop or send money online. It reduces the risk of fraud as you don’t need to share your bank card details, but you will need to open a free account with an e-payment service provider.
Do you need an overdraft?
Overdrafts should only be used for short-term borrowing or emergencies. Unfortunately, it’s all too easy to treat an overdraft as your spending limit rather than as a last resort.
What does it cost to run a bank account?
If you do it right, running a bank account shouldn’t cost you much – it might even be free.
The key to avoiding fees, or paying as little as possible, is matching your bank account to your needs.
For example, if you regularly go into your overdraft, pick an account that doesn’t charge high fees for this.
What if something goes wrong?
If you’re not happy with your bank, or something goes wrong with a payment, you might be protected.
- Find out how to Sort out a money problem or make a complaint.
- Learn What to do when things go wrong – payments.
- More information about getting Compensation if your bank or building society goes bust.
Find out more
- Learn the best ways to manage a bank account and more in our Beginner’s guide to managing your money.
- Keep your finances on track using our free Budget planner.
- Cut your costs with How to save money on household bills.
This article is provided by the Money Advice Service.