Abacus Daily Debt News

Opening a new bank account with bad credit

For many people, the biggest mistake they make financially is having debts with their own bank. Banks have the “right to offset” i.e. they will always take money from a debtor to cover the debts with the bank in preference to any other payments due.

It is easy to get into major debt management problems, even leading to mortgage arrears and repossession due to this one thing. Put very simply, a bank would rather pay itself for a loan, credit card or overdraft than pay a mortgage payment, even, incredibly, if the mortgage is with the same bank.

Therefore, a major part of solving debt management problems is to obtain a new account where there are no debts so that a debtor can control his or her finances again. The big question is how easy is it to do so?

Don’t Be Sold An All Singing - All Dancing Bank Account
To fully understand this, it must be remembered that whenever you walk into a bank they will try and sell you something, whether it be life/home/car insurance, loans, credit cards or, in this instance, bank accounts.

If you fall into the trap of applying for the account they want you to have then you may be signing up for an account with credit facilities, not a good move if you have had credit problems as you will fail a credit check and therefore not get that account.

For those with debt problems, I recommend a basic account. All banks provide them but normally you have to specify that you want that type of account, they make very little money on these accounts so they tend not to advertise their existence too much.

Basic Bank Account Opened Over The Phone.
As a test, I called a High Street bank today and opened an account over the phone. The account is a basic one and comes with no credit facilities, but it does have internet banking, phone banking and a debit card. The whole process was done over the phone and took no more than 10 minutes. As an example of customer service, I have come across no better.

I have not named the bank here as I am impartial and would not like to favour one over any others, however if you find yourself with difficulties with your debts and need to open a new account then please feel free to call me direct on 0161 905 8813 and I will be happy to point you in the right direction.