Opening a bank account with an IVA

You can still get a bank account with an IVA, but the process won't be as straightforward.

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Rachel Wait

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An individual voluntary arrangement (IVA) is a legally binding agreement between you and your creditors to pay back your debts over a set time.

Having an IVA can have a negative impact on your credit score which means there will be restrictions on the type of bank account you can apply for. This guide is for those looking for a consumer current account; we have a separate guide on opening a business bank account after an IVA.

Bank and e-money accounts you can open with an IVA

Revolut Standard

Revolut Standard

8.9 Great
Minimum opening balance£0
Account fees£0
Interest (AER)0% AER
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It’s quick and easy to open an account with Revolut and you won’t need to undergo a full credit check as there’s no overdraft facility. Instead, if a purchase exceeds the amount in your account, it should be declined. Or if your balance falls below zero, you will be notified and given up to 7 business days to add money. You’ll have 5 pricing plans to choose from, one of which has no monthly fee. With this account, you can easily send money abroad, as well as withdraw up to £200 per month without charge. Paid-for accounts offer more features, but may be less suitable while you’re getting your finances back on track.

Monzo Current Account

Monzo Current Account

9.3 Excellent
Minimum opening balance£0
Account fees£0
Interest (AER)0% AER
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You can open a bank account with Monzo without requiring a full credit check, making it a good option for those with bad credit. There are 4 different Monzo pricing structures to choose from, so you can pick the one that best suits you. To sign up for an account, you will need to download the app, provide your personal details and verify your identity by taking a video of yourself and a picture of your ID, but no proof of address will be required. The account allows users to set spending budgets by category, establish savings pots, divvy up their salary into spending, savings and bills, and benefit from fee-free transactions abroad.

Representative example: If you use an arranged overdraft of £1,200, you'll be charged interest at 39% EAR variable.

Starling Current Account

Starling Current Account

9.8 Excellent
Account fees£0
Interest (AER)0% AER
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Only a soft credit check is carried out when you apply for the Starling account, as long as you’re not applying for an overdraft. All you’ll need to provide are some personal details, a photo of your ID and a selfie video. You can manage the account via the app and there’s no monthly fee to pay. You’ll be able to transfer money with ease, set up different savings spaces to save for different goals, track spending and spend on your card overseas for free. What’s more, you can set money aside from your regular bills, split bills with friends and earn interest on your balance.

Representative example: If you use an arranged overdraft of £1,200, you'll be charged interest at 15% EAR variable.

Suits Me Essential Current Account

Suits Me Essential Current Account

Minimum opening balance£0.01
Account fees£0
Interest (AER)0% AER
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Cashback Rewards.

This is another account that doesn’t involve a credit check when you open the account. All you’ll need is to be at least 18 years old and have a UK address. There are 3 pricing structures to choose from, including a pay as you go account. This has no monthly fee but transaction charges apply - or you can upgrade to a paid-for plan which can be more suitable for everyday banking. You can also benefit from cashback on spending and retailer discounts. Suits Me doesn’t offer any overdraft facilities, but your account comes with a free contactless prepaid debit card and you can manage your account via the app.

Opening a bank account that doesn’t require a credit check

If you have an IVA and want to open a bank account, one option is to look for an account that doesn’t require a credit check. Fortunately, thanks to the rise of digital-only banks, these accounts are becoming increasingly common.

For example, you could look at accounts with Card One Money, Suits Me or thinkmoney. Just be aware that they often come with monthly or other fees attached.

Challenger banks such as Starling and Monzo also offer accounts with no hard credit check, as long as you’re not applying for an overdraft, and these don’t always charge monthly fees.

These accounts are typically quick and easy to open via the provider’s app, and your account can often be up and running the same day. Just keep in mind that this also means you won’t have a bank branch to pop into and not all accounts let you deposit cash.

But on the plus side, some accounts come with added perks such as fee-free spending abroad or interest on your balance. So be sure to compare them carefully, looking at fees, rewards, access, and eligibility requirements.

You can also find out more in our guide to bank accounts for bad credit.

Opening a basic bank account from a high street bank

Another option is to open a basic bank account with a high street bank. Some banks will carry out a credit check as part of the application process, but this is mainly to verify your identity.

Basic bank accounts are tailored towards those with poor credit, so you have a better chance of getting accepted. What’s more, you’ll be able to pop into your local bank branch if you don’t want to always bank online.

However, as their name suggests, these bank accounts are basic day-to-day accounts. This means there will be no perks or benefits with your account and you won’t have an overdraft either.

How an IVA can impact getting a bank account

Having an IVA indicates you’ve had problems managing your money in the past. This can make providers more reluctant to let you open a bank account – and you’re certainly not likely to get an overdraft. As a result, you’ll have less flexibility when it comes to the type of bank account you can open.

But the good news is there are still plenty of options to explore with both high street banks and digital-only providers.

Alternative options

As well as the accounts we’ve mentioned above, you could consider applying for a prepaid card. No credit checks are carried out, so you don’t need to worry about having poor credit.

Prepaid cards let you load cash onto your card in advance, and you can then only spend what’s on it, making these cards ideal for budgeting purposes. Some cards also have built-in credit building features, whereby the provider effectively lends you a year’s worth of monthly fees. You then repay this over 12 months and by making your payments on time and in full, your credit score starts to go up.

How to manage your existing bank account

If you have an IVA, you’ll probably be advised to open a new bank account if you have a debt, such as an overdraft or a credit card, with your existing bank account provider that’s included in your IVA. If you don’t do this, your bank could freeze your account or take funds from it to pay off your debts.

This also applies if you have debts with any providers in the same banking group – for example, if you have a debt with HSBC and a bank account with First Direct.

If your existing bank account isn’t linked to any of your creditors, you don’t have to switch bank accounts. But it’s best to stay out of your overdraft if you have one, and make sure you pay any bills on time. If your account has any budgeting features, be sure to make use of them to help you stay on track and meet the terms of your IVA.

Bottom line

If you have an IVA and need to open a new bank account, you won’t have as much choice as someone with good credit. However, it’s worth comparing accounts with both challenger banks and high street banks to see what works best for you. Remember to consider factors such as fees, rewards, how to manage the account and eligibility requirements before applying.

Our “Best for” picks highlight top options in specific categories based on our independent evaluation (see our full methodology), while “Promoted” tags indicate sponsored placements. Selected products may not suit everyone. We track selected market offers, which may not cover every product. Products are listed in no particular order unless specified, and inclusion or ordering may be influenced by popularity or commercial agreements. Most comparison table data is provided by Defaqto or sourced directly from providers. Always evaluate your own circumstances and consider independent advice before making major financial decisions.
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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio

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