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.
Pros
Low overseas fees
Quick sign-up
Earn cashback on spending
Set budgets for financial goals
Virtual cards for online purchases
Easy to transfer money internationally
Cons
1% currency conversion charge on weekend spending abroad
Free cash withdrawals in the UK and abroad both limited to £200 per month
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.
Pros
Easy to set up
Good for budgeting and categorising spending
Automatic saving feature
Fee-free spending abroad
Slick app with face login
Overdrafts and loans available
Cons
Free ATM withdrawals outside the EEA limited to £200,
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.
Pros
Accepts range of ID documents, ideal if you’ve recently moved to the UK
No monthly fee
Comes with a prepaid debit card
No credit check
Cons
One-off activation fee applies
Transaction charges also apply
Minimum opening balance
£0.01
Minimum operating balance
£0
Switch service guarantee
No
Account fees
£0
Overseas card transactions
Europe: 2% plus flat fee of ££1 Elsewhere: 2%% plus flat fee of ££1
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.
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.
Sources
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables is provided by Defaqto. In other cases, Finder has sourced data directly from providers.
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.
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