Borrowing money – on credit cards, personal loans, etc. – can be helpful if you need to give your cash flow a temporary boost every now and again.
However, finding yourself in debt you can no longer manage can be a very different story. People who have lost control of their debts may find they have to enter an insolvency solution such as an Individual Voluntary Arrangement (IVA), or even bankruptcy.
Although these solutions can help people regain control of their debts and work towards improving their financial situation, they aren’t completely free from downsides. One thing almost all debt solutions have in common is their effect on your credit rating: they can show on your credit history for three to six years.
Although a poor credit history can stop you from successfully applying for further credit, opening a new bank account is still possible – but you’ll probably have to look a bit wider at what accounts are on the market.
Here we’ll look at some possible banking options for people in debt.
“I’ve applied for a standard bank account – and been turned down”
If you have a less than ideal credit rating – because you’re currently bankrupt, in an IVA, or getting back on your feet after debt problems in the past – some banks may have turned you down if you’ve applied for a standard account.
This is because banks often regard someone with a poor credit history as a risk. However, there are possible alternatives. Some basic bank accounts don’t require a credit check, so you could successfully apply whatever the shape of your finances, or credit rating.
However, there are still certain criteria you may have to meet before opening a basic bank account – most of them require you to be at least 18 years of age and an official resident of the country, for example.
“I’ve had debt problems in the past – and want to avoid them in the future”
I’ve you’ve had debt problems in the past, and you’ve struggled with managing your money well, you may be looking for some extra help with making up a budget and sticking to it.
Knowing exactly how much money you’re spending – and how you’re spending it – could enable you to keep a tight rein on your finances, and help you to steer clear of any more problems.
Some budgeting bank accounts are designed with this purpose in mind, and could let you separate your ‘bill money’ from your ‘spending money’ – which could give you confidence that you’re not spending beyond your means.
Again, talk to different bank account providers or have a look online and find out if a budgeting bank account could work for you.
