Opening a basic bank account with overdrawn current account

flanker

Hi there,

I'm due to receive an small inheritance from my late uncle, but I have a bit of a problem in that my current account is well beyond my overdraft limit. So most of the money would be swallowed up if paid into that account.

I'd much rather offer a full and final settlement with the bank (a lot of it came from charges and interest) using some of the inheritance, so I need to pay it into a different bank account that's in my name.

Obviously my credit rating isn't great, so I went to a few different high street banks and asked about opening a basic bank account and they all said I couldn't if I had another current account that was open.

Is there anyone who will let me open a bank account, despite having a bad credit rating and an existing current account?

Many thanks

binaryuniverse

I was told the same, when I did have a load of defaults on account. But I did get a second account via Lloyds. Think I applied for a normal one, online, and was given a basic one. Had a debit card and such.

Even so, if I was in your position, I'd be using that lump sum to pay off the overdraft. Once that is done, start looking at how you can avoid getting in to that scenario ever again.

GDB2222

flanker wrote: »

Hi there,

I'm due to receive an small inheritance from my late uncle, but I have a bit of a problem in that my current account is well beyond my overdraft limit. So most of the money would be swallowed up if paid into that account.

I'd much rather offer a full and final settlement with the bank (a lot of it came from charges and interest) using some of the inheritance, so I need to pay it into a different bank account that's in my name.

Obviously my credit rating isn't great, so I went to a few different high street banks and asked about opening a basic bank account and they all said I couldn't if I had another current account that was open.

Is there anyone who will let me open a bank account, despite having a bad credit rating and an existing current account?

Many thanks

Could you ask the executors to hang onto the money for a month or two, whilst you sort out your bank? That seems simpler than opening a new account.

flanker

binaryuniverse wrote: »

Even so, if I was in your position, I'd be using that lump sum to pay off the overdraft. Once that is done, start looking at how you can avoid getting in to that scenario ever again.

Thank you for the advice. I am indeed planning to use a fair chunk of the lump sum to close the overdrawn account via a full-and-final settlement - hence why I need another account to pay it into.

Anthorn

flanker wrote: »

Thank you for the advice. I am indeed planning to use a fair chunk of the lump sum to close the overdrawn account via a full-and-final settlement - hence why I need another account to pay it into.

My guess is therefore that you don't intend to pay off the full amount you owe and will instead be seeking to pay a reduced amount as a full and final settlement and you don't yet have that agreement from the bank.

If the above is true the problem you could have is that the bank is only likely to agree to a lower amount in full and final settlement if there is no chance of getting the full amount any time soon. Most lenders are likely to look upon a lower amount in full and final settlement as a cost saving measure.

Have a look at Coventry Building Society Money Manager. It's a savings account without any credit element so likely to be opened without a credit check and it has most of the functions of a current account including a VISA "cash card" allowing ATM withdrawals. But no overdraft which in your case might not be a bad thing:
https://www.coventrybuildingsociety.co.uk/consumer/product/savings/everyday_money/moneymanager.html

eskbanker

flanker wrote: »

Thank you for the advice. I am indeed planning to use a fair chunk of the lump sum to close the overdrawn account via a full-and-final settlement - hence why I need another account to pay it into.

'Full' as in paying back everything you owe them or do you mean "I could pay all my debt back but feel it's morally justifiable to try not to"?

GDB2222

eskbanker wrote: »

'Full' as in paying back everything you owe them or do you mean "I could pay all my debt back but feel it's morally justifiable to try not to"?

He may feel it's not morally justifiable but want to do it anyway. Please feel free to cast the first stone, assuming that you have never done anything wrong in your life.

flanker

eskbanker wrote: »

'Full' as in paying back everything you owe them or do you mean "I could pay all my debt back but feel it's morally justifiable to try not to"?

A large chunk of the amount I owe came from big charges and interest - mainly on the balance of an overdraft limit that Santander decided to withdraw at short notice. Unfortunately I had a bad accident that broke my patella, so wasn't able to work and pay off the overdraft in the single month they wanted.

From there it snowballed.

So no, I don't feel morally wrong paying back the money I actually owe - as opposed to the interest and charges.

But thank you so much for the judgment. I now regret bothering to come on these forums.

Anthorn

flanker wrote: »

A large chunk of the amount I owe came from big charges and interest - mainly on the balance of an overdraft limit that Santander decided to withdraw at short notice. Unfortunately I had a bad accident that broke my patella, so wasn't able to work and pay off the overdraft in the single month they wanted.

From there it snowballed.

So no, I don't feel morally wrong paying back the money I actually owe - as opposed to the interest and charges.

But thank you so much for the judgment. I now regret bothering to come on these forums.

Seeking to pay a reduced amount in full and final settlement is not unknown and you'll find several examples of it if you search MSE Forums. But usually it's because someone has fallen into debt, wants to get rid of the debt but either don't have the full amount in order to pay off the debt or paying it off will cause severe hardship. But in your case you seek to hold back funds which you could use to pay off more of the debt. I assume the lender did not keep the charges, fees and interest a secret and you agreed to them and you should pay them provided you have the money to pay. Morals don't have anything to do with it. Hey if that's a judgement then so be it.

eskbanker

flanker wrote: »

I don't feel morally wrong paying back the money I actually owe - as opposed to the interest and charges.

You're not the first and won't be the last to try to rationalise partial debt repayment on the entirely spurious grounds that the costs of borrowing (that you'd have agreed to when doing so) are somehow less legitimate that the amount originally borrowed and can therefore be unilaterally ignored when the time comes to settle up, but it's a completely bogus argument that holds no water....

allybee101

To answer your question about bank accounts, I think most high street banks class a basic account as one for someone who doesn't qualify for a current account due to a poor credit rating. It usually has very basic facilities (debit card but no interest rates for a credit balance and no overdraft facility).
If you already have a current account the banks probably won't want to set up a basic account.

You should be able to open a second current account without too much difficulty. I have my main current account with one bank and a couple of months ago I opened a TSB Classic account to help with budgeting for some separate costs. I didn't apply for an overdraft facility on the TSB account so I don't think a credit check was carried out.

Alternatively, set up a savings account, deposit the money in there and then move around as necessary.