Bank accounts with no overdraft? 25 November 2022 at 7:34PM in Budgeting & bank accounts 29 replies 1.4K views

Rondo

I'm looking for a second bank account to use for online shopping with a debit card without exposing my main account, as a fee-free alternative to the prepaid card I currently use (I don't use credit cards).  The main requirement I have is that there is no overdraft of any kind, so if there aren't enough funds in the account for a payment it should just fail with no penalty charge instead of causing an unarranged overdraft.

From what I've seen, Chase would be perfect for this, except it's app-only and I don't want anything banking related on my phone.  Does anyone know if there are any non-app alternatives?  I know basic bank accounts are a thing, but I've asked various providers and nobody will let me have one as I'm eligible for other accounts.

username

I suppose you could always set up a second account with whoever you bank with and freeze the card in the internet banking when you are done with it. E.g. Natwest

The other option would be to get a credit card, this would offer Section 75 protection on items between £100 - £30,000 bought on the card.

Band7

If online banking is a condition, your choices are very severely restricted. But you could try Starling Bank, they have a web-based interface alongside their app. There are also some High Street Banks which offer "control" features which include no overdraft ability. I think Lloyds, Natwest, RBS might offer these.

There are some beautiful app-based cards that cannot go overdrawn: Tesco Clubcard Pay+, Kroo, Chase. Banking apps are less vulnerable than online banking, btw.

Rob5342

Starling have web access but you need the app on your phone to authenticate it. Why don't you want anything banking related on your phone? Apps are more secure than web page access. Also with some banks you'll get an app notification whenever anything is spent so you can spot fraud instantly, instead of only finding out the next time you log in.

Whats wrong with any old account with no arranged overdraft? In my experience things are normally declined if they will take you over the arranged overdraft. I don't think you can ever guarantee it can never go overdrawn, my daughter's child current says it's still possible for it to be overdrawn in some circumstances (offline transactions for example)

There shouldn't be much of a risk as the bank will refund you for any unauthorized charges. If you are using it like a prepaid card then any fraudulent transactions could still be taken from your balance.

I'd go for a modern app only bank like Starling, Momzo or Chase, turn on notifications so you are aware of all transactions, and if you are being really cautious freeze the card in the app when you don't want to spend on it.

ZeroSum

Just pick any high Street bank & just don't apply for overdraft. I've got loads of accounts & none of them have an overdraft 

Could also look at tescos clubcard pay plus which is essentially a prepaid debit card

Rondo

I don't want to use an app because I don't want to keep my password on my phone and I'm not entering it manually each time.  For online banking, I built my own password manager because I didn't want to use off the shelf ones.  Anyway, I'm not here to be persuaded of the merits of apps.  I don't particularly like using my phone for anything, and only have one at all because everyone I know seems to communicate exclusively via whatsapp.

Are offline transactions also an issue for prepaid cards with supposedly no overdraft?  How do they avoid going into a negative balance if bank accounts can't?  Or is it that they actually can go overdrawn in some cases and just bury it in the small print?

Band7

Rondo said:

I'm looking for a second bank account to use for online shopping with a debit card without exposing my main account, as a fee-free alternative to the prepaid card I currently use (I don't use credit cards). 

So what's wrong with your current card? The fee?

Rondo said:

The main requirement I have is that there is no overdraft of any kind

There are several good alternatives for cards which don't allow overdrafts, as already mentioned.

But is seems your main requirement is not actually no overdraft. Your prime requirement appears to be something that doesn't involve an app. This appears to be a somewhat irrational requirement, as app security is superior to online banking, but if it is your main requirement, you'll have very limited options. These have also already been mentioned.

phillw

Band7 said:
This appears to be a somewhat irrational requirement, as app security is superior to online banking, 

And online payment authorization is being moved to apps as well (I'm not sure if there is a way of opting out of that if you don't use their app)

SiliconChip

What you also need is a card that will always check to ensure you have funds before authorising payment. That will achieve what you are looking for if the account has no overdraft set up, but may have unintended consequences, such as not allowing the payment to proceed even if you do have funds if the card issuer cannot be contacted for any reason. One example is some pay at pump petrol stations, which don't permit the use of such cards.

Rondo

Band7 said:

Rondo said:

I'm looking for a second bank account to use for online shopping with a debit card without exposing my main account, as a fee-free alternative to the prepaid card I currently use (I don't use credit cards). 

So what's wrong with your current card? The fee?

Yes.  There's a monthly fee, and also a fee for paying to other bank accounts.  It was free for those things when I signed up, but costs have gradually increased over the last few years to the point where it's costing me £35-40 a year.

Band7 said:

This appears to be a somewhat irrational requirement, as app security is superior to online banking

People keep saying this, but I don't see any particular reason to believe it without an authoritative technical source. 

In any case, if my requirements were completely rational I would probably just use a credit card, since my primary requirement is to have a safe card to use for online shopping without exposing my main bank account.  However, my irrational dislike of smartphones is nothing compared to my irrational dislike of borrowing money for any reason whatsoever.  I'm not prepared to change my irrational requirements, so this line of conversation is a dead end.

Band7

Rondo said:.

Band7 said:

This appears to be a somewhat irrational requirement, as app security is superior to online banking

People keep saying this, but I don't see any particular reason to believe it without an authoritative technical source. 

Plenty of authoritative technical discussions about this available on the internet

Rondo said:

....my primary requirement is to have a safe card to use for online shopping without exposing my main bank account.  

You could try Wise. They are not a bank but are offering a free virtual card and it's easy to transfer money to Wise. You can use your account online, though I think you might need a phone for 2FA. Watch out for hidden charges, though - Wise have recently started to introduce all sorts of charges.