Banks and Building Societies

Banks and building societies offer a really good and safe place to keep your money. It’s also a great way for you to try and save your money and earn some interest.

There are lots of things you need to think about carefully when opening a bank or building account as they make a difference to how easy it is to get to your money.

Location

Choose a bank or building society that is easy to get to.

This may be important to you as you may want to have easy access to your money and make regular deposits.

Your account may only come with a pass book so you will have to get to your bank or building society to put money in and draw money out. Your choice may be limited if you live in a rural area or are after a particular account.

Internet banking may be an option. Internet banking has the obvious advantage of being able to control your account without having to phisicaly go to a bank or building society.

However, there are down sides.

You need to be confident about handling a bank account without the need to ask for help and advice. There is little customer service available and often you will receive a postal statement once a year rather than every month as with conventional banks.

Accessing your money

Most bank accounts for young people offer a cash card, which allows you to take money out of any branch or cash machine. Some cash machines may charge you for this service.

There may also be a debit card available on some accounts (depending on certain conditions such as age set by the bank). A debit card allows you to take money out of your account like a cash card, but also allows you to make payments directly with it in shops, over the phone or on the internet.

Some building societies will give you a pass book. Every time you take money out or put it into your account, it will be entered into your pass book, so it’s easy to keep track of your money.

One thing you don’t want is someone else getting access to your money so security measures are important.

PIN

With both a cash card and debit card you will have a Personal Identification Number (PIN). This is a four digit number that you will need to remember so you can take money out of a cash machine and make payments in shops.

Never give your pin number to anyone. If you need to write it down to remember it, don’t keep it with your card.

Without your pin number, it is difficult for anybody else to take money out of your account using a cash machine.

Chip and PIN

You may have heard about chip and PIN but what is it?

During 2004 a new system was introduced across the UK to reduce debit card fraud. The chip and PIN card looks the same as your existing debit card, but it has a ‘smart’ chip that holds your 4 digit PIN.

When you pay for goods in a shop with a chip and PIN card you won’t have to sign a receipt. Instead you’ll be asked to enter your PIN into a keypad.

This means that if you loose your card and someone else tries to use it they would also need to know you PIN. The chip is personal to you and the PIN, unlike a signature, cannot be forged.

To find out more about chip and PIN visit the official chip and Pin website www.chipandpin.co.uk/

Lost or stolen cards, cheque books and passbooks

If you do loose your cash, debit card (chipped or not), passbook or cheque book you must report it straight away. Contact your branch of bank or building society as soon as you can.

Your bank or building society may also have a 24 hour emergency phone number that you can ring if you can’t get to your local branch.

Type of accounts

There are a lot of different accounts on offer these days and hopefully after a little bit of shopping around you will find one to suit you.

When you open an account one thing is for curtain you will have to prove who you are. All banks and building societies will ask for some form of identification, such as a passport or birth certificate and proof of your address.

It is a good idea to check with the bank or building society beforehand to find out what they will accept.

The amount of interest paid varies with different accounts and banks and building societies. Some accounts may pay very little interest or non at all.

Interest is effectively a reward from the bank or building society for keeping your money with them. The amount of interest you earn is a percentage of the total amount that you have saved.

The more money you have in your bank account, the more money you earn in interest.

Youth Accounts

If you are under 16 there are plenty of accounts available. Both banks and building societies offer a good range of these types of accounts.

A single bank or building society may have two or more accounts available to young people.

To open a young persons account most banks and building societies will ask for a small cash deposit. You may also have to ask your parent or carer to open the account on your behalf.

You will either get a passbook and/or cash card to access your money.

Current Accounts

You have to be 16 or over to open a current account.

Most people have a current account to manage their day to day finance.

With a current account you usually get a cash card or debit card and/or cheque book. You will also be able to set up Direct Debit and standing orders and possible arrange an overdraft.

Direct debit

This is a payment taken out of your current account. It is set up with your agreement, by the organisation which receives the money.

Most people set up direct debits as they are an easy way to pay regular bills.

There are many things you can pay for by direct debit including:

  • gas and electric bills
  • television licence
  • mortgage and car insurance payments
  • magazine subscriptions

You should know before you start how much each monthly payment will be and what date in the month it will come out of your account.

If you want to know more about direct debit visit www.directdebit.co.uk/

Standing orders

This is where you instruct your bank or building society to pay a fixed amount of money regularly from your current account into another bank account. The amount and date, for example 1st of each month, is agreed by you.

This is a good way to make regular payments from a current account into a savings account.

Overdraft

This is when you end up taking out more money than you have in your account.

Sometimes you will have to arrange this with your bank or building society – this is called an authorised overdraft. Other banks or building societies will allow unauthorised overdrafts.

You will be charged for both authorised and unauthorised overdrafts. Agreed overdrafts with your bank or building society have lower charges.

If you think you will overdraw on your account talk with your bank or building society and arrange an overdraft facility.

Savings accounts

There is a huge range of savings accounts available to suit your needs. Most banks and building societies will ask for a cash deposit to open a savings account.

If you are trying to save, you would be best to choose an account with a high interest rate. However, a general rule is the higher the interest rate, the less often you can take money out of your account.

If you want to dip into your savings on a regular basis make sure you get a savings account that lets you withdraw money whenever you need to.

With some savings accounts you will need to give a period of notice before you can make a withdrawal. Check whether you will have to do this and if so, how much notice you will need to give them.

Student accounts

Many banks and building societies offer student accounts, with special overdraft rates while you are studying.

A good place to look for what offers are available is on ‘studentzone’. It will also give you some information on student loans, grants and scholarships.

If you are about to start a college or university course you can visit the Students and Money section on the Youth Start website for more advice on keeping your finances healthy as a student.

Who can help?

The Find website provides links to many of the banks and building societies within the UK. For links to banks visit www.find.co.uk/banking/Personal_Banking/. For links to building societies visit www.find.co.uk/banking/Building_Societies/

Up My Street offers you a quick and convenient way to find your nearest bank or building visit www.upmystreet.com/nrs/?cat=1139

Fair Investment provides comparisons between all sorts of financial services, including online banking.

The Youth Information website provides details for young people on how best to manage your money and open a bank account.

Ask family and friends which banks and building societies they use and why, and how they decide.