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All about banking

Banking and money can seem complicated, but it needn’t be.

By making the effort to find out a bit more about how to bank responsibly you can really take control of your finances! These pages will help you understand all you need to know about using banks so that you can keep in control of your money, and not let it control you!

Banking basics

What is a bank account?

A bank account is a place where you, or others but only with your permission, can deposit (put in) and withdraw (take out) money.

If used properly a bank account can help you keep your money matters on track. And if you stay in credit you can even earn interest - when the bank gives you money!

What? People can take money out of my account?

Don’t worry! They can only do this with your permission. You can also arrange for payments to go out automatically for regular bills – like rent, council tax, phone. This is called a ‘direct debit’.

For example, if you start a phone contract then they will normally expect you set up a direct debit so they can take the money straight from your account.

Some bills can be a teeny bit cheaper if you pay them by direct debit.!

I’ve always kept my money in a piggy bank. Why do I need a bank account?

Everyone needs a bank account at some point. It gives you easy access to your money and means that you can get paid by work, you can receive loads and grants, and you can receive any benefits you are entitled to. It is pretty impossible to build a life for yourself without one.

What are the different types of accounts?

The two main types are ‘current’ accounts and ‘savings’ accounts. 

Current accounts

Current accounts give you easy access to your money. You receive a debit card and this means you can take money out of cash machines, pay for things in shops, and shop online using the numbers on it.

Most banks offer starter or basic accounts for young people or students that come with incentives and special offers. Shop around – look online or go into your local branch, there should be someone there who can talk to you about what you need. Don’t just sign up for the first bank you walk into!

For more advice on getting a current account, click here.

Savings Accounts

If you have money left over each month, the best place to store it is a savings account.

Savings accounts are great for storing money you want to keep in a bank for a long time, without using it. It can earn you interest as well as making sure that if ever there is an emergency, you have enough money to deal with it.

The accounts offering the highest interest rates on your savings usually have rules about when and how you can take the money out again. So don’t use one of these if you think you might need your money at short notice. Things might get tricky!

For more advice on getting a savings accountclick here.

You might have heard of 'credit' and 'debit' cards.

credit card is a way of spending money you don't have - you get money on 'credit' and pay it back each month. 

debit card is your bank card - when you pay for something with it the money is taken out of your bank account.

Finding the right bank for you

There are loads of banks, some good, some bad, but it’s probably best when starting out to find a bank who have a branch near where you live. This will mean you’ve always got the chance to pop in for some advice if you need it.

Online banking

Online Banking is an easy way to keep a track of your money and do the everyday things you may need to do with your bank account on your computer or phone. These could include checking your balance, transfer money and make payments at any time.

Different banks set up their internet banking differently, but they will all have strict security measures in place to make sure that no one else can access your account online. When you join up they will ask you a set of security questions and give you a password. You will need to use some or all of these pieces of information when you access your account online to prove that it is your account – so don’t forget them! Most banks also have handy apps you can download to your phone.

Security tips for online banking

  • Don’t write down your passwords or tell them to anyone
  • Check your account regularly and report any unusual or unauthorised transactions immediately
  • Always log out properly when you’ve finished your online banking, and don’t leave your computer unattended while you are logged in
  • Try to avoid using public computers for online banking, such as in a library or internet café
  • Install up-to-date anti-virus and anti-spyware software
  • Keep your operating system (eg Windows) and web browser (eg Firefox) software up to date
  • Don’t respond to emails or phone calls from anyone saying they’re from your bank and asking you to share your security information with them. It’s ok for your bank to ask you security questions if you called them
  • Don’t open emails from unknown senders as they may contain a virus that will infect your computer
  • Connect to your bank account through the bank’s website, not through a link in an email
  • If your account is hacked and money taken from it, the bank must refund you. Banking regulations say that a bank can only refuse a refund for an unauthorised transaction if it can prove you authorised the transaction or that you acted fraudulently or were grossly negligent in failing to protect your PIN and password
  • If your bank refuses to refund you, take your complaint to the
  • Financial Ombudsman Service. It will look at each case on its merits.

Borrowing Money

Sometimes big bills all come at once and you may not always have the money to cover your expenses each month – this means you might go overdrawn.

Going overdrawn means spending money that isn't in your account. Check with your bank because you will probably be charged a fee and you’ll have to pay this fee plus the extra money you spend before you’re back in credit.

At times like these you may need to borrow money. That’s okay, as long as you can see a time ahead when you'll be able to make the repayments.

Remember: No one gives away money for free!

If someone is willing to lend you money without asking too many questions about whether and how you can pay it back, back off!


An overdraft is when the bank increases the amount of money you can take out of your bank account. This seems great, but remember that it is for emergencies only and will have to be paid back.

If you know you're going to need an overdraft, talk to someone in your bank. They'll want to know what the money is for and how long you'll need it. Remember – your bank would rather you went and spoke to them so they can help you than get yourself into a lot of trouble that you can’t get out of.

Credit Card

If you have a credit card you can use it to pay for things and pay back a bit each month. However, watch out because the interest they charge can be high, and if you only repay the minimum amount each month you'll end up paying more for the item than it's worth.

If you need to buy something big on a credit card like a bed or sofa, then look for a credit card that offers ‘interest free credit’ for a period of time. Then you can spread your payments over that time – usually six months or a year – at no extra cost.

Payday Loans and loan sharks

Payday loans are designed to give people a little money when they are desperate in exchange for extremely high interest rates in return. This means that however little you borrow you end up paying hundreds or even thousands of pounds more.

We don’t like payday loans. Most people don’t. But people still use them – mostly because they think they’re the only option if you need to get your hands on some cash urgently.

Before you even consider applying for a Payday Loan, contact the Money Advice Service.

Loan sharks are a completely different beast. They're unlicensed, they break the law, often go knocking door-to-door and at worst use they horrific methods – including violence and threats of violence against the borrower or their family or children - to get their money repaid.

If you know of loan sharks near you, report them on 0300 555 2222 (you can also text LOAN SHARK and lender's details to 60003, or visit the Government's Report a Loan Shark page).