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Banking and borrowing

Banking options for people in debt

When you're in debt, it's important to know what banking options are available to make sure your money is safe and you can prioritise your household bills over your unsecured debts.

If you've got debts with the same bank that your current account is with, we recommend talking with your bank to find out what your options are.

They may be able to:

  • separate any overdrafts from your existing account
  • set up a new 'clean' basic bank account for you
  • help you to reduce your overdraft at an affordable rate and in line with your other debts

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What to do if your bank can't help

If your bank are unable to help, we recommend setting up a new basic bank account with a provider you don’t have any debts with and paying your income into this account. You’ll need an account that has no credit facilities. Your new provider may perform checks to confirm your identity but don’t worry; there should be no need to perform a credit check with this type of account.

Although it’s extremely rare, banks can use the 'right of set off' to take money from your account to pay your debts if you've fallen behind with your payments. This includes your overdraft, credit card or loan payments if they're with the same bank.

If you're struggling to make payments to your debts, and your bank is unable to offer any help, you need to make sure that you prioritise your household bills and living costs, and make sure your income is available to you without the bank taking it first. By opening a basic bank account elsewhere, you'll be in control of where your income goes, and how you budget your money.

Credit unions are also an alternative to high street banks worth considering, as they offer accounts to people on low incomes or who have a poor credit file. This means they can be a better alternative if you're already struggling with your finances.

Dealing with bank account problems

If you have debt with your bank or you've had money taken from your account to cover a debt, we can help.

Our online debt advice tool can help you put together a personal action plan.