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Different types of accounts

Banks and building societies offer a range of different accounts to suit different people and circumstances.

Current accounts
Current accounts are the accounts that most of us use in day-to-day life. They may differ slightly from bank to bank but generally current accounts enable you to:

  • receive money into your account

  • take money out of your account at cash point machines and branches

  • use a debit card to shop in person, online and over the phone

  • write cheques supported by a cheque guarantee card

  • set up direct debits and standing orders to pay bills straight from your account.

They may also provide:

  • an overdraft facility, which lets you spend more money that you actually have in your account.

  • Telephone or Internet banking

  • Interest on your money. See our section on interest for more information.

Basic accounts
Basic accounts are similar to current accounts but offer fewer facilities. They are designed for people who don’t want an overdraft facility or may have problems opening other accounts. This can happen for a number of reasons, for example they may not have a good record of repaying loans or it may simply be because they have a low income.

With a basic account:

  • you can receive money into your account

  • you get a cash card so that you can take money out of your account at cash point machines as well as over the counter in branches

  • you can set up direct debits and standing orders to pay bills straight from your account

  • you can only take out as much money as you have in your account, which means you can’t run up debts.

Savings accounts
Savings accounts are not for managing your day-to-day money. Instead, they are designed as safe places for you to keep your savings, which means any money that you choose to put aside instead of spending it.

  • Savings accounts pay interest on your money, which means your savings will grow. See our section on interest to find out more.

  • Some savings accounts let you take out your money as soon as you want to while others expect you to give notice or ask you to tie up your money for a certain amount of time.

Joint accounts
A joint account is an account that belongs to more than one person. Joint accounts are often set up by couples that are living together or people who have finances that are closely linked. Both current and savings accounts can be opened jointly.

  • Joint accounts can be set up so each individual account holder can use the account or so that all account holders have to authorise transactions.

  • With a joint account, you are liable for any debts run up by other account holders.

Student accounts
Most banks provide accounts specifically for students in higher education. These are current accounts that have been designed with student finance in mind. They usually offer interest-free overdrafts up to a certain limit to help students cope with the debts that often accumulate while studying. You also tend to get freebies when opening a student account, for example a free rail pass or music vouchers.

Children’s accounts
Children can keep money in banks and building societies too and there are lots of accounts that are specifically for children. Most children start with a savings account but as they get older they can also use an account similar to a current account, which may allow them to withdraw money from a cash point machine. By the time they are about 13 they may be offered a debit card.  Children can’t run up overdrafts and they shouldn’t have to pay any bank charges.

Children shouldn’t get taxed on any interest they earn on savings unless they earn more than £100 a year in interest or they work and have used up their personal Income Tax allowance.

  • To receive interest tax free, parents or guardians need to fill in Form R85. You can download the form from the Directgov website, which also has further information on children’s accounts and savings schemes.

Business accounts
Most people who run businesses have a business account so their business and personal money are kept separate. For more information see Business Link.

Shariah accounts
A growing number of banks and building societies offer current and savings accounts that are designed and run in accordance with Shariah law, which is Islamic law. Under Shariah law, interest is prohibited so Shariah compliant accounts provide a return on your money that is not interest.


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