Dealing with your non-priority debts

​Debts with your bank - overdrafts, loans and credit cards

Extra advice:

Standards of Lending Practice - Personal Customers

The Lending Standards Board’s Standards of Lending Practice – Personal Customers states that customers in financial difficulty “will receive appropriate support and fair treatment, across the different communication channels offered, in order to help them deal with their debts in the most suitable way.”

The Standards of Lending Practice – Personal Customers

Many people use their current account with a bank or building society to have their wages paid into, and to pay household bills. This can cause problems if you have a number of debts, and your current account becomes overdrawn.

With an overdraft, you pay interest and charges on the amount owed. If you have a loan with the bank or building society, the full monthly instalment will usually be taken from your current account too. This may mean that you do not then have enough money to pay priority debts such as your mortgage, rent, council tax, gas or electricity.

You need to be very careful in dealing with debts to your bank. Some banks or building societies will react by taking all the money in your account to clear the overdraft or loan. They can also try to do this if you ​have a credit-card debt with your bank. It is called the 'right of set-off'. You should consider opening an account elsewhere to have your wages paid into before negotiating with the bank just in case. Do this immediately if the bank or building society does not agree to your offer. If your bank tries to take money from your account in this way, contact us for advice.

Opening a bank account

Extra advice:

basic bank accounts

Contact the Money Advice Service for a list of basic bank accounts on 0300 500 5000.

You may have difficulty opening a bank account if you have debts on your credit file. However, opening a basic bank account should not normally involve a credit check. These accounts allow you to have wages or benefits paid in and take cash out. Some accounts let you have direct debits and standing orders.

You are not usually allowed cheque books, cheque guarantee cards or an overdraft. Shop around the high-street banks and building societies or contact us for advice.

If you are on benefits and don't want a basic bank account, you can choose a post office 'card account'. You can have your benefits (including tax credits and pensions) paid into this account and can take money out at a post office counter.