Managed bank accounts are now offered by a number of companies. The accounts are aimed at people with poor credit ratings and can normally be opened without the need for a credit check.
These type of bank accounts are good for people who have traditionally got into difficulty with managing their money. The key feature of the account is that it provides a management facility which allows you to split your money and put some into a bill payment account.
You can use this facility to put aside an agreed amount which is then always available for paying your priority living expenses such as your rent, mortgage, council tax and utility bills. Direct debits can then be set up from your bill payment to make sure the payments are made on time.
If you want to use your debit card to draw cash or for other expenditures this comes from the main account only. You therefore never have to worry that you will overspend and not have enough money to pay your household bills.
The advantages of a managed bank account
A managed bank account can be very useful if you are the type of person who has difficulty managing your money throughout the month. With a managed account you always know that sufficient funds are put aside to pay your priority living expenses.
You will not be offered any credit facilities with a managed account and so it will be opened for you without the need for a credit check. It can therefore be opened by people with poor credit ratings.
A managed bank account will normally come with a debit card as standard making it easy for you to pay for expenses such as shopping and petrol with any cash you have available in your main account. However you will not be allowed to go overdrawn.
The disadvantage of a managed bank account
The main disadvantage of a managed bank account is that you will have to pay a monthly fee to keep the account open. This fee will normally be between £10 and £15 a month.
If you feel confident that without the pressure of your unsecured debts you can manage your money and budget your living expenses payments through the month then you will really not benefit from a managed bank account.
It would be better for you to open a card cash account for free which will normally come with a debit card as standard.
What is a pre-paid debt card?
A pre-paid debit card is a debit card look-alike with either a MasterCard or VISA symbol on it. The card can be used at all the same places a VISA or MasterCard credit card however it is not attached to a bank account. The card works on a top-up basis. You deposit money onto the card and then you are free to spend it however you like.
The cards are issued with a chip and pin for your security and you can monitor your account and security online.
One of the major advantages of a pre paid card facility is that it will normally be issued without a credit checks as you are not being offered any credit facility. As such these cards are available to people with poor credit ratings.
In the past a pre paid debit card was a good option if you had a poor credit rating and could only open a simple card cash bank account which did not come with a debit card as standard. However the need to open a pre paid debit card account is now becoming less and less as many banks are now offering their simple card cash account banking facilities with a debit card included as standard and for free.
What does a Pre Paid Card Cost?
The main downside of a pre-paid card facility is that it is not available for free. You will pay different fees depending on the card provider you choose.
You will almost certainly have to pay an application or joining fee of around £10. Then depending on the card you choose you will then be charged for each transaction you make or each time you deposit money onto the card or both. You need to compare the different card charges carefully before making your application.