Credit Building > Which is the best bank account if you have bad credit?

Which is the best bank account if you have bad credit?

Wollit Team2 minute read · Updated 3rd July 2024

If you have bad credit in the UK, finding a suitable bank account can be quite hard.

However, there are banks that are willing to accept people with a poor credit history. The accounts that these banks offer usually do not require a credit check, making them more accessible to those who have been rejected for standard bank accounts.

However, because of this, they usually come with limited features, like no overdraft. Still, they do offer basic banking services like depositing and withdrawing money, paying bills, and using online banking.

Which are the best bank accounts with people with bad credit?

The best ones that we could find are:

Card One Money. This provider calls itself “the banking alternative that leaves no one behind.” They offer a bank account with no credit checks, no account opening fee, free next day payments, and a prepaid debit card. It comes with a monthly fee of £12.50 a month but it also offers up to 3.5% cashback rewards.
ThinkMoney. This bank account also meant for people with poor credit or no credit history. Just like the one from Card One Money, it charges a monthly fee (£10.99), and while it doesn’t come with cashback, it does offer a very useful budgeting app.
Virgin Money M Account. Virgin Money calls this “better than basic”, and it is meant specifically for people with bad credit. Unlike the ones offered by ThinkMoney or Card One Money, it is free to use, comes with a linked savings account, and even accepts non-standard forms of ID.

What are the pros and cons of bank accounts for people with bad credit?

Most of the best current accounts for people with bad credit are offered by non-traditional financial institutions. In other words, “challenger banks” or fintech startups.

This means that these accounts will often have a great mobile app, a friendly interface, and might even offer more features for a lower price.

They do come with a few downsides, though:

No banking licence and no FCSC protection. If Card One Money, ThinkMoney, or Virgin Money go bankrupt, get hacked, or fail in some other way, you can’t be made whole by the UK Government. Your money is not insured.
All of these accounts are essentially prepaid “e-money” accounts. They’re closer to an app like PayPal than a bank like Barclays or NatWest.
No bank branch. Using only a mobile app is useful, but often customer support for these accounts is limited to online chat.
A monthly fee. Most basic current accounts require a monthly fee to cover cost for the provider. They can’t rely on revenue from overdraft interest or interest from future loans that you might take.
No overdraft. This is the real cost of getting an account with no credit check. If you get a prepaid account instead of a real bank account, you won’t have an overdraft that you can rely on in an emergency.

To become eligible for a current account with better features, lower cost, and especially a decent overdraft (which can become a lifeline in an emergency), the best thing you can do is to work on your credit score.

Luckily, now there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies (Experian, Equifax, and TransUnion).

In time, this builds your credit history, helps you improve your credit score, and increases your approval chances – not only for full bank accounts with generous overdraft lines, but also for other financial products, like insurance, personal loans, credit cards with rewards, and mortgages.