Can I get a current account when unemployed?

Can I get a current account when unemployed?

Being unemployed can put a strain on your finances, especially if your unemployment wasn’t planned and you’re struggling to get another job. One of your main concerns might be whether you can still get a current account or not. The answer is yes, you can still get a current account if you’re unemployed. However, you may be limited to which account you can get.

We have taken a look at what options are available to you.

Are current accounts available for people who are unemployed?

If you are unemployed, there are still bank accounts that are available to you. Although you may not be receiving an income from an employer, you will still need an account to receive other forms of income, such as state benefits, and to pay for your bills.

Here are a couple of accounts that you could open.

Basic bank account

You may only be able to open a basic account since many accounts require a regular income of a certain amount each month, but this will depend on the bank you choose. It is unlikely that you will be able to open an account with any benefits, such as rewards, high-interest rates, and interest-free overdrafts.

A basic account may not have any perks, but it will be a secure place for your money, allow incoming and outgoing payments, and provide you with a debit card.

Jam Jar accounts

Since unemployment can cause financial strain, it may be worth opting for a current account that can help you manage your money. For example, here at thinkmoney, we offer a budgeting system to ensure your bills are paid on time. Tell us how much your bills are each month and we will automatically put the right amount in your bills account so that they are paid on time. That way, you know exactly how much disposable income you have left. You can also benefit from no hidden bank charges, so there will be no unexpected costs taken from your account.

Which accounts can receive benefit payments?

If you need to seek financial support from the government or other organisations and will be receiving benefits, including universal credit, you will need to open an account. The types of accounts your benefits can be paid into are:

  • Current account
  • Basic account
  • Prepaid account

However, it is worth noting that not all prepaid accounts allow you to set up standing orders or Direct Debits.

Do I need a current account for jobseekers’ allowance?

For those who are claiming jobseekers’ allowance, you will not just need an account, whether that’s a current or basic account, for your benefits to be paid into. You will also need an account for when you are offered a new job as you will need to provide your account details as soon as you start. This is so that they can set you up on the payroll system.

Using current accounts for benefits

When looking to open an account, it is worth considering the services, features, and charges available.

FeaturesCurrent accountBasic bank accountPrepaid card
Accepts benefits, including Universal CreditYesYesYes
Accepts other forms of incomeYesYesYes
Allows Direct Debits and standing ordersYesYesSometimes
Overdraft YesNoNo
Cash card with a PINYesYesYes (charges may apply)
Debit cardYesSometimesNo - Prepaid card is used as an alternative to a Debit card
Cheque bookYesNoNo
Credit checks when you open an accountYesNoNo
Fees and chargesBank charges may apply, including interest on overdrafts and fees for Direct Debit bounce backsSometimesCharges may vary, including fees to set-up and withdraw cash