Lifestyle :

Finance

Banking

Most banks offer special bank accounts for young people. Banks have advisers who are happy to talk to you about the best account for you. To open a bank account you usually you need two forms of identity like a passport or birth certificate. You may also need proof of your address. Banks will ask you to put in some money in order to open the account, but many accounts can be opened with just £1. Ask at the bank before you apply.

There are two main types of account that you can open these are current accounts and savings accounts.

• A current account is what people often use for their everyday money, and most people get their wages paid directly into this account. You can get instant access to your money with a cash card. A cash card comes with a 4 digit number which is called a PIN number. This is a number for you to keep secret and use when using a cash point or buying things with chip and pin. Depending on your age you may be given a cheque book, a debit card or a credit card.
• A savings account is useful if you want to save some of your money for the future and don’t need to get money out regularly. You might be given a bank book and some banks ask that you tell them in advance before getting your money out. You will earn interest on your money in a savings account so your money will grow.

You can access different kinds of accounts when you are

• under 16 – some accounts will provide you with a cash card. A cash card can be used to get your money out of the bank using a cash machine. You have a PIN number to use in the cash machine. Some banks will give you a bank book instead. You can also go into the bank and put money in or take money out of your account over the counter.
• 16 or 17 – you can get a debit card and a cheque book.

  A debit card can be used just like a cash card but it also allows you to pay for things in shops and over the internet. Again you get a PIN number. Some shops will ask you to sign a slip or put your PIN number into a handheld machine, and this method is called Chip & PIN. You can only spend money that you have in your account and the money is taken out of your account immediately.

  A cheque book allows you to write cheques to pay for things or to give money to other people. Cheques take some time to ‘clear’, which means it can take a few days for the money to go out of your account once the person you have given the cheque to has paid it in to their account. Again, you can only spend money that you have in your account.

• 18 or over – You can apply for credit cards, overdrafts, and loans.
  

  Credit cards allow you to buy things by charging it to the card and arrange to pay it back later. Banks and credit card companies charge you for doing this and it can be an expensive way to buy things.

  An overdraft is when you spend more than is in your bank. Some banks allow you to have a small overdraft without charging you for it while others will charge. If you spend more than you have in the bank without arranging to have an overdraft banks will make big charges for this.

  Loans are a way of borrowing large amounts of money. They are offered by banks and companies and are a very expensive way to borrow money. You have to pay interest on the money they lend you and you have to pay your loan back over a set period of time. Interest rates vary. To give an example if you borrow £2,000 and they charge you 20% interest you would actually pay £2,400. There are usually other charges too, and if you can’t keep up with your payments then they will charge you even more. Think carefully before taking out loans. Student Loans for Higher Education are different.

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