How Many Current Accounts Can I Have UK?
Understand the practicalities and benefits of managing multiple current accounts in the UK for effective financial control.
In the United Kingdom, individuals often consider holding multiple current accounts. There is no legal restriction on the number of current accounts an individual can maintain. Individuals can open several accounts with different banks, or even multiple accounts with the same institution, provided they meet eligibility criteria. While there is no cap, certain practical considerations come into play, which can influence a person’s decision to manage more than one account.
The Concept of Current Accounts in the UK
A current account in the UK serves as the primary tool for managing daily finances, for regular transactions, income, and outgoings. It allows individuals to receive wages, pay bills, make purchases with a debit card, and transfer money. They are fundamental for daily banking, offering access to funds via online banking, mobile apps, and ATMs.
Different types of current accounts cater to varying financial circumstances and needs:
- Standard current accounts are widely available, typically without a monthly fee, offering essential services.
- Basic bank accounts are for individuals with limited credit history or financial difficulties, providing core functionalities without an overdraft.
- Student accounts often feature interest-free overdrafts or discounts.
- Joint accounts allow two or more individuals to manage shared finances.
- Packaged current accounts offer additional benefits like insurance or breakdown cover for a monthly fee.
Practical Considerations for Multiple Accounts
Managing multiple current accounts can offer advantages for financial organization. Many individuals use separate accounts to compartmentalize finances, for example, one for bills, another for spending, and a third for savings or travel. This enhances budgeting by separating funds and tracking expenditures. It promotes a structured approach to money management, which can help in achieving financial objectives.
Applying for new current accounts can temporarily impact a credit score. Banks typically conduct a ‘hard search’ on an applicant’s credit report when assessing an application, especially if it includes an overdraft facility. Each hard search is recorded and can slightly reduce a credit score for a short period. While holding multiple accounts does not directly harm a credit score, frequent applications for new accounts, particularly with credit features, can signal increased risk to lenders.
Financial Services Compensation Scheme (FSCS) protection is important when holding multiple accounts. The FSCS protects eligible deposits up to £85,000 per person, per authorized financial institution, compensating depositors if a bank or building society fails. If multiple accounts are held within the same banking group, even under different brand names, the £85,000 limit applies to the total amount across all accounts, as they share a single banking license. To maximize FSCS protection, any funds exceeding £85,000 should be distributed across different financial institutions that do not share a banking license.
Beyond financial implications, managing several accounts involves practical considerations. This involves keeping track of multiple debit cards, online banking logins, and statements. Careful attention is needed to set up direct debits and standing orders correctly across accounts. While online banking and mobile apps simplify management, the administrative burden increases with each additional account.
Opening Additional Current Accounts
Opening a new current account in the UK is generally straightforward, whether online, via a mobile application, or in a physical branch. Most banks offer online application portals that guide applicants through the necessary steps. The application typically involves providing personal details, including name, date of birth, and contact information.
Applicants must provide documentation to verify identity and address. Identity proof includes a valid passport or a full UK photocard driving license. Proof of address documents include a recent utility bill, council tax bill, or a bank statement dated within three months. Some banks may also request additional information, such as income or employment details.
Processing time varies between banks, though many online applications are processed quickly. Applicants typically receive notifications regarding the approval or rejection of their application. Upon approval, the new debit card, along with details for online banking access, is usually sent to the registered address.