Basics of Banking

Learn some of the basic things you can do with your bank account.

If you want to know more about what bank accounts are and how to set one up, check out our article.

Online banking

If you have a bank account, most banks will allow you to manage it online. Whether it is logging into an account on your bank's website or downloading an app and managing your money from that. It is a convenient way to look after your finances without having to visit a branch or get things through the post. There are lots of handy things you can do with online banking.

Any time money goes in or out of your account, it’s called a transaction and your bank will keep a note of yours. You can check these in your account to make sure what you are paying for and what you have coming in is all accounted for. If you see any transactions you don't recognise, you should contact your bank as soon as possible. If you have a dispute with your bank over a transaction, you can seek help from the Financial Ombudsman.

A bank statement is a note of all your transactions within a set period. Your bank will be able to send you physical statements through the post, or you can get a bank statement through online banking.

You can set up or change your regular payments, such as for your subscriptions or household bills. You can also move money to other accounts whether it is yours or someone you know.

Payments

One of the most common things you will use your bank account for is to pay for things.

This could be paying for things on the go like a train fare or your weekly shop. Or, it could be regular payments you have to make to pay your household bills.

For on-the-go payments, you can use the debit card your bank gives you with a current account. Many debit cards will let you pay for things using contactless payment up to £100 which is the legal limit in the UK. You can also put your card into a card reader and enter your PIN number to pay for things.

You can also pay for things online by using your card and entering information on the card. This is usually your name, the long card number and the security code.

There are two common ways to set up regular payments. These are standing orders and direct debits.

A standing order is when you tell your bank to pay another account a set amount regularly. For example, you set up a monthly standing order to pay for your rent.

A direct debit is when you allow a company to take an agreed amount from your account on a set date. This is how you may pay a household bill such as for energy or internet. The company will tell you if there is any change to the amount or date of the payment.

Transferring money

You can transfer money between your own accounts, for example from a current account to your savings. You can also transfer money to other accounts, such as a friend or family member.

Find out more about transferring money on the Money Helper site.

Accessing money

If you want to withdraw money from your account as cash, you can do this at a bank or a cash machine.

For savings accounts, there may be more conditions. You may get charged a fee, or there may be a limit on how often you can take money out.

Overdrafts

An overdraft lets you spend more money than what you have in your account. You are borrowing money from the bank that you will have to pay back. This can be "authorised" which means you have an agreement with the bank that you can have an overdraft up to a limit. Or, an overdraft can be "unauthorised" which is when you spend more money than what is in the account without an agreement with the bank.

Overdrafts can be useful for some people but you should only use them in emergencies or as a short-term option. This is because there can be fees related to an overdraft if you don't pay the bank back in time or your overdraft is unauthorised.

Find out more about overdrafts on the Money Helper site.

Cheques

A cheque is a way to pay someone or get paid by someone. You may get a chequebook from the bank when you open an account.

It is a slip of paper issued by a bank that you fill in with information. This lets the person writing the cheque send money to the person who cashes it.

You can cash a cheque at the bank, at some cash machines and in some cases through online banking by taking a picture of it. There may be limits to how big a cheque you can write or cash and how many. If you write a cheque, always make sure you will have enough money in your account to cover it when it is cashed.

Find out more about cheques on the Money Helper site.