Banks in the United Kingdom

Banks exist to carry out two basic processes.

• The first is to borrow money from people and businesses that have some money. When you give a bank your money you are depositing money in that bank. These credits would include money added to your savings, money paid in to your bank account, your salary being paid in by your employer etc.
• The second is to lend money to people and businesses that need some money. When you take out a loan or your account goes overdrawn or you use your credit card, then you are borrowing money from the bank

When a bank holds your money (deposits) it should pay you interest. When you borrow the bank's money (loans) it will charge you a much larger amount of interest.

Types of Bank Accounts

Basic Accounts
No cheque book with these. A cash card and a pin number allows access to your money from a cash machine. Direct debits and sanding orders are allowed.
No interest paid on credit balances.
These are not intended for you to earn interest on excess balances.

Current Accounts
Cheque book, cheque guarantee card, credit/debit cards, interest paid on credit balances, direct debits and standing orders are allowed. Overdrafts can be arranged.

Savings Accounts
Savings accounts provide a higher rate of interest. If your bank account is generally in credit, there is no point in holding excessive credit balances in the account. The interest you get paid is too low. The savings accounts can be used to hold this money and allow you to earn more money from it.