Understanding Money and Debt
February 12, 2025
Almost all of us have a bank account – at least one, in fact – and for many of us, that account is linked to existing credit agreements. That could be loans, an overdraft, or numerous credit cards. Like our parents and grandparents before us, it’s easy simply to bank with the same institution for years. After all, they’ve managed your finances for a long time and you’ve had no cause for complaint – the ‘if it ain’t broke, don’t fix it’ approach. We’ve all been there: indeed, many banks, plus insurers, utility firms, and other service providers bank (if you’ll pardon the pun) on their customers’ reluctance to make changes.
However, when financial difficulties raise their ugly heads, this long-term relationship can be a major obstacle to regaining control over your money.
Bank Where You Owe Money? Bad Idea
Unlike your debts with other lenders and creditors, money owed to your own bank poses a unique challenge: when you’re paid into an account linked to those debts, your bank can – and likely will – take those payments automatically. This means that even if your financial situation has changed and you’re struggling – perhaps through illness, job loss, relationship breakdown or any of the many reasons why we can all face tough financial times – your bank can continue taking payments. This could be at the expense of priority debts such as mortgages or other secured loans, or even your essential living costs.
We’ve heard from countless clients who were left struggling to afford the basics like rent, food, and utility bills simply because their bank automatically took payments as per the initially agreed terms. Unsecured debts should never take priority over your essential living expenses.
Change Bank; Take Control
That’s why a highly effective step to take when you’re facing financial difficulties is to switch banks. Change to a bank that you don’t owe money to. This will allow you to take full control of your income and expenditure. You’ll be able to prioritise your essential expenses before repaying debts. It is, of course, essential to speak to your creditors and explain your circumstances. When they’re aware, they can help. It is in their interests to do so, too, so never be afraid to reach out.
Changing banks might seem overwhelming at first, especially on top of coping with debt and the resultant stress. Don’t worry. It’s a really straightforward process – and so very worthwhile, as it offers several key benefits that will make a dramatic difference to your problems. Changing banks can:
- Stop Automatic Debt Repayments You Can’t Afford:
Moving your income to a new bank means your old bank no longer has direct access to your money. This allows you to decide who gets paid first, and how much.
- Ensure Essential Bills are Paid First:
By setting up your new account, you can prioritise your rent or mortgage repayments, utilities, and food shopping before making any debt repayments.
- Prevent Further Charges:
When we’re in financial difficulty, it’s easy get stuck in a vicious circle of overdraft fees and bank charges. A fresh start with a new account can help break that cycle.
- Empower You to Choose a Better Bank:
Many modern banks, such as Monzo, Starling, and Revolut, offer user-friendly mobile banking, fee-free accounts, and free budgeting tools to help you manage your money more effectively.
So, while the primary benefit is controlling and prioritising repayments, there are other advantages to changing your bank.
Switching Banks Can Be Easy
Switching banks is much easier than many people think – and certainly a simpler process than it used to be. UK Debt Services can help you through the process.
- Choose Your New Bank: We can guide you in selecting a new bank that offers free banking, lower charges, good customer service, and helpful money management tools.
- Open a New Account: Many banks allow you to open an account online within minutes. If you need help, we can walk you through the process.
- Redirect Your Income: Contact your employer, benefits providers, or any other source of income and give them your new bank details.
- Transfer Essential Payments: We can help you identify and switch your priority payments, such as rent or mortgage and utilities, to your new account.
- Manage Your Old Bank Account: Once your essential finances are in order, we can help you deal with any remaining debts linked to your old bank account.
There. To coin a phrase, ‘simples.’ The difference switching banks will make to your debt issues, however, is priceless.
Switch Banks Without Stress
Most of us avoid changing banks or are at least hesitant to switch, even when we know it’s the right thing to do. Everyone thinks it’ll be a palaver; a lot of stress and messing about. Common concerns include:
“But I’ve had this bank account since I started work; won’t switching be complicated?”
Reality: The Current Account Switch Service makes transferring direct debits and standing orders quick and hassle-free. The Current Account Switch Service (CASS) is a free service that allows UK residents to move their current account from one bank to another. The service is operated by Pay.UK, a not-for-profit company that manages shared services for UK interbank payments.
How CASS works: The service is designed to be simple, reliable, and stress-free and can be used to switch with an overdraft, though you should speak to your new bank first. The Current Account Switch Guarantee ensures that all your payments are automatically transferred and redirected to your new account.
“But won’t my credit score be affected?”
Reality: Don’t worry. Opening a new basic bank account does not impact your credit rating.
“I don’t have time to switch everything over.”
Reality: Modern banks make the process seamless, and we can support you every step of the way.
The benefits of switching banks far outweigh the minimal effort of doing so.
The First Step Towards Financial Freedom
If you’re struggling with debt, switching banks is one of the simplest yet most powerful moves you can make. It really can make all the difference. At UK Debt Services, we’re here to help you every step of the way, ensuring that your financial future is back in your hands – and the stress and worry of debt problems is behind you. Whether you choose to undertake a debt solution of any kind or not, it’s always best to bank with someone you don’t owe money to. Then, the only person to decide where the money goes is you.
Contact us today. We’re here to help you understand all your options and can help you on your way to financial freedom.
