Welfare Rights Issues

Basic Bank Accounts

The Financial Services Authority (FSA) is the independent watchdog set up by the government to regulate financial services and protect your rights. This information comes from their leaflet about basic bank accounts.

Most people now have their wages, benefits, and tax credits paid straight into a bank account. This gives them many advantages, and if you don't have a bank account, you could be losing out. For example. do you pay cash for things like gas or insurance? if so, you could be paying more than you need to. You may already know about current accounts, and have decided they're not for you at this time. But a basic bank account may suit you better.

With a basic bank account:

• You can have your wages, benefits, State pension and tax credits paid directly into your account. To arrange this just contact your wages office of the pensions or benefit office dealing with your claim.
• It costs you nothing to pay cheques into a basic bank account, although you will have to wait a few days at least for the money to be available in your account.
• You an take your money out at cash machines by using a cash card - check with your bank if there are any cash machine restrictions or charges.
• With some accounts you can also withdraw money from branches of your bank or building society, or the Post Office.
• If you have a debit card, you can also withdraw cash from some shops, using cashback.
• You can pay your bills by direct debit. Some banks will also allow you to pay your bills by standing order.
• You do not get a cheque book.
• You can't overdraw a basic bank account, so they suit people who worry about getting overdrawn and want a tighter hold on their money.

Some of the ways a basic bank account could help you:

• You pay less if you pay some firms by direct debit - especially gas and electricity companies. For example, it is estimated that if you pay household bills by direct debit you could save on average each year around £22 in electricity charges, £38 gas and £12 telephone.
• You will be in a better position to shop around and find the best deal on other financial products if you have a bank account, so you could get cheaper insurance.
• You could save money by paying by direct debit instead of cash, as some companies add a small charge for this.
• You can cash cheques for free instead of using a cheque cashing service that is not connected to a bank. The charges for a cheque cashing service might mean you only get around "20 out of a cheque for £25.
• A basic bank account can be a first step towards opening a current account alter on.

Top of Page

Information on a range of benefits is provided below:

Attendance Allowance (AA)

Benefit for those aged 65 and over with attention or supervisory needs. There is a higher rate and a lower rate, the rules of which are similar to the higher and middle rates of disability living allowance care components. there is no mobility component. AA is not normally included as income in benefit calculations.

A claimant must meet the disability conditions and have met them throughout a period of 6 months in the 2 years before the claim or be terminally ill.

Top of Page

Disability Living Allowance (DLA)

Benefit for claimants aged under 65 with care and mobility needs with separate rules for children under 16. There are three rates of care - higher, middle and lower - and two for mobility - higher and lower. A more detailed description of the care and mobility criteria is available separately but a brief summary is given below. A claimant must meet the disability conditions, have met them for the last 3 months and be likely to for the next 6 months, or be terminally ill. DLA is not normally included as income in benefit calculations.

Top of Page

Carers Allowance (CA)

Benefit payable to a claimant giving regular and substantial care (35 hours per week) to someone who is severely disabled. The person being cared for must be receiving either the high or middle care rate of disability living allowance or attendance allowance. The claimant cannot be in gainful employment, earning more than the lower earnings limit for National Insurance.

Top of Page

Council Tax Benefit (CTB)

Paid to those on a low income who pay council tax. There are two types - main CTB and second adult rebate and the higher of the two is payable.

Maximum benefit is paid automatically to those on income support, income based-jobseekers allowance or guarantee credit of pension credit. Other claimants must satisfy income and savings criteria.

The second adult rebate applies where there is at least one non-dependent adult in certain circumstances on a low income living with a claimant who has sole responsibility for council tax.

Top of Page

Housing Benefit (HB)

Paid to those on a low income and  liable to pay rent. Maximum benefit is paid automatically to those on income support, income based-jobseekers allowance or guarantee credit of pension credit. Other claimants must satisfy income and savings criteria and the rules are more generous for those aged over 60.

HB can cover eligible rent and other charges like eligible service charges, mooring fees and site rents. It is not payable to owner occupiers, people in care homes or co-ownership schemes etc. A claimant must normally be occupying the home. Payments will be affected by any non-dependents living in the home.

Discretionary housing payments may be available for those on HB and Council Tax Benefit.

Top of Page

Pension Credit (PC)

Paid to ensure pensioners have a guaranteed income and are rewarded for making provision for retirement above the basic state pension. It depends on circumstances, savings and income and is made up of:

• guarantee credit - over 60 and low income
• savings credit - over 65 and income over basic state retirement pension.

Top of Page

Child Tax Credit (CTC)

Paid to those who are on a low income and are responsible for at least one child.

Top of Page

Working Tax Credit (WTC)

Income-based credit for working adults who:

• work over 16 hours a week and have responsibility for a child or a disability that puts them at a disadvantage in employment or qualify for the 50+ element or
• work over 30 hours a week and are aged over 25

It is paid through the employer and based on the tax year.

Top of Page

Incapacity Benefit (IB)

paid to people who are incapable for work and who have paid or been credited with sufficient national insurance contributions or became incapable or work in youth. If you are in employment you would normally receive Statutory Sick Pay (SSP) from your employer for the first 28 weeks of your incapacity for work and then claim IB.

Payable at three rates - Short term lower rate / short term higher rate / long term rate.

Incapacity for work is assessed by either the own occupation test (first 28 weeks) or the personal capability assessment (after 28 weeks) assessed by point scoring from questionnaire and medical examination.

Top of Page

Income Support (IS)

Paid to people aged 16-60 on a low income who are not in full-time work and do not need to be available for and actively seeking work and don't fit into various other categories. There are savings and income restrictions and the rate depends on your personal and financial circumstances. You may qualify if you are sick or disabled, responsible for the care of a child or a carer.

Top of Page

Income-Based Job Seekers Allowance (JSA)

Paid to people who are unemployed or working less than 16 hours per week, who are available for and actively seeking full time work and have entered into a jobseeker's agreement. There are savings and income restrictions and the rate depends on age. It is payable for up to 182 days.

Top of Page