Easy Guide on How to Run Your Bank Account – Part 1

26.12.2010 | Author: Sean Raston | Posted in Banking
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A bank account is crucial for financial management – it allows us to make and receive the payments that facilitate our daily lives.

The following guide will cover the ways you can make payments of money owed to you into your account, as well as what you can expect from your bank or building society in return.

Ways to Pay Money into Your Account

These are the main ways that you can deposit cash and cheques payable to you into your bank account:

At a Local Branch:

  1. Use an ATM and follow the simple instructions – you will be given a receipt for your records.
  2. Complete a paying-in form and deposit your cash or cheque over the counter.
  3. Many local branches have a self-service paying-in box which will generally have less of a queue than over the counter services. You will simply put your cash or cheque in the envelope provided. Be aware though that this method doesn’t provide you with a receipt, so if there’s a payment dispute it will be your word against that of your bank or building society. For this reason it’s important to check how often the box is emptied and keep your own record of the payment.

By Post

While it is fine to send a cheque by post to your branch, it’s not advisable to send cash.

Through Automatic BACS

This is an ultra convenient way to receive payments, particularly your monthly salary. BACS allows you to receive automated transfers directly into your account from your employer. They will first need your bank account details (i.e. your sort code and your account number) to do this – you will find these details on your card, bank statement and cheque book.

Cash or Electronic Deposits

Once a cash or electronic payment has been made into your account, your bank or building society will give you:

  • the date the payment was credited to the account;
  • details of the payer and any information sent with their payment;
  • the amount of the payment, including original currency value);
  • any charges or interest payable;
  • any exchange rate applied if the payment was from another country.

Payments made are credited to your account on the day they’re received and the money will be available for use as soon as it is credited (except for cheques).

Most banks or building societies will not charge you to receive payments, but it’s wise to check with them so you can be sure.

Cheque Deposits

Cheques paid into UK current accounts have a clearing cycle, otherwise called ‘2-4-6’. Firstly, what this means is that you will start receiving interest from the funds on the 2nd business day after you’ve paid the cheque in – for example, if you deposit a cheque on a Monday, interest will commence of the Wednesday. Secondly, you can then withdraw or spend the money on the 4th business day (Friday), and on the 6th business day (the following Tuesday), the cheque will have completely cleared and cannot be returned unpaid.

Unpaid cheques happen if a cheque you’ve deposited is returned unpaid because there is not enough money in the payers account – the bank or building society will in this case usually take the money back out of your account and charge you a small administration fee.

Cheques that are paid into savings accounts have a clearing cycle of ‘2-6-6’ – thus you will have to wait until day 6 before you can withdraw the funds, but at the same time you will know that the cheque cannot be returned unpaid.

Some banks or building societies will offer better terms such as paying interest earlier and allowing withdrawal before day 4, so if this is important to you it’s advisable to thoroughly do your research when choosing a bank account provider.

Also be aware that if you deposit a cheque later in the day, it may not be processed until the next working day.

Conclusion

The above information clarifies the ins and outs of making payments into your bank account. Part 2 of this guide series will deal with money going out your account to pay for expenses.

For both incoming and outgoing activities, the most important factors for ensuring the smooth running of your finances are:

  • When choosing a bank or building society, carefully read the fine print to make sure their services and charges are suitable to your needs.
  • Keep a consistent eye on your account balance so that you don’t accidentally go overdrawn or over your agreed overdraft limit as this will incur extra charges.
  • Check your bank statements so that you can pick up on any unauthorised payments.
  • Review your financial situation and new banking options that become available on the marketplace regularly to make sure your current bank account is right for you.

About the Author: Sean Raston is an economics student and personal bank account expert.

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