A budget account helps you to spread out the cost of your household bills over the year. You make a payment of a set amount into the budget account every week or month so the money is there to pay your bills on time.
How does a budget account work?
You pay your bills from your budget account during the year whenever they are due and you pay equal monthly amounts into the budget account from your normal current account. The limit on your budget account will reduce with each monthly payment.
This type of account is essentially a form of credit that allows you to pay your household bills whenever they are due. This can be convenient if you get paid on a weekly basis and your bills need to be paid every month. Here are some things you should be aware of with budget accounts:
- You can pay your bills by direct debit, standing order, cheque, online or transferring money directly from your budget account.
- You may have to pay interest on any overdrawn balance.
- There may be a regular fee for having this account such as a quarterly maintenance fee.
- There could be fees for setting up standing orders or for missing direct debits or standing order payments.
- As it is a credit application, the provider may check your credit history.
These accounts aren’t very common so make sure to ask your bank if they offer this or a similar product and check out our budgeting section for more information and helpful tips.