Opening and maintaining a bank account can be difficult if you are self-employed or work as a freelancer, as many UK bank accounts require you to deposit a minimum amount each month. For a regular current account, the minimum deposit is around £500 a month.
For account holders with regular employment, having their salary paid into their bank account each month can meet the minimum deposit level requirements, but this can be difficult for freelancers or the self-employed.
Why Do Freelancers and the Self-Employed Find it Challenging to Open a Bank Account?
While working as a freelancer can provide a steady stream of income but the amount earned each month can fluctuate, especially if the work is seasonal. With banks requiring account holders to deposit a minimum amount each month, they may not feel that someone without a guaranteed monthly income will be able to meet that requirement.
That is why a regular current account may not be an option for someone who works on a freelance basis or is self-employed.
Many current accounts also offer overdrafts and credit cards. Taking out a product that involves borrowing may be difficult for someone without a permanent job or consistent income. Applications will be the subject of a credit check, and providers want to be confident that you can pay back any credit you take out.
What Banking Options are Available for Freelancers and the Self-Employed?
As a freelancer in the UK, you need reliability, no monthly minimum deposit, and flexibility to manage your money on the go, 24/7 – especially if your work takes you all over the country and abroad. Here are some potential options which could work for you.
A Basic Bank Account
A basic bank account is a useful option for a person who does not have a regular income source. For someone who is self-employed or works freelance, this allows them to account where they can deposit money and pay bills.
However, even some basic bank accounts can come with minimum monthly deposit limits. Plus, some providers don’t provide contactless debit cards which is essential during the pandemic and for your busy lifestyle.
Prepaid Debit Cards for the Self-Employed and Freelance Workers
A prepaid card is an excellent way for someone who is not in permanent employment to manage their finances. Prepaid debit cards come with a card number and are set up to receive a third-party payment.
A prepaid card works by having money loaded onto it, either by the cardholder or someone else. In the case of a freelance worker, they can ask a client to pay them directly onto their card. They can then use the card to purchase in a shop or online.
They can also use a prepaid card to set up a regular payment, such as direct debits and standing orders. This allows them to pay rent and bills using their card, meaning they can operate without a bank account. A contactless prepaid card can also allow the holder to pay for items in-store, which are £100 or less.
A self-employed individual may also consider using a prepaid debit card if they find it difficult to open a conventional bank account. Some prepaid cards come with monthly fees, and you can be charged a small amount each time you load funds onto it.
However, the main advantage of a prepaid debit card for self-employed or working as a freelancer is that they are relatively easy to get a hold of. All you need is to prove your identity, and no proof of income or a credit check is required to take one out.
👉 To learn more about how a prepaid card could work for you, check out our ultimate beginner’s guide to prepaid cards!
Alternative Banking for the Self-Employed with Suits Me
Here at Suits Me, we offer much more than just a basic prepaid debit card.
Our accounts are personal e-money current accounts that work similarly to a traditional bank account. You’ll gain access to online banking and our mobile banking app, where you’ll be able to manage your money on the go, 24/7.
We offer a whole variety of banking features including:
- The ability to set up standing orders and manage direct debits,
- Send money within the UK via a bank transfer, international transfers are available via a partner in the Suits Me app,
- Gain access to our exclusive cashback reward programme where you’ll automatically get a percentage of your money back when you use your Suits Me debit card with our retail partners.
Opening a Suits Me account takes 10 minutes and you’ll gain access to your online banking immediately so you can start managing your money. We don’t ask for proof of address or run a credit check. We accept 99.8% of all applicants – so if you’re looking for a suitable alternative banking solution apply today!