Do You Need a Cheque Account When You Want to Apply for Credit Cards and Cashback Credit Cards?

In all honesty, it is not necessary or mandatory for an individual to have a cheque account in order to be able to obtain credit cards or cashback credit cards. In fact, many people have an account of this type before they even consider applying for credit through an established lender. Cheque accounts are commonly used to pay for many kinds of monthly expenditures, including car loans and the mortgage or rent. They are also used to pay for annual expenses such as insurance and tuition. While they offer versatility and convenience, cheque accounts cannot take the place of obtaining an account that enables the borrower to access funds that must be repaid on a temporary basis.

A Look at Cheque Accounts

Cheque accounts are one of the most common types of bank accounts. They generally carry a small monthly account keeping fee that is often waived if the account owner has also signed up for to have a home loan payment deducted automatically each month or deposits a predetermined balance into the account by the end of the month. They are usually inexpensive to keep with monthly account keeping fees as low as five dollars. In most instances, the holder of the account also receives a debit card that can be used with it.

The Benefits of Having a Cheque Account When Applying for a Card from a Credit Company

While you can still apply for credit cards without a cheque account, having one that is listed in your name is often beneficial when completing an application for credit. This is particularly true when it is a first-time application or after a period of having a poor history with an existing credit account has occurred. The truth is that you are more likely to receive an approval on your application if you have a pre-existing cheque account that has been handled well.

Why Is It Useful to Have a Cheque Account When You Apply?

Perhaps the most important reason that it is useful to have a cheque account in your name when you apply for credit cards or cashback credit cards is that it allows the lender to take a look at your financial history. This action can validate your credit worthiness by showing the company that you handle money well. On the other hand, if you've never had either a cheque account or a credit card of any type, then you really don't have much to show that you are responsible with your finances.

Why Is It Useful to Have a Cheque Account after You Apply?

Once you have applied for a new credit card and your application has been accepted, it is quite handy to have an account from which you can write cheques to make your monthly payments on your new card. You can even sign up to do so online, which enables you to set up an automatic payment to occur on the due date. This type of convenience can save you time as well as to help you avoid late payments.

The Disadvantages of Not Having a Cheque Account When Applying for a Card from a Credit Company

Unfortunately, if you do not have an existing cheque account that can show you are a responsible handler of your finances, then your chances of obtaining a credit card are somewhat limited. It is entirely possible that you might not be able to receive approval, particularly if you do not have any credit history attached to your name.

In fact, your employment situation and loan history also come into play. If they are positive, then your chances improve. However, if you have a poor showing regarding employment and financial responsibilities, the likelihood of obtaining a credit card or cashback account diminish greatly. As a result, the only type of card that you might be able to obtain is a debit card.

Although debit cards can be used as payment in much the same manner as their counterparts, there is one huge difference. Debit cards must be prepaid with funds provided by the cardholder, or they must be attached to an existing bank account. Most commonly, debit cards are attached to cheque accounts, although they can also be attached to savings accounts at some banking locations. So, as you can see, not having a cheque account in your name is going to place you at a disadvantage that limits your ability to borrow funds on a daily basis to cover minor expenses as well as major ones.

Laura Ginn knows that when used correctly you can actually earn money by using cashback credit cards. Find out more about the various kinds of credit cards available at uSwitch.com, the UK’s leading online price comparison site.