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Sometimes banks screw up. At the moment I have a single login with a single bank (various accounts inside). I'm not that rich, so that's no biggie. I'm under the personal savings insurance limit, and I'm not inclined to spend my free time trying to gain thruppence a year by moving my money around.

But here's my worry. Banks screw up. I'm sure I'm legally entitled to this and that, but if I'm stuck in the middle-of-nowhere on a trip, that's no real comfort, even if it's only a temporary loss. The banks sincere apologies for inconvenience would be of even less value. (It will probably be IT, won't it?)

So what I'd really like is an account with another provider which can be used to access a small amount of money to get me out of a hole. The temptation is to hide some actual cash somewhere, but that's bad.

Banks in the UK seem to actively discourage opening accounts for this purpose and there's all kinds of hoop jumping that seems to be required to convince them it's going to be my main account.

What I really want is just some way of giving a secure institution (like a bank) some cash, around a month's salary, and then armed with a small piece of plastic and a secret code, and located in the middle of nowhere, to get the cash back. Maybe even buy something online: probably once in a blue moon.

Is this a good idea? What's the best way to go about it in the UK if it is?

Update: note that this situation seems to be rather specific to the UK. You basically have to defeat the intent of a number of hoops that banks here put in place to avoid multiple current accounts. It probably doesn't amount fraud, for example "moving your money around" each month, but it seems close to it. I'd rather not do that

Dannie
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    Are there laws or regulation in the UK preventing from simply opening multiple bank accounts ? I currently have more than one myself and had zero problem doing so but I am from Canada. – ApplePie Jun 03 '19 at 23:05
  • I think OP is trying to look at non banks for the second account. At least non standard banks, if I understood correctly. – perennial_noob Jun 03 '19 at 23:08
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    "Banks seem to actively discourage opening accounts for this purpose and there's all kinds of hoop jumping that seems to be required to convince them it's going to be my main account." They don't want your money?? – RonJohn Jun 04 '19 at 00:36
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    Why are all these comments asking for clarification, when in the context of the UK banking system the question makes perfect sense? – Vicky Jun 04 '19 at 07:32
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    Have you ever read 'Papillon'? – spodger Jun 04 '19 at 16:01
  • The online banking has usually little relevance compared to credit/debit card system, or ATM system. The fact that online system breaks doesn't mean that you can't pay with your card or use ATM. If the 2nd is the case, then you should switch banks. –  Jun 04 '19 at 17:13
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    do credit unions exist in the UK? You should have no problem joining one and getting a debit card. (protip: they're better than banks anyway) – user91988 Jun 04 '19 at 19:00
  • @only_pro they do exist but they’re not widely used. – Notts90 Jun 04 '19 at 20:35
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    @Vicky because most people are from the USA, and either assume the rest of the world is like their own back yard, or else realize it might be different but don't know much about it. – alephzero Jun 04 '19 at 23:17
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    Banks seem to actively discourate opening accounts for this purpose - say what? I live in the UK and I had no problem opening a simple basic free current account in a second bank. At the time of opening, they asked if I had an account with another bank - I said, yes, and that was the end of it. I've had this other account for a few years now with a small amount sitting there (around £100). – Aleks G Jun 05 '19 at 10:21
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    The accepted answer doesn't seem to make sense. As many commented (and as another answer says) there is really no issues in having multiple accounts and banks could not care less. Just be sure to use the second account at least once a year or it could be blocked. – algiogia Jun 05 '19 at 10:25
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    @spodger +1 - bought tears to my eyes – Keith Miller Jun 05 '19 at 15:38
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    @RonJohn Banks in the UK are weird, as everyone who's ever seen Mary Poppins knows. :P – Mason Wheeler Jun 05 '19 at 18:34
  • @KeithMiller - I rather think it would. :-) – spodger Jun 06 '19 at 08:10
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    Why would moving money from one of your accounts to another seem close to fraud? (I'm in Germany and have never tried to open a UK bank account, but when I asked one of my banks whether they'd waive fees if I maintain a certain minimum or average monthly balance they told me that waive on monthly minimum incoming transfer and themselves suggested setting up an automatic loop transfer with another bank account. – cbeleites unhappy with SX Jun 06 '19 at 13:34
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    Secondly, I want to encourage your plan to have more than one checking account as I've witnessed a bank administratively screwing up for a substantial length of time: husband died suddenly. Bank froze joint account. Nationwide bank claimed they'd otherwise not be able to provide a statement at date of death (wtf!?). All in all, it took the widow 9 months to get access again. The joint account btw. was set up in a way that each spouse legally had full access without the other. For comparison: local credit union had everything sorted out within a few days. – cbeleites unhappy with SX Jun 06 '19 at 13:51
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    " I'm not inclined to spend my free time trying to gain thruppence a year by moving my money around." This is outside the bounds of your question, but please be aware you could be losing significant amounts of money by keeping all of your money in a simple checking / savings account. 10k over 10 years at 7% (typical average estimated equity returns with risk) becomes 20k. 10k over 10 years at 3% (a far more modest risk profile) becomes 13.5k. Over a 40 year working career, adding in 10k each year, continually each month, becomes 771k at 3% / year, 2.1M at 7%, or 400k at 0% interest. – Grade 'Eh' Bacon Jun 06 '19 at 14:58
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    "The temptation is to hide some actual cash somewhere, but that's bad." Why is it bad? – jpmc26 Jun 06 '19 at 17:04
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    I would just like to add that this worry is not unfounded, and I think it is a sensible idea. I was once driving abroad and had informed the credit card company before leaving of my plans including details of dates and locations, to ensure the card wouldn't get blocked. I needed petrol on the motorway, and the petrol station was the type that was unmanned with only card readers. My card got blocked. I ended up on the phone to them for nearly 2+ hours with no luck, and ended up saving myself by convincing another customer to pay with their card in exchange for my cash. Always have backups! – JBentley Jun 07 '19 at 13:28

9 Answers9

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Frame challenge

It’s easy to have multiple accounts with multiple banks without jumping through hoops.

  1. Halifax offer a current account with no monthly fee and no minimum pay in requirements.
  2. Nationwide offer a current account with no monthly fee and no minimum pay in requirements.
  3. Barclays offer a current account with no monthly fee and no minimum pay in requirements.
  4. HSBC offer a current account with no monthly fee and no minimum pay in requirements.
  5. NatWest offer a current account with no monthly fee and no minimum pay in requirements.

Pretty much every major UK bank or building society offers a free, no minimum payment, current account. Here is a fantastic guide to the various accounts available (scroll past the first section about switching to to the section with account that pay decent interest). These accounts are offered for free as a loss leader, in the hope you’ll use the overdraft facility or purchase other products from them. However there are basic bank accounts that are good if you don’t want an overdraft facility or have a poor credit score.

I think you may be getting confused with many of the switch incentives offered to encourage you to leave your current bank and switch using the switch guarantee scheme. They often come with conditions like paying in a minimum amount and have at least two direct debits. Some people try and open multiple accounts and have money moving between all of them to get the new customer benefits from multiple banks. These requirements about direct debits and monthly pay in are purely to qualify for the rewards, not the account. You’re not trying to switch your main account to get rewards so you don’t need to worry about this.

You simply need any current account that has no monthly fee, such as the ones linked above.

Notts90
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    This! I'm from the UK too and most of the other answers seem very strange, particularly the accepted one. – thirtydot Jun 04 '19 at 17:40
  • I first went looking for advice on how to do it and found many pages like this one at GoCompare: "Meeting the conditions of multiple current accounts requires serious organisation. As many current accounts need funding with a minimum monthly amount, you’ll have to make sure you transfer enough money between accounts to maintain them all". – Dannie Jun 04 '19 at 20:17
  • This was also my experience in the past when last looking for acocunts about ten years ago. – Dannie Jun 04 '19 at 20:18
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    @Dannie yes that if you’re trying to get all the rewards for switching and account benefits. In which case it can get a bit complex. If all you want is a second place to store a bit of emergency cash as you describe, you don’t need to worry about them. You simply need a no monthly fee bank account. Literally any will do, simply follow one of the links in my answer, though I’d recommend picking one that has a branch near you. – Notts90 Jun 04 '19 at 20:21
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    Tbh, I've never paid attention to rewards. I couldn't even tell you what my rewards are on my main account. (Insurance or something, points somewhere, I just chuck them in the bin). You may well be right about accounts being available now but I'm not just confused over rewards. I've actually experienced this. Things may have changed, I may have looked in the wrong places, but I'm not just being muddle-headed about shiny pictures. – Dannie Jun 04 '19 at 20:26
  • @Dannie do you pay a fee for your main account? If you do and you’re not getting use of the benefits you could potentially reclaim years worth of the monthly fee, which could be thousands of pounds. As said above, for what you described, any no fee bank account will do the job well. – Notts90 Jun 04 '19 at 20:32
  • No, I don't pay for my banking. It's just a normal bank account. I just want them to look after my money, and let me withdraw it or spend it online. They don't charge me for that, which is a good enough deal for me. Maybe the market has just changed recently: I've been with the same bank for at least twenty years. I definitely tried this back in the day and had no joy! – Dannie Jun 04 '19 at 20:40
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    @Dannie the market has definitely changed in the last 5-10 years. Definitely sounds like you just need a simple no fee current account like the linked ones. Can open most either online or in branch. – Notts90 Jun 04 '19 at 20:44
  • Let us continue this discussion in chat. – Notts90 Jun 04 '19 at 21:27
  • Not in UK, but I have over 10 accounts in 7 different banks, barely using others than main. Almost always there is a way to get an account for free. It's lifting a debit card fee one of the benefits you earn through hops and bounds (because idle account costs bank nothing, it's card what costs them). Easy, don't get a debit card. Instead, look for a bank where you can open a HCE/ApplePay/GooglePay debit card through a mobile app in a matter of seconds when an emergency materializes. – Agent_L Jun 05 '19 at 10:37
  • @Agent_L all the accounts linked to in the answer come with a free debit card automatically with no additional requirements. I’ve never heard of having to pay extra to have a debit card. – Notts90 Jun 05 '19 at 11:08
  • @Notts90 Nice, that's even better. We also had it that way, up until about a decade ago. When banks profits got shorter, they've found out that paying Visa/MC for cards nobody uses is the cost that's easiest to ax. – Agent_L Jun 05 '19 at 14:38
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Second Bank Account

As far as mainstream financial institutions are concerned, the simplest course would be, as RonJohn suggested, to just open an account with another bank: either one of the major high-street banks (NatWest, Lloyds, etc.) or one of the "second-tier" banks/ex-building societies (Tesco, Santander etc.). The majority of "screw-ups" in recent years have been specific to a single bank (or banking group), so the chances are good that if your day-to-day account is affected, your back-up account won't be.

Contrary to the OP's fears (and those of some other answers), there does not appear to be any great hurdle to having a second, basic, current account in the UK. I was going to edit in some examples, but Notts90 covers this far better in their answer. Meeting extra requirements (like two or more Direct Debts, and/or a minimum deposit every month) may get you benefits such as interest on credit balances or cash-back on spending, but are not a requirement for many basic accounts.

Emergency-Use Credit Card

The processing networks for credit cards (Mastercard/Visa) are substantially different from normal UK banking (BACS/Faster Payments) so glitches that affect one bank, or even the much rarer glitches that have affected the underlying banking infrastructure will probably not affect credit-card payments.

The obvious advantage of a credit-card is that you do not have to "tie up" any money "just in case". You can spend (up to your credit limit) at time of crisis and repay the balance once things have returned to normal. Even if you have to repay in a couple of installments (and thus incur some interest charges) or need to make a cash withdrawal (incurring appropriate fees), this may be an "acceptable cost".

As asgallant suggested in a comment, an alternative to a normal credit-card would be a Pre-Paid Credit Card. These might be useful if you either have a poor credit-rating or – as the OP mentions in a comment – if you have not built much of a credit-rating. The down-sides of a pre-paid credit-card (compared to a normal one) are that you have to "tie-up" the money in advance, and you may have to watch out for fees (see "How much do prepaid cards cost?" in this Money Saving Expert article, particularly the mention of Inactivity Fees).

Some other more "off-the-wall" ideas that you might pursue (after fully evaluating the risks):

PayPal

While PayPal is most often used to pay merchants, or to transfer money to others, it is possible to add money from a linked bank account to your PayPal wallet (see PayPal Help: How Do I add Money to my PayPal Balance). You could thus pre-load your account with however much money you think you'll need to ride out any bank glitch. You can obviously use the money for online purchases, and while you cannot normally access it through an ATM1, you could potentially send part of the balance to a friend/relative who does have ready-cash.

Note, that like Gift Cards (below), any balance held in a PayPal account is NOT protected by the Financial Services Compensation Scheme (FSCS). Were PayPal (or a gift-card issuer) to go bust, you would be at the back of the line of creditors and be unlikely to get much, if any, money back.

1You can get a PayPal Business Debit Mastercard which – from what I can see – acts as a "normal" Mastercard, backed by your PayPal account. This does allow withdrawal of a PayPal balance from ATMs (with a flat £1/withdrawal fee), but is only available with "business" PayPal accounts in the US and UK (but the card can be used worldwide).

Amazon (or other) Gift Card

This would not be a viable solution for many people, and certainly not for large amounts of money.

Amazon (and, undoubtedly, other major retailers) allow you to load a gift-card on to your account. While Amazon doesn't (yet) sell everything, it may be enough to ride-out the occasional glitch with your main bank. Probably the main drawback is that according to their Terms and Conditions, "Gift Cards cannot be used to purchase other gift cards", so you could not send some of the balance to another person (e.g. as a way of getting cash). However, if you have a credit card attached to your account, you probably would be able to purchase a gift-card on that, that you could send to a friend.

As both Owain and Notts90 rightly point out in comments, a gift-card carries the risk of the issuer going bust and not being able to honour it (as happened to a somewhat-similar "Christmas Club" run by Farepak in 2006, and to a number of other UK high-street retailers over the past few years such as Woolworths, BHS and Toys-R-Us: see this Centre for Retail Research list for many others who have been in trouble).

If you were to pursue this idea, it would probably be best to follow the suggestion Chris H gave in a comment of limiting exposure to cover essentials and diversifying across a number of major supermarkets.

TripeHound
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    A problem with a retailer's gift card is if the retailer goes into administration, the gift card balance will usually be lost. – Owain Jun 04 '19 at 08:25
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    @Owain True... some care/due diligence is needed. There have been notable UK collapses in the past (Farepak... a "Christmas club" in 2006; Woolworths/Toys-R-Us etc.). If I felt a need to do this at all (I don't), I'd probably trust Amazon, but you never know (but probably not with a month's salary). – TripeHound Jun 04 '19 at 08:36
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    If you're going to go with the gift cards (+1 for a creative if partial solution), in addition to solid retailers I suggest: (i) Diversification, (ii) Prioritising essentials, and (iii) Looking for click-through/cashback offers when buying/loading them. In practice this might mean going for a gift card for each of the local major supermarkets (that you can walk to in emergency), and getting loyalty points on the purchase. – Chris H Jun 04 '19 at 14:52
  • I would love to up vote most of this answer but I’m not because of the gift card suggestion. I can’t think of a worse way to store money. If the company goes into administration you have no recourse for getting your money back. In addition to this, gift cards often expire and if you lose one, they cannot be replaced. – Notts90 Jun 04 '19 at 15:35
  • As an alternative to the gift card, you might be able to get a pre-paid Visa/MasterCard/etc (you can definitely do this in the US, I assume its also an option in the UK). Pick whatever payment processor is prominently accepted in the UK, and you should be able to use the prepaid card basically anywhere in the event of an emergency where access to your base bank account is cut off. – asgallant Jun 04 '19 at 16:16
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    @Notts90 I've beefed-up the warnings about gift-cards (and PayPal, which is equally unprotected). Also, your excellent answer about the "frame challenge" saved me from some edits I was going to make along the same lines. – TripeHound Jun 05 '19 at 07:46
  • I like this answer, and want to emphasize that if you already have a bank account which comes with government assurances AND a credit card which can give you quick cash if needed, anything further 'just in case' is likely not worth the effort. -- Even more so if it would be OK to bother other people in case of emergency. – Dennis Jaheruddin Jun 05 '19 at 10:03
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I'm amazed none of the answers so far have mentioned Monzo.

You can open an account entirely using its mobile app – you just need to be able to take a picture of your photo ID, and record a 3-second selfie video to demonstrate that it’s really you and you match your photo ID. There are no branches, the account is entirely managed via the app.

Let's go through your list of requirements:

all kinds of hoop jumping that seems to be required to convince them it's going to be my main account.

  • nope. No hoop jumping whatsoever, just download the app and request to open an account. I suspect the hoop-jumping may be an artefact of an older-fashioned approach to banking – or, as Notts90’s answer points out, to get a switching incentive.

a secure institution

  • it is a UK bank and is covered by the FSCS (the compensation scheme covering you for up to £85,000 if the bank fails), if that’s what you mean.

armed with a small piece of plastic and a secret code, and located in the middle of nowhere, to get the cash back.

  • easy; withdraw at any Link ATM – including in foreign countries, where withdrawals of up to £200 in any 30-day period are fee-free, and the exchange rate is the same as the MasterCard base exchange rate with no markup. (Foreign cash withdrawals in excess of £200 in a 30-day period are subject to a 3% fee). Re: “secret code”, unlike with other banks that send your PIN by post, you decide what your PIN is going to be before the card is sent out to you.

Maybe even buy something online: probably once in a blue moon.

  • no problem; you get a MasterCard debit card, and the receipt / statement shows up instantly within the app.

Is this a good idea? What's the best way to go about it in the UK if it is?

  • If you go with Monzo the only ‘overhead’ to all this is having the app on your phone. You really can do everything, including the account opening, all via the mobile app.
marktristan
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  • And the overhead of getting a phone which can run apps, :-) . I may consider this, though, if I ever "get with the program"! Good answer, though, for most people. – Dannie Jun 04 '19 at 11:49
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    Suspect Monzo's lack of hoop jumping is while their investors are more interested in seeing user numbers go up rather than worrying about whether those users are profitable. Same for any growthy tech company these days: worry about uptake before monetization. But it seems a shame not to take advantage of this and let those investors subsidize your banking; good answer! – timday Jun 04 '19 at 13:45
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    The 'Challenger Bank' option in general is a good one here. As hinted at they are desperate for customers for 'Growth', and the whole process is more streamlined. I have an account with Starling https://www.starlingbank.com/ for the same purpose - similar to Monzo as described. Works well for me, Mastercard rather than Visa that my main account is on, no fees even for using abroad. I just use it as my main spending account and transfer money in each month. Keep main account for wages and direct debits. Maybe not best option for OP if they don't have or want a smartphone though. – Carlovski Jun 04 '19 at 16:01
  • At least one challenger bank has got things wrong recently. – Andrew Leach Jun 04 '19 at 16:49
  • There must be some hoop jumping due to money laundering know your customer legislation – Ian Turton Jun 04 '19 at 19:01
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    There is still a robust KYC process, it's just done in a modern way unlike most of the legacy banks which insist on posting 50+ pages of A4 paper to you in order to open an account ;) – Adam Williams Jun 04 '19 at 20:17
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    @AndrewLeach I'm not sure I'd place Metro Bank in the same category as e.g. Starling and Monzo. Not only are they not digital-only, they're around a decade old at this point and haven't really technically innovated to distinguish themselves from e.g. the CMA9. – Adam Williams Jun 04 '19 at 20:21
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    @timday according to Monzo, as of a few months ago, they are were breaking even on each new account opened, and had lost between £10 and £50 before that. Even with their minimal restrictions they’ve managed to become almost profitable. – Tim Jun 05 '19 at 09:23
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This sounds a whole lot like, open a current account at a separate bank, and carry its debit card with you too, in case of emergencies. That's easy peasy in every county that claims to be free, and most that aren't.

Alternatively, carry a credit card for emergencies like this.

If it's not what you're talking about, then please edit your question for clarity.

RonJohn
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  • I think the OP is looking for a non-bank institution. That is why the emphasis on being able to take out money and even make payments to online purchases, for ex. The last paragraph and the general mistrust in bank is what I am reading from the OP. – perennial_noob Jun 04 '19 at 00:16
  • @perennial_noob like a debit card for PayPal? – RonJohn Jun 04 '19 at 00:35
  • Didn't think about that but possibly that. Even that... I'm not sure is not backed by a bank after all. – perennial_noob Jun 04 '19 at 00:42
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    @perennial_noob which is why OP needs to clarify his question. – RonJohn Jun 04 '19 at 01:11
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    There’s no such thing as a “checking account” in the UK. – Vicky Jun 04 '19 at 07:34
  • @Vicky what's the name of the type of account that you (if you're old) write checks from, and use your debit card from? – RonJohn Jun 04 '19 at 09:35
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    @RonJohn current account, but your meaning will be perfectly well understood. – AakashM Jun 04 '19 at 09:53
  • @AakashM thanks. I've edited my answer. – RonJohn Jun 04 '19 at 09:56
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    ... except that, in the UK, opening a current account for free usually requires you to a) get your pay deposited into that account, which is not possible to do with more than 1 account at a time, and b) have at least 3 bills direct-debited from that account, which is not possible to do without some hoop-jumping which I think is what the OP is referring to. – Vicky Jun 04 '19 at 11:20
  • That's it exactly, @Vicky . I've updated my question to make it clear that it's a UK specific thing. (I had no idea). – Dannie Jun 04 '19 at 11:43
  • @Vicky "get your pay deposited into that account, which is not possible to do with more than 1 account at a time". Are you kidding me?? The "antiquated" US banking system makes depositing your paycheck into multiple accounts trivial in the extreme. I do that to work around the fees on my second checking account. – RonJohn Jun 04 '19 at 13:12
  • @RonJohn no, I'm completely serious. It's not generally possible here to have your employer split your paycheck between multiple accounts, and although you could easily set up an arrangement to automatically transfer half of it yourself from one account to another, for some banks that would not count towards the requirement (plus it would be a hoop you would have to jump through, which the OP would rather avoid). – Vicky Jun 04 '19 at 14:37
  • @Vicky wow... we've been able to do that for at least 20 years. – RonJohn Jun 04 '19 at 14:53
  • In the UK most people don't get paid by cheque; pay is sent by BACS transfer [US: direct deposit?] from the employer's to the employee's bank. Changing the destination bank account may not be possible every pay period, especially for weekly paid staff, due to limitations with the employer's payroll system. This also means banks can tell whether an account has a salary deposited to it, rather than a cheque being paid in. – Owain Jun 04 '19 at 19:50
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    @Owain it's been more than 20 years since I've been given an actual paycheck, and for that whole time, I've been able to specify things like "10% in Account 1 and 90% in Account 2" or "$250 in Account 1 and the balance in Account 2". This is a "rule" that stays takes a pay cycle to get implemented and stays in force until you change it. "Set it and forget it." – RonJohn Jun 04 '19 at 19:59
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    @Owain in fact, I've got a second "current account" which charges $12/month unless a $1,500 balance is maintained every day, or $500 is direct deposited (same as BACS) every month. So... I set it up so that $250 from each paycheck is deposited into that account and then transferred to my main "current account". Voila, no absurdly high monthly fee. – RonJohn Jun 04 '19 at 20:03
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    @vicky "... except that, in the UK, opening a current account for free usually requires you to a) get your pay deposited into that account, which is not possible to do with more than 1 account at a time, and b) have at least 3 bills direct-debited from that account" - as the other answers have shown, this is completely incorrect. How long have you lived in the UK with this misconception? These conditions might apply to switch incentives, but certainly don't apply to opening a current account.. – Adam Williams Jun 04 '19 at 20:23
  • @AdamWilliams Ok, no need to be rude about it! I’ve lived in the UK all my life and I am distinctly middle aged; I can assure you that my answer has been correct based on my experiences of banking here for the majority of my adult life. From the other answers and comments here it does seem like the current account market has changed in the last 5-ish years in ways I was not aware of, in which case your downvote on my answer is the right thing to do. – Vicky Jun 04 '19 at 22:02
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    I'm sorry if I came across as rude @Vicky - it's just concerning how many people think they need to pay fees/jump through hoops which as far as I can see, aren't there. I've personally held a Nationwide current account for over 15 years without paying fees - maybe it's the other banks for which things have changed recently. – Adam Williams Jun 05 '19 at 10:44
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In the UK, banks discourage you having a current account (i.e. one on which you can get a debit card / access money via an ATM) that is not your main account, i.e. the one into which your regular income is deposited.

That is because it costs them money to provide those facilities and if they’re not getting income from you to invest then it doesn’t make sense to provide them for free.

I would say you have three options:

  1. Open a second current account with a different bank (ideally a bank in a different banking group, as an outage that affects one may affect others in the same group) and accept that you have to pay a monthly fee to maintain this account. This should not be difficult or require jumping through hoops.
  2. Open a savings account with a different bank. This will not give you a debit / ATM card but may give you instant access to the money via online banking.
  3. Take out a credit card with a different provider from your bank account. Again, there may be annual fees (although likely less than current account fees). You can use the card either to pay for things directly or to withdraw cash at an ATM; with most credit cards you pay interest on cash withdrawals immediately, but you can counterbalance this by transferring money to the card via online banking.

I think option 3 comes closest to what you want - it gives you access to some money in an emergency situation and also doesn’t tie up any capital. This is what I do - I have a main current account with linked debit and credit cards, and then I have two other credit cards as backup options if needed.

Vicky
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    "they’re not getting income from you to invest". Banks loan deposited money. That's (one way) they make money. – RonJohn Jun 04 '19 at 09:38
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    "and accept that you have to pay a monthly fee to maintain this account". Where's the "minimum balance after which fees are waived? – RonJohn Jun 04 '19 at 09:39
  • @RonJohn "Banks loan deposited money", exactly, and in this scenario you won't be depositing any money into the account on a regular basis, so it won't be free. – Vicky Jun 04 '19 at 11:21
  • @RonJohn "Where's the minimum balance after which fees are waived?" there may well not be one. Most current accounts that I've seen here only waive fees if you have your pay going into the account (or "more than £x deposited from outside this bank per month", more specifically) and you have at least 3 bill payments going out from that account per month as well. – Vicky Jun 04 '19 at 11:22
  • I've been thinking of a credit card for other reasons, so this might be another good reason to get one. I have a mediocre credit score because I don't have a mortgage or rent to pay, and avoid credit where possible (everywhere at the moment). At some point I might, so I'd rather not be a mystery to the gods of lending at that point. So this is another good reason to do that. – Dannie Jun 04 '19 at 11:46
  • @Vicky that's a bit more onerous than US banks, but not much, and certainly can be worked around. – RonJohn Jun 04 '19 at 12:58
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    @Dannie I think CCs are just great, for the exact problems you're asking about. If one bank's system is down or card is stolen, I use another bank's card. If fraudsters ring up huge charges on my card, I call the bank to start the dispute process and... use my other card. If UK/EU banks make that hard, then UK & EU banks really suck, despite all the whining about how "antiquated" the US banking system is. (I've had many fraudulent charges on my cards, and getting them reversed and new card sent out was just a stress-free phone call.) – RonJohn Jun 04 '19 at 13:05
  • With a different bank is key anyway, to avoid a single point of failure. You can route money through that account to meet requirements: Standing order from your primary to your backup, some bills paid from that. That's common for joint accounts; I've ended up with just that for an ex-joint account. It's actually quite easy. I also have a credit card from another provider, so have access to emergency cash and spending, even if my wallet is stolen with my primary cards in – Chris H Jun 04 '19 at 14:45
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    In the UK, banks discourage you having a current account ... that is not your main account [CITATION NEEDED] what are you on about? How do they discourage this? It’s extremely easy to have multiple accounts with multiple banks, you can open a second account online in minutes for free with most banks. – Notts90 Jun 04 '19 at 18:10
  • @Vicky Serious question: from the bank's perspective, what's the difference between an account that is rarely deposited to or withdrawn from, and an account with a lot of activity but roughly the same average daily balance? – chepner Jun 04 '19 at 18:55
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    @RonJohn UK banks place much more fraud risk on the account holder than the US, for example, the whole EMV pin scheme allows them to deny claims e.g. by claiming charges were authorized or you must have written down your pin. (If you think that's unfriendly, see their insurance) Also the majority of UK current accounts are associated with revolving credit, via an overdraft facility, thus its more like opening a credit card than a checking account. Interest charges are how banks make a lot of revenue. – user71659 Jun 04 '19 at 19:39
  • @user71659 "the whole EMV pin scheme allows them to deny claims e.g. by claiming charges were authorized or you must have written down your pin." Thanks for confirming what I thought would happen when EMV was rolled out. – RonJohn Jun 04 '19 at 19:49
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    I've downvoted this, because it doesn't match my experience at all. The number of accounts that have a monthly fee attached is low, in my experience. I've previously held concurrent accounts with Santander, First Direct, Nationwide, Monzo and Starling without paying anything. – Adam Williams Jun 04 '19 at 20:13
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    This is a really bad answer and not at all useful in the UK context – Neuromancer Jun 04 '19 at 23:51
  • you set up automatic transfers to push money from one account to the other. There isn't any need for the deposit to be long term or for it to be from not you
    • – UKMonkey Jun 05 '19 at 09:51
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    Banks seem to actively discourate opening accounts for this purpose - I have to disagree. I live in the UK and I had no problem opening a simple basic free current account in a second bank. At the time of opening, they asked if I had an account with another bank - I said, yes, and that was the end of it. I've had this other account for a few years now with a small amount sitting there (around £100). – Aleks G Jun 05 '19 at 10:22
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    This answer is wrong. From experience, UK banks don't ask if you have other accounts. Just be sure to use the second account from time to time to avoid it being blocked. – algiogia Jun 05 '19 at 10:26
  • @algiogia I haven't used my other account in at least 4 years - and it hasn't been blocked. – Aleks G Jun 05 '19 at 13:59
  • @AleksG not all banks block dormant accounts but some do (e.g. HSBC) – algiogia Jun 05 '19 at 14:02
  • The only hoops for a standard bank account is ID and credit checks. You can skip the latter by getting a (usually unadvertised) basic bank account. – OrangeDog Jun 05 '19 at 14:26
  • I'm so used to being able to go anywhere with 500 cash and open a no-fees account. Pretty odd twist of market. – Joshua Jun 05 '19 at 15:24
  • As long as you're opening a second credit card, arrange to have its billing cycle offset from your current card by 15 days. Then make it a habit to put the one with the most grace period time left (to pay the balance without incurring interest) on top of the other one, and use it in preference to the other. You'll switch their position whenever a card enters a new billing cycle, so that you'll use each card for the first 13-16 days of the billing cycle, maximizing your interest-free use of the credit. – Monty Harder Jun 05 '19 at 18:15
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    This answer is flat out wrong with "accept that you have to pay a monthly fee to maintain this account". The majority of UK current accounts for individuals (as opposed to businesses) do not charge monthly fees for their basic accounts or non-premier accounts. – JBentley Jun 07 '19 at 13:30