A Separate Bank Account for Bills: How to Set One Up

A separate bank account for bills is a second current account that does one job: it pays your bills. On payday you move in exactly what your bills need, and every direct debit and standing order comes out of that account. Your main account then holds only money you can spend, so you can check your balance without wondering what is still due to go out.

Here is how to set one up and how much to move in.

Step 1: List every bill

You cannot fund a bills account until you know what it has to cover. Citizens Advice suggests gathering your recent bank statements, payslips, and card statements or bills before you work out a budget. From those, list:

• every direct debit and standing order
• any bill you pay by card or bank transfer each month
• every yearly or quarterly bill, with its amount

Our bill organiser spreadsheet guide gives you a layout for this list.

Step 2: Work out your monthly transfer

Your transfer is the total of your monthly bills plus one twelfth of everything that is not monthly.

Here is a worked example, using made-up amounts:

Bill	How often	Amount	Monthly share
Rent	Monthly	£700	£700
Council tax	Monthly (10 payments)	£150	£125
Gas and electric	Monthly	£95	£95
Water	Monthly	£40	£40
Broadband and phone	Monthly	£45	£45
TV licence	Yearly	£180	£15
Contents insurance	Yearly	£96	£8
Total			£1,028

Two details in that table matter.

Council tax. GOV.UK says council tax is usually paid in 10 monthly payments, so two months of the year have none. In the example, £150 over 10 months is £1,500 a year, or £125 a month spread over 12. Moving £125 every month means the account builds a small cushion in the months with no council tax, which covers the higher months. You can also ask your council to spread the bill over 12 payments; our council tax guide explains how.

Yearly bills. GOV.UK lists a TV licence at £180 a year. Saving £15 a month means the money is there when the renewal comes.

Step 3: Open the account and move your bills

1. Open a second current account. It needs to accept direct debits and standing orders. Opening it with your existing bank usually makes transfers instant.
2. Set up a standing order from your main account to the bills account for the day after payday, for your monthly transfer amount.
3. Move each bill. For direct debits, give each company your new account details, or ask your bank whether it can switch them for you. Move one or two bills at a time, and check each one has been taken from the new account before moving the next.
4. Keep a buffer. Leave a small extra amount in the account for the first couple of months, in case a bill comes out before your first transfer lands.

Step 4: Keep it topped up

Bills change. Energy, phone and broadband prices can rise, and council tax changes each April. Under the Direct Debit Guarantee, a company taking a direct debit normally tells you 10 working days before your account is debited if the amount or date changes. When that notice arrives, change your monthly transfer the same day.

Once a year, compare what came out of the account against what you put in. If the balance keeps growing, you are moving in too much. If it dips close to zero before payday, increase the transfer.

Is your money protected?

The Financial Services Compensation Scheme protects eligible deposits up to £120,000 per person per firm, and FSCS says the limit rose to that level from December 2025. The limit is per firm, so if you hold a lot of savings, check on the FSCS website how your banks are counted. For a bills account that holds a month of bills, the limit rarely matters.

Make the due dates visible

A bills account solves the money side. It does not tell you when each bill is due or whether it went out. A bill tracker such as Billo lists every bill with its due date and reminds you 3 days before each one, which makes it easy to spot a bill that did not go out from the new account. Between the account and a clear list, nothing comes as a surprise.

Is a bills account right for you?

It suits you if:

• you often check your balance and are not sure what is still to come out
• your bills land on different days across the month
• you share bills and want one place where everyone’s share goes in

It is less useful if most of your bills already come out the day after payday. In that case, a clear list of dates may be all you need.