A current account provides everyday banking services such as receiving your salary, benefits, and pension, as well as cash withdrawals, deposits, bill payments, and direct debits. You can open current accounts with most banks and building societies, and you can usually manage your account online. If you’re looking for a current account that’s right for you, key considerations might include:
Fee charges
Some current accounts charge a monthly fee. These fees might give you the benefit of lower overdraft rates, high interest rates for account balances or a higher overdraft buffer amount. You might even receive travel insurance, breakdown cover, or mobile insurance as part of a packaged current account. Depending on the current account you choose, and especially if you search around for the best current accounts for interest, the benefits you receive from paying a monthly fee might outweigh the cost of the fee.
Funding requirements
A bank may require you to pay a minimum amount of money into your current account each month. This is common for high interest current accounts, as they offer a better interest rate in exchange for your commitment and regular income. This type of current account may also require you to make a minimum number of debits per month. By issuing funding requirements, your bank is ensuring that this is the main current account you hold.
Credit interests
Some high interest current accounts offer competitive interest rates, but typically only on part of your balance, after which you won’t earn more interest. In such cases, it might be worth exploring current accounts that pay interest on larger balances. Alternatively, you might want to consider opening a savings account and maximising your returns by depositing any money you have above the first part of your balance into a savings account with a better interest rate.
Overdrafts
Overdrafts are a form of credit that allow you to spend more than the sum of money you hold in your current account. If you are considering using an overdraft, you should also compare current accounts which charge a low interest rate on overdrafts. There are two types of overdraft: arranged and unarranged overdrafts.
With arranged overdrafts, the bank agrees to the amount you can overdraw. An unarranged overdraft is where you have either exceeded your arranged overdraft, or you have gone overdrawn without an arranged overdraft.
In April 2020, overdraft fees in the UK were standardised by the Financial Conduct Authority (FCA). Banks are now only allowed to charge overdraft users a simple annual interest rate, and they can’t include any additional fees or charges, making it easier to compare the cost of overdrafts.
Access to your accounts
The most notable benefit of a current account is the flexibility of being able to access your account and your money whenever you need to. Some current accounts offer online and mobile access, while others are more traditional and require visiting a branch or using telephone banking to manage your account. Most banks offer contactless payment as standard, but you should still check as it’s not provided on every current account.
Cash machines
As with the ease of access to your accounts, you might also want to ensure that the current account you choose can be accessed from a wide range of cash machines and that cash machine transactions are free. All of the UK’s major current account card issuers are members of LINK, the UK’s largest cash machine network. Almost every ATM is connected to LINK, and it’s why you can withdraw cash from your account wherever you are in the UK.
