A current account is an absolute essential, enabling you to manage your money on an everyday basis. You can set up direct debits and one-off payments out of your account, and receive wages, pensions and loans into it. With a current account, you have freedom and flexibility to control your money in the way you want.
It can seem that there are an overwhelming number of current accounts out there to choose from. If you know your spending habits and you know what to look for in an account, it becomes much easier to see which will work best for you.
Things to consider when choosing a current account:
How Much Money you Tend to Keep in Your Account
If you tend to keep a large balance in your bank account, you’ll want to pick a current account which pays good interest for staying in credit. Some current accounts pay no interest at all for maintaining a good balance, so avoid these. If, however, you are regularly overdrawn, it’s advisable to go for a current account that has low charges for overspending. Steer clear of current accounts which charge daily fees for being overdrawn, as you could quickly run up debts.
Whether you Want Added Benefits
Certain current accounts, often referred to as ‘packaged accounts’, charge a monthly fee for providing benefits such as phone insurance and car breakdown cover. Don’t be taken in by what looks too good to be true. For example, if you don’t drive, getting breakdown cover, no matter how cheaply, isn’t much use! Check out what you’ll use and see if you can buy the cover you want separately. It can save you money and the benefits might be better.
Whether you Have Savings
If you have a lump sum of cash in a savings account, it might be worth considering moving this money to a high interest current account. This way, you’ll maximise the earnings you can make on your money. If you do have money saved, go for an account that will give you high returns.
Money for Nothing
If you have a lump sum or can save regularly, think about an ISA. You won’t pay tax on the interest so it’s like the government giving you money for nothing!
How Often you Go Abroad
If you travel regularly, think about a current account provider that charges low fees for foreign usage. The majority of banks charge fees for making purchases abroad, and an extra flat rate fee (usually up to £2) for withdrawing money from a foreign ATM. If foreign usage fees are a concern for you, research banks that waive these fees. There are still some that offer good rates on overseas spending.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk