CURRENT ACCOUNTS

Current Accounts

A current account is also known as an everyday bank account and almost everyone in the UK has one. It is best used to hold the money that you spend on a regular basis for things like day to day living costs, household bills and they are usually the place where your salary gets paid into. The way current accounts work is you pay your money in and out through a variety of methods, through branches, over the phone, online or at your local Post Office. You will then receive a monthly statements either through the post or online which shows all your transactions and what money has come in and gone out.

Reasons to open a current account

With a current account you can obtain free everyday banking and you can pay people from this account. Current accounts provide you with a debit card which you can use at cash machines and in the shops. Most current accounts will also come with a chequebook that you can use to make payments easily. Online banking is a great feature of many current accounts. Internet banking is fast, safe and convenient. You do not have to travel to your nearest bank for many basic services and you can access your account 24 hours a day. You can also access your statements instantly, make transfers quickly and schedule monthly payments to be made out of your account automatically. Some current accounts offer interest on the money you have on the account, although the rates are often lower than on a savings account. You can set up standing orders and direct debits from a current account for regular payments you have to make like bills meaning you do not have to worry about missing payment deadlines.

How to choose the right bank account

The right account will depend on you and your requirements. Recently the UK current account market has diversified to offer a wide range of products covering everything from basic accounts to packaged accounts and others aimed at particular target markets. For example there are special accounts designed for students with exclusive offers geared specifically towards students such as interest free overdraft facilities and free railcards Packaged current accounts can have a wide range of additional offers and benefits including features such as higher credit interest, free home, car, travel, mobile phone, breakdown insurance, protection from identity theft, you can earn airmiles, travel benefits and discounts and also commission free foreign currency. Bear in mind that while many current accounts are free and won’t cost you anything as long as you do not go overdrawn, other more advanced accounts, for example those offers additional benefits like travel insurance, may charge a small monthly fee. Many accounts offer incentives with their accounts such as free gifts and vouchers but do not just be drawn in by these. Without these does the account still offer everything you are looking for?

Considering current accounts

There is a wide range of different accounts and benefits available so you should shop around to find the best one for you. With so many vying for your business you should research thoroughly to find the best deal for you. There are hundreds of accounts to choose from. You should think about the things you’ll be using the account for and always watch out for any hidden charges that may apply. You may want to choose an account that can be managed online or via the phone and whether it has a 24 customer service line. Age restrictions may apply, you can usually open an account quite young but you may not have full access to all the benefits. Please note that you will have to provide some identification to open a current account which can include a passport, and proof of your address such as a bill. You may also find that you need to pay in a minimum amount each month to qualify for certain features such as particular interest rates.

Overdraft facilities

With some providers you will be offered an overdraft facility which is in essence borrowing money from the account provider. If you exceed the available balance in your account and go into a negative balance, then you enter your overdraft. Some accounts may offer overdrafts on an interest free basis. However, you should watch out for charges as some banks may charge you for this facility and rates can vary. If you do not have an overdraft facility and you go into a negative balance you should expect these fees to be much more expensive.