How to Choose the Best Current Bank Account for You
A current account is the most common type of financial product: Most people have one. If you’re like the majority of account owners, you didn’t give much thought to what you want from a current account before signing up for one, which means your current bank account may be unsuitable for your needs. For example, if you frequently go overdrawn, you don’t want an account with expensive overdraft charges, or if your account is usually in credit you don’t want one with a poor rate of interest on current account balance.
The good news is that if you’re not happy with your account – for whatever reason – it is easier than ever to switch. The Internet has opened up competition in the current account market with scores of new providers offering attractive products. And new rules mean that banks have to co-operate within days rather than weeks if you express a desire to move an account. We will show you how to make sure you find the best current account for your particular needs.
When the first time your open current account, it’s easy to opt for the same account your parents have. Or if you are heading off to university and open current bank account for the first time, you may choose the one that offers the best perks: such as a free five-year Young Persons Railcard, which gives you one-third off rail travel. Few people give any more thought to it than that. But seeing that a current account fulfill such a crucial role in your personal finances because most of your cash flow through it at some stage, it’s worth thinking about what you want from it before signing up.
Some banks pay extremely poor on current account interest rates and charge extortionate rates of interest on overdrafts, yet those offering the worst deals also have the largest number of customers. The ‘big four’ – Barclays, HSBC, Lloyds TSB, and NatWest – all pay 0.1 % current account balance (although Lloyds TSB also has an account paying a higher rate of interest as long as you pay in a certain amount each month). Other banks pay more than 30 times this amount of interest.
The big four also charge around 16-18 % on authorized overdrafts (although Barclays has some packaged accounts with 9.9 % overdrafts). But you can get an overdraft rate of under 8 % if you shop around. Yet despite this, some 70 % of all current bank accounts remain with one of the big four banks.
Current account is one of the 2 primary components of the balance of payments in economy theory, another one is capital account.
No bank or building society offers the best deal on every single product. One bank may have a fantastic mortgage range but offer a low on its current account interest rate. Product providers specialize in certain areas, offering one or two really attractive deals to pull in the punters. Other customers end up paying for this great deal – usually those stuck with an uncompetitive current bank account.
Check for an introductory offer. Some banks pay a lump sum or charge 0 % on overdrafts for a limited period when you open current account. Find out whether you qualify for preferential rates on other products offered by the bank, such as insurance or personal loans.
When scouting financial institutions or commercial financial services, discover what other services are on offer, such as the ability to buy or sell shares or free financial advice. If you’re keen on being green, determine whether you can get an ethical banking account, which are provided by socially responsible banks that don’t invest in companies involved in tobacco, gaming, gambling, or pornography.
If you think you have been overcharged by your bank, get help on how to claim a refund from Which? (www.which.co.uk). When choosing a current account, you need to consider how you will use it.