Learn about the bank accounts available on the current account market today and see if you can find the right one for you.
What are you looking for in a current account? You may wish to get a better return on your savings, pick up some rewards with your main bank, or simply find a bank or building society that gives you the service you want.
Whatever you are looking for, read our guide to learn about the many different types of bank accounts available on the market and to see what features could benefit you and what others ones you may not need at all.
Bank accounts available
Customers today are not only faced with a large number of providers offering different current accounts; they are also faced with a choice of account types.
Most banks and building societies will have a standard day to day current account for holding your income and withdrawing cash, but they’re also likely to have a suite of other accounts ranging from the savings account to the packaged account with premium benefits.
Before you start comparing providers, read our guides to find out more and make sure you can get the current account to suit your needs and your lifestyle.
Current accounts – the day to day account
Most of us have a current account to manage our money on a day to day basis. We pay our income into the account and then manage payments such as bills, Direct Debits and standing orders from the account.
Current accounts give you easy and quick access to your money and usually come with a cheque book and a debit card.
If you need access to extra funds, either temporarily or over a longer term, your provider can offer an overdraft facility for you to borrow against.
Most current accounts will charge interest against the borrowing, although the interest rate charged varies from provider to provider. Generally standard current accounts offer a low rate of interest on money saved in the account, so are not the best choice for savers.
Providers also offer current accounts which levy a monthly charge to customers. In return customers receive benefits such as reductions on loan rates, free insurance and discounts on goods.
You can compare current accounts available and find the best account for you with uSwitch.
High interest accounts – better returns on your savings
High interest accounts fulfill the same everyday banking function as current accounts, but offer higher rates of AER (the interest a bank will pay to you for your deposit) than the typical standard current accounts.
However, often you will only receive this interest rate if you meet a provider’s conditions, such as paying minimum monthly deposits into the account or paying an annual fee. You may also
It’s also worth watching out for how long you’ll receive the higher rate of interest as some accounts only offer this as an introductory special offer for around 12 months.
Basic accounts – helping you manage your money
Basic accounts are similar to a current account but are designed for those with a less than perfect history with managing credit or for those who want the absolute minimum.
Customers can pay their wages or benefits into a bank account and can access their money either by using a cash card (with an agreed withdrawal limit) or at the bank’s branch.
The current account switch guarantee is used by most providers now, making it easier to change your bank account
Basic accounts will not allow customers to have an overdraft or a cheque book, so suit those who want to control their spending and stay in credit.
Basic accounts are an option for customers who have had issues with credit and may not be eligible for a current account.
By setting up a basic bank account and managing it effectively customers can increase their likelihood of being given a current account in the future.
Savings accounts – earn money while you save
Savings accounts are aimed at customers looking at building up a cash fund either for a special occasion, such as a wedding, or for the future such as saving for children’s university costs.
A savings account can be opened from a wide range of providers and generally require the customer pay in a sum of money each month. These accounts often give a higher rate of interest than a normal current account, but are less flexible. Restrictions can include:
- Keeping money in the account for a certain period of time
- Paying in a minimum or maximum amount each month
- A restriction on the number of withdrawals you can make
Your bank may also have an Individual Savings Account (ISA) which allows you to accumulate tax-free interest.
Like regular savings accounts ISAs could come with similar restrictions on the amount of withdrawals you can make or how long you have to keep your money there.
However, it is possible to find ISAs and regular savings accounts that provide you with instant access. This means you can access your money whenever you like, but this will impact the rate of interest you get at the end of the month.
Usually the restricted savings accounts can offer better rates.
You can read more about ISAs and savings accounts here.
In return for a monthly fee, some bank accounts will offer a premium account or packaged account that gives you some perks along with your usual banking.
These perks usually include products such as mobile phone insurance, breakdown cover and travel insurance, but can also cover entertainment benefits such as film rental, music downloads and executive airport lounge access.
Aside from these benefits, some of these packaged accounts may offer preferential rates for other banking products such as loans or mortgages.
Read more about packaged accounts to see if they are worth the money.
Offset – combine your mortgage and banking
An offset mortgage links your main current and / or savings accounts with your mortgage. Each month, the amount you owe on your mortgage is reduced by the amount in these accounts before working out the interest due on the loan.
So if have an interest only mortgage of £200,000 and have savings in your offset account of say £50,000, you pay interest on £150,000.
However if you spend £10,000 in the next month you will have reduced your offset account to £40,000 and pay interest on £160,000.
So, as your current account and savings balances go up, you pay less on your mortgage. As they go down, you pay more.
These accounts, while becoming more popular, do require careful money management to ensure you are paying off your mortgage and not wasting your savings.
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