Looking for a bank account with a better overdraft rate, higher interest, cashback or other benefits? We compare current accounts from 6 banks, including high street banks and new challenger banks.
A current account is the name for your account with a bank (so it’s often referred to as bank account, unsurprisingly), where your cash is held.
It’s typically the bank account you use in your everyday life for paying bills, rent, mortgage payments and the one you get your salary paid into.
Not all current accounts are created equal, look closely and you’ll see a wide range of different perks, cashback, free overdrafts, rewards or interest available.
Standard – These are the most straightforward current accounts, giving you a debit card, cheque book and online banking to manage your money.
Packaged - Packaged accounts come with added extras such as travel insurance, breakdown cover, mobile phone insurance and other offers in return for a monthly fee.
High interest - Some current accounts offer a higher rate of interest than standard accounts depending on your balance or the amount you’re able to pay in every month.
Cashback - Cashback current accounts are simply bank accounts that reward you with cash - either for paying in a set amount of money each month or for paying your utility bills with the account.
Bad-credit - If you’ve had problems getting credit in the past or no credit history at all, these accounts – also known as prepaid accounts – could be your best option.
While there is nothing quite as straightforward as ‘the best’ current account, some current accounts do offer a better deal than others. But it also depends on what you want from a current account.
If you consistently have a reasonably large bank balance of around £2000+ (that you don’t want to put into a savings account or mortgage overpayments), you should consider looking for an account that will pay you the most interest.
If you find yourself running out of money each month on a regular basis, then you should find an account with the cheapest overdraft. But be careful not to rely on your overdraft too much.
You will need to apply with a bank of your choice, have the correct documents to hand and have some money to deposit into the account in order to open it. Minimum deposits will vary between lenders.
You will need identification, usually a passport or a drivers licence as well as proof of address, this will typically need to be at least two bills with your address and name on.
It’s likely a bank will look at your credit file, if they are unhappy with your credit history you may be refused access to overdrafts, or even be unable to open an account.
When you hit the apply button on our site you will be taken to the bank’s page, where you can find out more details about the account. You are not obliged to proceed with an application if the account doesn’t seem like the one for you.
Two types of interest rates. One that you are paid in return for depositing your savings with a bank, the other is the rate you are charged for borrowing.
AER – This is the rate you will be paid by your bank on your deposits. It stands for Annual Equivalent Rate, which means it is calculated under the assumption that any interest paid is combined with the original balance and the next interest payment will be based on the slightly higher account balance.
EAR – This is the rate of interest you will pay on money you owe to your bank (ie your overdraft). It stands for Effective Annual Rate and reflects the effects of monthly compounding.
An overdraft is a borrowing facility attached to your current account. Or, to put it in plain English, it’s when your current account balance goes into negative values.
It is important to know the difference between authorised and unauthorised overdrafts.
An authorised overdraft is when you have agreed with your bank to be able to spend more money than you have. However this is capped at a limit, normally somewhere between £500 and £2,000. Some current accounts offer this as standard, others you need to apply for like any other form of borrowing. Typically you will need to pay an interest rate or a daily fee.
An unauthorised overdraft is where you spend more money than you have deposited in your account without your bank’s permission. They will charge you fees and charge a higher rate of interest or a daily fee for doing this.
Some accounts will offer you a certain amount you can borrow for free, this will be referred to as an ‘interest free overdraft’. Be careful not to confuse this with your overdraft limit, as you will typically only enjoy interest free borrowing for a smaller amount of your total overdraft limit.
For example, your overdraft limit may be £1,000, but if only the first £250 of this is free, you would then pay interest on everything you owe over £250.
If you find yourself regularly spending a little more than you have coming in each month, an authorised overdraft is a useful borrowing buffer to have. Unauthorised overdrafts should be avoided entirely. However, if your overdraft is not free you should be careful about relying on it too heavily as the interest charges and daily fees will soon add up.
As a rule it’s better to treat your current account’s authorised overdraft as a last resort emergency borrowing tool. If you’re going to be consistently overspending each month a better way to borrow could be a low APR or 0% purchase credit card. This will likely work out cheaper.
However, it is generally unwise to consistently spend more than you’ve got coming in each month and relying on unsecured credit for sustained borrowing is risky in the long term.
It is highly likely a current account that charges you an interest rate to use your overdraft will work out much cheaper than one that charges you a daily overdraft fee.
Even if the daily fee seems cheap (eg £0.50 per day to use) this will soon add up. When compared to an annual overdraft charging a rate of 20% (which sits at the more expensive end), borrowing £500 will cost £0.27 per day.
However, it ultimately depends entirely on how big your overdraft is. If you are overdrawn by more than £1,000, having a daily fee could very likely be the cheaper option.
But if you are overdrawn by more than £1,000 and unlikely to pay it back within a few months, you could consider a 0% money transfer card. You can use the card to clear your overdraft and then pay off the credit card balance over several months without paying any interest.
Compare money transfer credit cards here.
This is a separate flat fee that some accounts charge for access to the account. Normally only high-end accounts that will offer you exclusive perks or cashback will charge this fee.
Don’t be put off by being charged a fee, just consider whether you’re going to use the account to take full advantage of the perks or cashback, you could end up saving more money than the fee costs you.
However, if you don’t think you’re going to take advantage of the extras on offer then steer clear of these accounts.
Bank accounts on this table are ranked by popularity, which we have judged according to how many clicks they got over the past 48 hours. Those with the most clicks are at the top of the table, and those with the least at the bottom.
However, the most popular account might not be the account for you. You should still take time to filter and search all the accounts listed to see if there’s one that better fits your needs.
We compare current accounts from a wide range of high street banks and newer challenger banks. Compare our current account providers to check which ones we include.