What is a current account?
A current account is a type of bank account. It‘s usually the bank account you use for most of your transactions and the one you get your salary paid into.
Current accounts usually come with a debit card and a chequebook.
You can get unlimited access to your money without paying a penalty. Withdrawing cash will not stop you from getting any benefits associated with the account.
How can I find the best bank account?
Some current accounts are better than others. But this largely depends on your own financial circumstances.
You can use a comparison tool like the one above to compare current accounts.
Different accounts offer different perks. For example cashback, free overdrafts, rewards or high interest.
Think about how you’ll use your current account, and whether your bank offers you the best deal. If not, consider switching bank accounts to make the most of the deals on offer.
What types of current account are there?
There are a number of different bank accounts. These include:
- Standard bank accounts. These are the most straightforward current accounts. You’ll get a debit card, cheque book and access online banking or an app to help you manage your money.
- Packaged bank accounts. These are similar to standard accounts often come with a monthly fee. This is because they have extras such as travel insurance, breakdown cover or mobile phone insurance
- High interest bank accounts. Some current accounts offer a higher rate of interest than standard accounts. This often depends on the size of your balance or the amount you can pay in every month. There may be a cap on how much the bank pays interest on.
- Cashback accounts. Cashback current accounts are bank accounts that reward you with cash. You could get cashback from paying in a set amount of money each month, or for using the account to pay your utility bills.
- Bad credit accounts. These are sometimes called prepaid accounts. A bad credit account could be a good option for you if you’ve had problems getting credit in the past or you have no credit history.
- Student accounts. Student bank accounts are only available to full time students. To get one, you need to prove you’re a student either with an acceptance letter from your university or your UCAS offer letter.
How do I choose the best current account?
The best current account is the bank account that offers the perks or deals that suit your lifestyle.
If you often dip into the red, you might want to compare bank accounts that offer fee-free overdrafts. New legislation means arranged and unarranged overdrafts are practically the same thing now, but banks have started to charge up to 40% interest on your debt.
If you have a large bank balance of around £2,000 or more, and are always in credit, you might consider looking for an account that will pay you the most interest.
To check your balance while you’re on the move, an online bank account or banking app could be a good option.
How do I apply for a current account?
You can start your application for a new current account with our comparison table. Most banks allow you to apply online.
If you’ve already chosen the bank you want, you could go to in person to a branch, apply by post or over the phone.
You need to be at least 18 and living in the UK to apply for a current account. If you’re not yet 18, you could get an easy access children’s savings account.
When I apply for a current account via the comparison tool, what happens?
When you press the apply button on our site, you’ll be directed to the bank’s website. You’ll find out more details there including full terms and conditions.
You do not have to go ahead with an application if you decide the account is not the one for you.
What do you need to open a new bank account?A UK address and proof of address. You may need at least two bills or letters from the past three monthsIf you’ve been at your current address less than three years, you may need proof of address for your previous propertiesPhoto ID, like a passport or driving licenceEnough money to reach the bank’s minimum deposit amount, if it has oneIncome and employment details, such as a payslip
You should not need to pass a credit check to get a current account.
What are the incentives to switch bank accounts?
Banks sometimes offer perks or incentives to encourage you switch your current account to them.
These could be in the form of a cash bonus, vouchers or an item like new headphones.
You may have to stay with the bank for a set amount of time to qualify for and keep the bonus.
You’ll probably have to get your salary paid into the account and set up 1 or more standing orders or direct debits.
Which bank account offers the best switching incentive?
There’s a plethora of banks offering different incentives to encourage you to switch your current account. These offerings change frequently.
Some current examples include:
- £175 cash if you switch to the HSBC Advance Account. To qualify, you must pay in £1,750 a month
- £100 cash and a 0% overdraft from First Direct for new customers only. To get the £100 cash offer, you need to open a 1st Account and pay in at least £1,000 within 3 months
- 5% interest on up to £2,500 savings for 1 year at Nationwide. This is only for those who have not had a FlexDirect account before. You must pay in a minimum £1,000 per month
Use a comparison table, like the one above, for more deals.
How will my existing payments and direct debits be transferred across to my new bank account?
The Current Account Switch Guarantee means that your new bank takes care of everything. They will close your old account, move your balance and switch over any direct debits or standing orders. The guarantee covers most UK banks.
The process should be:
- You open your new current account
- You pick a switch date (this is usually within 7 working days)
- Your new bank or building society takes care of all the transfer details
Under the Switch Guarantee, your new bank should cover fees or charges you might incur as a result of the switch. For example, a missed payment.
Your old bank should redirect any payments or request for payments to your new bank for up to 3 years after you’ve switched.
What about overdrafts on current accounts?
Some accounts allow you an interest free overdraft. This translates to letting you borrow a set amount of money for free. Not all accounts do this.
The interest free amount is often less than the full overdraft limit. Be careful not to confuse the two.
For example, you may have an agreed interest free overdraft of £250. But your full overdraft limit might be £1,000. You would owe interest on anything in your overdraft between £250.01 and £1,000.
What are the new rules on overdraft fees?
The rules on overdrafts will change from April 2020.
Under new government rules banks will no longer be able to charge fees to customers who drop into their overdraft. This applies to both arranged and unarranged overdrafts.
Banks can now only charge overdraft users a simple annual interest rate. But some banks have decided to charge 40% interest. The Financial Conduct Authority (FCA) is looking into this.
What is a monthly or annual account fee?
Some banks charge you a monthly or annual fee to have a particular account.
Not all accounts have a fee. It’s usually the accounts with exclusives perks or cashback that charge this fee.
Do not let fees put you off. 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 fees cost you.