However, it’s vital that you make the right decision, as your current account is likely to be the most important account you have when it comes to managing your finances.
Most people’s income goes straight into their current accounts, and they then pay all their bills from this account. Many people also rely on their current account overdraft to help tide them over until payday.
Choosing the right account
When picking a current account, think about what is important to you. For example, do you tend to keep a large credit balance in your current account? If you do, you should look for a current account which pays competitive rates of interest if you stay in the black. A number of current accounts pay no interest at all if you are in credit, while others pay either a flat rate of interest or tiered rates depending on how much you deposit. Those which do pay a competitive rate of interest often only offer this rate for the first year, after which it plummets, so you will need to move your money then if you want to continue earning competitive returns.
If, however, you tend to be overdrawn most of the month, then you will need a current account which has low charges if you are consistently in the red. That means those current accounts which impose daily fees for being overdrawn are unlikely to be a suitable option, as charges can run into hundreds, if not thousands of pounds over the year if you aren’t careful.
When picking a current account, think about what is important to you.
It’s also worth thinking about whether you want a UK current account which comes with added benefits. Known as ‘packaged accounts,’ these usually charge a monthly fee in return for benefits such as breakdown cover, travel insurance and mobile phone insurance. If you do opt for a packaged account, you must be certain you will make full use of the benefits on offer, and that you aren’t doubling up on any of them.
Some accounts come with added benefits and don’t impose a monthly fee, while others offer perks such as cashback on some of your spending, or even just for switching to their account, so always find out exactly what you’re entitled to before signing up.
Trawling through individual providers’ small print to find the best current account for your individual needs could take weeks. However, you can compare accounts quickly and easily through MoneySuperMarket.com, using at-a-glance tables to compare in-credit interest rates as well as overdraft charges and any other additional benefits.
Opting for the first current account you come across, or sticking with the same account year after year, just because it was the same one your parents had could end up costing you dear, so always do a quick comparison to ensure you’ve chosen the right deal.