Current Accounts

Category: Money
Date: 6/20/2008

What is a Current Account?

A current account is a bank account which allows you to access a range of banking services such as receiving money like your salary, pension or benefits payments, paying bills and setting up direct debits and standing orders to make regular payments.

A current account will typically give you a cash card and a debit card (which will probably be combined), a cheque book and guarantee card; and allow you to have an overdraft facility.

Some current accounts offer a high rate of interest, but this is usually payable only on the first few thousand pounds in the account and require a certain amount of money to be paid in per month.

Most accounts can be accessed in a number of ways, such as bank branch, internet and telephone. Some accounts can also be accessed at the Post Office or even on a WAP enabled mobile phone. Others are only accessible via web and telephone.

Who Are They Suitable For?

Anyone who wants or needs full access to the banking system. People with either no credit rating, or who have had credit problems may not be granted a current account, but should be able to get a basic bank account.

If you don't think you'll ever go overdrawn, then the interest rate on the credit balance may be the most significant factor in deciding which account is best. If you are likely to, then go for an account with a low overdraft interest rate.

What Should You Look Out For?

Current accounts can vary in exactly what they offer, so look out for the following:

• Up front fees - some accounts charge a monthly fee, normally to offset the cost to the bank of some other benefit available with the account
• Funding requirement - you may be required to pay in a minimum amount of money per month
• Interest - Competitive interest rates are only paid on the first part of the balance. After this amount, interest may not be paid at all, or at a very low rate.
• Overdraft Buffers - You may get an account which allows you to go overdrawn by a certain amount (called a 'buffer amount') before you get charged either a fee or interest (or both). This can prove very valuable if your income and outgoings are nearly the same and your account balance goes to near zero on a regular basis.
• Overdraft fees and Interest - these can vary greatly between banks so its well worth shopping around if you think you'll go overdrawn at some point.
  
• Cash Machines - make sure that your account allows access from a wide range of cash machines and that these transactions are free.