The consumer watchdog Consumer Focus has warned of "dark clouds" brewing over the world of the basic bank account.
These bank accounts offer banking in their barest, simplest form and can be handy to accommodate wages, benefits and cheque payments.
Whilst there are just 20 basic bank accounts currently offered by banks, the current account market offers a variety of products to suit all customers.
• Take a look at your lifestyle, regular outgoings and spending habits to assess what account would suit you best. For example, if you are a regular spender, an account offering a competitive overdraft rate may appeal to you.
• Shop around for the best bank account. Don't be tempted into opening the first account offered to you. Banks will often try to convince customers to take out one of their packaged accounts.
Packaged accounts will require a monthly fee, ranging from £8 to £25, and can offer such benefits as free mobile phone insurance or breakdown cover.
Whilst these accounts can offer some attractive features and benefits, they don't necessarily suit everyone. Don't open one of these accounts if you do not think the benefits suit you. In other words, don't choose an account offering free travel insurance if you hardly ever go abroad! After all, what is the point in paying for benefits that you will never use?
• Look at the rate of interest paid for staying in the black to make your balance work hard for you. Some accounts offer competitive rates of interest on the balances left in credit each month.
• Overdrafts can help with extra costs, especially just before payday! If you are planning to use an overdraft on a regular basis, research the market thoroughly for the lowest rates.
1. Agreed or authorised overdrafts. These overdrafts are agreed with your provider and may be for a fixed amount over a set period or you may be given a limit to use whenever you like.
You will be charged interest every day on the amount you overdraw. You may also have to pay an administration fee or arrangement fee when you set up the overdraft.
2. Unauthorised overdrafts apply to customers who fall into their overdraft without prior agreement or consent from their provider. These will carry higher rates of interest as well as a daily fee.
Try to avoid dipping into an overdraft as much as possible. As with any form of credit it is there to be used sensibly.
Avoid going overdrawn by keeping a close eye on your outgoings and check your bank statements regularly.
• Consider how you wish to conduct your account. Do you prefer to visit a branch or handle your finances independently?
There are some great accounts available for all lifestyles, ranging from online only to the more traditional branch-based accounts.
• Check whether the account requires a minimum amount to be paid in each month to keep it open. Some accounts require a regular payment, such as a salary, to be credited each month.
Compare the best bank accounts
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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