Are you one of the millions of people in the UK who have remained loyal to the current account you opened with your high street bank when you first left school or started work?
In recent years, the competition for current account business has really started to hot up, and as a result, there are some good deals available, as long as you are prepared to put in a little bit of effort to switch.
Before you jump in and sign up for that shiny new bank account, you need to think about the way you intend to use the account, for example, will the balance always remain in credit, or do you rely on an overdraft facility or perhaps a bit of each?
Once you have established the way your account will be used, you can check out the best account to suit your requirements.
If your account never goes overdrawn, and you don't think you'll need to in the future, then you need to look at accounts that pay a decent return on credit balances. If you're currently with one of the big high street banks, you may be shocked to find out that they may be paying you as little as 0.1% interest on your bank balance.
Take a look at the Halifax High Interest Current Account paying 5% (yes, 50 times more!) on balances up to £2,500 or the Premier Direct Current account from Alliance and Leicester currently offering 5.94%, also up to £2,500 – just be aware that you need to pay in a minimum of £1,000 per month and £500 per month respectively.
If you intend on keeping much larger credit balance in your current account, rather than siphoning some away into a savings account, the Coventry Building Society 'First' current account pays 5.46% on your entire balance, as long as you can meet the £1,000 monthly funding requirement.
If your financial position means that you require an overdraft on your account, then you should take a look at the Flex Account from Nationwide which charges a very competitive 7.75% on overdrawn balances and also doesn't require you to pay in a minimum amount each month. The Alliance & Leicester Premier Direct currently offers interest free overdrafts for the first 12 months, then reverts to 5.9% thereafter, although you must be over 21, pay in at least £500 per month and sign up to use their internet banking.
So as you can see, there are some sound financial reasons why you should ditch your existing current account provider, but it is important that you choose the account that fits your own personal cash flow situation. Even if you don't use an overdraft, it's well worth arranging one just in case something unexpected happens with your finances. It doesn't cost you anything to set up an overdraft limit, but if you were to accidentally go overdrawn without having a limit in place, you could find yourself faced with some pretty hefty penalty charges of between £25 and £30, so better to be prepared, just in case.
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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