nigel woollsey

Nigel Woollsey

Online Writer
Published: 12/03/2019

At a glance

  • There are a range of current account types offering different benefits to different people. Make sure you choose a current account that is right for your circumstances.
  • Most accounts come with a cash card or debit card. You may also be offered a cheque book and the option to have an agreed overdraft.
  • Some current accounts come with monthly or annual fees. Make sure you know how much your bank will be charging you and when.
  • A credit check will be performed when you open a new current account so be sure that your credit score is as healthy as possible beforehand.

What is a current account?

A current/bank account lets you keep your money in a safe place while still allowing you to spend it, transfer it, use it to pay bills and have more added to it. Current accounts usually come with a cash or debit card, which you can use to make purchases or withdraw money from your account.

Types of current account

The different 'adult' account types you can choose from are:

  • A standard account, which offers you all the 'standard' account features, but nothing extra. These accounts may or may not charge a monthly or annual fee.
  • high interest current account, which offers you a competitive interest rate on funds up to a certain balance and/or monthly cashback for keeping your account in credit. These accounts may come with monthly fees, and will likely require a certain income and number of standing orders or direct debits, but could offer you some extra cash on a monthly basis if you use them well.
  • basic or guaranteed account, which usually does not have an overdraft so you can't get into the red. These accounts are designed for those with bad credit or no credit history. To that purpose, guaranteed bank accounts don't even require a credit check. In exchange for letting people with bad credit bank with them, they may charge certain fees, which makes them less attractive to people once they've improved their credit score.
  • An account with an overdraft, which allows you to go into debt on your account without being charged huge interest rates or excessive (or even any) fees. Some of these accounts will however charge monthly fees, and the overdraft deal may be limited to arranged overdrafts (where the provider has agreed that you can go into debt on your account up to a certain limit).
  • free bank account, with which you can be sure that you will not be charged a monthly fee (though they'll likely still come with fees for overdrafts, etc.). They may offer in-credit interest, overdraft deals or other enticements, and may have funding requirements.
  • A packaged account, which offers deals on (or free) insurance and such. You will likely have to pay an account fee, but this should ideally be less than what you would pay to get travel or mobile insurance separately, for instance; always do a few calculations and comparisons first to make sure. There are not that many packaged accounts nowadays and you'll be able to find some of these deals by selecting these on the features tool. Don't get too tempted by attractive deals, however. If you don't own a car, complementary breakdown cover will only go to waste.

Current account FAQs

Aside from the different account types, there are likely some basics you'll want to know. That's why we've answered some of the most frequently asked questions:

Can I have more than one current account?

Yes, there's nothing stopping you from opening multiple current accounts, but beware that this will likely impact your credit score and might make it harder for you to get the most out of any one of them.

Should I get a savings account or a current account?

A savings and current account are by no means mutually exclusive. In fact, it's probably a good idea to have both. You may even require a current account to be able to open some loyalty-based savings accounts.

An easy access savings account can complement your bank account perfectly, as it allows you to put your money aside while getting a hopefully competitive rate of interest, and you'd still be able to access the funds should you need them. For better rates, you'd need to put your funds aside for longer, in a fixed rate bond for instance, or keep adding money every month to a regular savings account.

If you really only want one account, some high interest current accounts could be used as a form of savings account, but given their restrictions they’d only be suitable for smaller savings pots. Remember that there's nothing stopping you from getting a combination of account types.

Will I get a debit card?

Check the 'Further Details' on the account you're interested in to make sure, but most accounts will offer a debit card. Beware that a few accounts may offer a cash card instead, which you would only be able to use at ATMs. Read more on the difference between a cash and debit cards in our guide.

Can I get a free current account?

Yes, there are free current accounts available. Just select 'Free in the relevant search box and all current accounts that come without monthly or annual fees will be selected. These accounts will still charge fees for overdrafts and for some other types of transactions.

What happens if I go over my agreed overdraft limit?

The column 'Overdraft Rate' will show you the fee and/or rate that you are charged if you go into an arranged overdraft. If you exceed your arranged overdraft limit, unarranged overdraft charges will apply, which can be a lot more expensive.

You can find the unarranged overdraft charges for each account by clicking on 'Further Details'. Your overdraft limit will be determined by your credit history – your provider may change it depending on whether and how you use it.

How can I avoid unarranged overdraft costs?

Unarranged overdrafts, which occur when you exceed your arranged overdraft, or go into the red without an agreed overdraft in place, can be avoided in several ways. You could try to make sure that you never get close to zero on your current account; banks are now required to warn you if you're approaching an unarranged overdraft, giving you time to credit your account. Or, you could get an account with overdraft facilities so it doesn't cost anything, or as much, to go overdrawn up to a certain amount, and make sure to never exceed that agreed limit.

Choosing a current account

Now that you've got some idea of what current accounts there are to choose from, you'll have to determine which is the best current account for you. This will of course depend on your personal circumstances. If you're often overdrawn, you'll likely be drawn to an account with overdraft facilities. If you never go overdrawn, on the other hand, you might want to take advantage of a high interest current account instead.

If you're looking for the best current account that gives you something back, a switching incentive might lure you in with an offer of up to £100, or sometimes even more, straight away. However, a little bit extra every month might work out as more lucrative over the long run, so you may want to consider a cashback or interest-paying current account instead. Regardless, remember that a lot of incentives will require you to close your old account, so you can't just open an extra account for a cash offer.

Whatever you are after, make sure to compare current accounts on all their features, not just their benefits, otherwise you might find that a cashback offer is undone by a high account or overdraft fee. Once you've made your choice, it's easy to switch bank accounts, especially thanks to the Current Account Switch Service and its accompanying guarantee. Read our current account switching guide to find out which providers offer it – you'll find that almost all do nowadays.

Note that a lot of banks now offer smartphone apps that let you do your banking on your phone. Some banks are even smartphone-exclusive, so you won't be able to access your account any other way. Look at the account management options before you decide on an account – it may have all the features you're looking for, but if you can't use it in the way that you like, you will likely end up regretting your choice.

How to open a bank account

Once you've picked the best bank account for you and you're happy you can open and manage it the way that you like, all you need is a valid ID and proof of address to open a new account or switch over. If you're applying online (by clicking through from our table, for instance), the provider should talk you through exactly what you need to do, including if you want to close an old account when you switch.

There are a few things to watch out for when opening an account. First, be aware that when you apply the provider will run a credit check. To maximise the chances of your application being accepted, you'll want to know what your credit score is and, if necessary, improve it.

Second, make sure that you are actually eligible. This means seeing whether you're the right age (usually 18+), in the right country (some deals may not be available in Northern Ireland or Scotland, for instance) and have the right income. For some accounts, you will need to make minimum pay-ins every month, which is usually covered by a minimum income requirement. If you apply for an account without checking these things first, your application may be rejected and your credit rating will be negatively impacted as a result.

You should not need to set up or switch any direct debits or standing orders which were on your old account, provided your new bank is part of the Current Account Switch Service. Under this scheme, your regular payments should get moved over automatically, and in the unlikely event that one does get lost, the switch guarantee means you shouldn’t have to pay the price.

The switch service does not take into account how many direct debits and standing orders you have, however, so if your new account requires a certain minimum amount, you'll have to ensure that you have sufficient automated payments in place yourself. Likewise, if certain account rewards rely on you getting paperless statements, you will likely have to turn these off yourself as well, or risk missing out.

So, there are a few things to look out for when opening a new account or switching your current account. The process itself should be fairly easy, and can be very lucrative if you find the right account for you.

Moneyfacts tip

Moneyfacts tip nigel woollsey

The safest method of avoiding arranged overdraft charges on a current account is to choose a basic bank account which does not have an overdraft. To avoid the hefty fees charged on unauthorised overdrafts keep a close eye on your balance and always make sure there is enough money in your account to cover your spending, as well as any direct debits or standing orders. 

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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At a glance

  • There are a range of current account types offering different benefits to different people. Make sure you choose a current account that is right for your circumstances.
  • Most accounts come with a cash card or debit card. You may also be offered a cheque book and the option to have an agreed overdraft.
  • Some current accounts come with monthly or annual fees. Make sure you know how much your bank will be charging you and when.
  • A credit check will be performed when you open a new current account so be sure that your credit score is as healthy as possible beforehand.

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