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Bank accounts - things to watch out for

Category: Banking
Author: Tim Leonard
Updated: 28/09/2018

Banks and building societies are in business to make money from their products and services. That means there are things you should look out for when choosing your bank account.

Monthly fee

Some accounts require a monthly payment, usually in return for some other benefits such as travel or breakdown insurance, discounts in certain shops or access to executive lounges at airports, which are often advertised as a package deal. Sometimes paying the fee could save you money if it means a lower overdraft interest rate or other money-saving initiatives, but remember that free banking is still widely available, so don't pay for things you don't actually need.


Interest rates that are comparable with - or even better than - some savings accounts are now available on current accounts. However, these will usually only apply to a portion of your account balance, and often up to a set limit, so you may want to maximise your returns by placing any money above this amount in a separate savings account.

You'll also normally be required to pay in a minimum amount each month and /or have a minimum number of direct debits being paid from your account in order to qualify for the advertised interest rate.


  • Overdrafts are basically a form of credit: they're a facility that allows you to overspend, so should be avoided if possible.
  • Make sure you understand the terms of your overdraft facility. There are two sorts of overdraft:
    • Arranged overdraft - where the bank agrees an amount by which you can go overdrawn.
    • Unarranged overdraft - where you either exceed your arranged overdraft or go overdrawn without having an arranged overdraft.
  • The interest rate charged on your arranged overdraft will usually be less than an unarranged one. Rates for unarranged overdrafts have come more into line with arranged rates, but can charge higher fees instead.
  • Some accounts may also charge a fee every time you are overdrawn. Other accounts forgo interest rates altogether and only charge an overdraft fee.
  • If you don't have an overdraft facility (which will be the case for basic bank accounts), it's doubly important to make sure you have enough money in the account to meet payments, as you may be charged a fee if a payment cannot be made.

Cash withdrawals

  • Just about all bank accounts give you a cash card so you can get money out of cash machines. Most transactions will be free of charge, but if you use cash machines in places like petrol stations, amusement arcades or nightclubs, you are likely to get charged.
  • It's worth understanding what type of cash card you'll get, and whether it is widely accepted, e.g. at Link machines.

What next?

Find the best bank account for you - compare bank accounts­

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.