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AUDIO: How to choose a new current account

AUDIO: How to choose a new current account

Category: Banking

Updated: 07/12/2017
First Published: 26/06/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Has the raft of new current account launches over the last few months left you wondering where to turn? From high-interest accounts to those that offer generous reward schemes, it can be difficult to know which one's right for you. Well, Sylvia Waycot, editor of, recently appeared on BBC Radio 4's Moneybox programme to discuss the landscape and help clear things up.


Hannah: The poll for both Tesco and Marks and Spencer accounts is the loyalty points. Tesco gives one Clubcard point for every £4 you spend in store and one point for every £8 spent elsewhere. Marks and Spencer offer a more generous one point for every pound spent in store. So if you shop there a lot it may be worth making the switch, but it's not a huge perk.

Paul Lewis: Thanks, Hannah. Well, if your head's spinning with all that information a bit like mine, I've got Sylvia Waycot with me. She's editor of And Sylvia Waycot, it is all complicated trying to choose the best one for you. Where do you make a start?

Sylvia Waycot: I think the first thing that you've got to do is be really honest with yourself and decide how you actually run your current account. Are you the sort of person that spends just a little bit more than you actually earn? Are you the sort of person that never spends all that you earn? Or are you the sort of person that sometimes has money in their account, and sometimes at the end of the month is overdrawn? Because that's really the basis for which sort of account is best for you.

PL: Yes, 'cause if you've got £20,000 for spare, you open a Santander 123 account and leave it in there. But most people don't have £20,000 in their current account, do they? What if you're just the sort of much more ordinary person with your money? Perhaps a bit of money at the end of the month with your wages or you might get overdrawn as the end of the month approaches. Which is the best for you?

SW: Well, that's why we like this Tesco account because it's actually aimed at the majority of people who like to stay in credit as much as they can, but sometimes can actually just go overdrawn. It doesn't offer the best interest rates and it doesn't offer the cheapest charges, but what it does do is it offers good in both circumstances. And it's unusual in that it actually features in our best buy charts, both for offering high interest and also for offering low charges.

PL: And going back to the Nationwide account, which we mentioned. I mean, they give you 5%, but only for a year. And you're not going to switch your account after a year just because of that either. That seems to be a bit mean to me.

SW: No, because there's all the direct debits and everything that go with the current account. They've got Switch in place now and that's a great service. And people are starting to vote with their feet, if they're unhappy. Whereas years ago, even if you were really unhappy with your current account, you'd think it was so much trouble, you'd just stay with it. So, I think, the people will move their accounts more and if people go to Tesco and TSB because they like the interest that is offered and then it drops, then they might well move, but it's not an account that traditionally, like a savings account, you would just walk all over the place for the best rates.

PL: One problem with the big banks now is that if you have an overdraft and drop into it occasionally at the end of the month, they're now moving from a percentage to a daily fee, aren't they? And Barclays is doing this from Monday, and that can be very expensive.

SW: It can be. It's been done, we're told, because it's transparent - you can see exactly what the charges are, it's quite clear from the provider's point of view and it's quite clear from the account holder's point of view what you're going to be charged. But it's not actually, because whilst you can see what you're going to be charged with a daily fee, you can't actually really compare that with the other percentage fee. So, for instance, if you had an overdraft of £500 and it was charged at 50p a day for 10 days, quite simple, £5. However, if you were to use the overdraft with the Tesco account, where it was 18.97%, same scenario, you wouldn't have a clue on what you'd be charged, but it would actually be £2.59.

PL: Yes, and certainly, I was looking at some Barclays figures, if you're £100 overdrawn for 15 days, you'd be charged 73 pence now, and that would be £11.25 a month from Monday. So it is going to make a big difference to a lot of people. Do you think though, briefly, these challenger banks will take enough customers? I mean, 80,000 a month of this is change, but they've got tens of millions of accounts, haven't they?

SW: Yes, but the challenger banks like Tesco, that one has all of its customers that shop in its stores. So they're probably going to be interested because of the additional benefits you can get from the Tesco points. Marks and Spencer, again, is aiming at its customer base, which is vast.

PL: Yes, so it's looking at its regular shoppers as well. Thanks very much, Sylvia Waycot from

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