Compare Bank Accounts
What is a current bank account?
Effectively, a bank account is when your chosen bank agrees to take care of your money whilst offering you services such as withdrawing (paying bills, direct debits, etc) and depositing cash (salary, pension, benefits payments, etc.) without notice.
Your bank will provide you with a debit card that you can usually use online, in-store and at cashpoints. Customers can also receive or request a cheque book if they need one.
A current bank account is a basic financial need and choosing one is the first step in managing your money.
Why do I need a bank account?
Of course, you could store your cash in a piggy bank or under a mattress but really, how safe is it? We use bank accounts because they’re a safe place to store our money and keep our finances secure.
It is also much more convenient to have a bank account. You can set up standing orders and direct debits to make sure you don’t miss payments on bills or into savings accounts.
Finally, you could make a small income from storing your cash in a bank account. You could earn interest on your bank account balance, which is often paid every financial year. Some banks also offer added incentives like cashback or free breakdown cover so you can really make your cash work hard!
What types of bank account are there?
There’s so many options when it comes to keeping your money safe, it’s hard to know which is best for you. Think about your current money situation when comparing and researching bank accounts.
The main types of bank accounts on the market are:
- Mobile Only Bank Accounts: are purely controlled by the user from an app or online. There are no branches to visit so may not suit you if you like to deal with banking in person.
- Basic Bank Accounts: were designed for those with bad credit scores and work just like a current account but with limited benefits and no overdraft facility.
- Current Accounts: are the most common type of bank account. You can deposit and withdraw money without notice and sometimes come with incentives, benefits, overdrafts or monthly fees.
- Incentivised Switch Accounts: offer incentives to try and appeal to more customers, hopefully encouraging them to switch to their account. These often include cashback, vouchers or a high AER rate.
- Packaged Bank Accounts: often charge a monthly fee but come with a “package” of extra rewards that are usually a higher value than the fee you are paying each month. Extra rewards could include mobile phone and travel insurance, breakdown cover orexclusive rates on loans or overdrafts.
Which bank account is best?
If you’re not sure which bank account is right for you, it’s a good idea to read reviews and info about providers using the Choose Wisely Bank Accounts Library.
Remember, bank accounts are often very similar from bank to bank so ask for recommendations from friends and family. Research offers and make sure they’re worth the investment.
Evaluate what you need from your bank account and what you prioritise when it comes to your cash. Also, it’s a good idea to consider how likely you are to need an overdraft and which type of bank account would be cheapest.
Should I switch bank accounts?
In September 2013, the process of switching bank accounts became a lot easier and banks are now legally obliged to ensure account holders can switch their account within seven days.
So the process is easy but does that mean you should switch? If you’re unhappy with your provider or you’re looking to earn more from your money, it’s worth comparing the other accounts that are out there.
Your current bank will work with your new bank to make sure all your deposits and withdrawals are switched smoothly as well, so there is very little you will need to do.
Should I get an overdraft?
When it comes to overdrafts, it’s important to remember that it’s not your money and more like a temporary loan. So you could be charged fees or interest per day for being overdrawn.
If you know you may need your overdraft from time to time you might be able to set up an organised overdraft that could limit the fees you’re charged - have a chat with your bank.
Final Word
When taking control of your finances having the right bank account is a must. Compare your options and start making your money work for you.
