There are several kinds of bank accounts on the market, which ranges from those that offer basic banking benefits to packaged ones. The account you choose will be based on what you need from an account and the approach you use your money. There are so many things you should be comparing to find the best account for you. In this guide, we take a close look at the nine things you should be comparing:
1. What is standard in a current account?
Before you pick your account, study and see what goes with it. A standard current account will typically give you:
• A chequebook
• A debit card where you can withdraw funds in any ATM. Fees may apply if you withdraw from ATMs other than your bank’s
• The ability to set up payments by Direct Debit and standing order
• An overdraft facility that is subject to approval
You can open a standard current account free of charge and without any monthly fees. The simplest bank accounts are typically called ‘basic bank accounts.’ They offer a debit card, Direct Debit and standing order facilities, but no overdraft and chequebooks. A basic bank account could be the best for you if you have been turned down for other accounts because of your pay or of your poor credit standing.
2. What accounts offer additional services?
If you want services from your bank than the standard range of features and you are willing to pay for it, you may consider having a current account called ‘packaged bank account.’ This account gives extra services which occasionally come with a monthly or yearly fee. They may include, but is not limited to:
• Access to better savings rates
• Breakdown cover
• Travel insurance
3. Does the current account give interest?
If your current account is constantly on credit, you can capitalise on it by picking an account that gives interest.
There are many interest-paying current accounts you can choose from, so you can go around to find a good deal. There are likely to be agreements to using this kind of account, for example, you may need to pay a specific amount to your account every month, and interest payments are limited. You may look at the Annual Equivalent Rate (AER) to compare your options and see how much interest you will get in a year.
4. What bank gives the best service?
For this, you may look for comparison sites that show customer service or satisfaction grades as well as giving basic facts about accounts, and allow you to compare both traditional and online bank accounts.
5. What are overdraft arrangements?
Planning is always the key to saving money. If you think you will be borrowing money in the future, you may want to look closely at the overdraft facility your bank offers for your account.
Arranged overdrafts are those settled with your account provider in advance. These will be less expensive than going overdrawn without agreements, which can incur significant fees and affect your credit standing.
To compare overdraft fees, look at the Equivalent Annual Rate (EAR) of your chosen bank. The EAR shows how much lending would cost if you were overdrawn for a year. There are limits for fee-free arranged overdrafts that you should look into.
We recommend you read: What Is an Overdraft?
6. What are the fees you need to pay?
Usually, you will not need to pay any charges for a standard current account, but you may need to for packaged bank accounts or services like an overdraft. Monthly fees may be small, but it could get big as it adds up, so it makes sense to consider this one too.
7. How can you manage your money?
If you know how to bank online, managing your money would be very easy for you. Otherwise, check if your chosen bank has a branch nearby so you would be able to visit a branch in minutes. Some banks offer accounts that are only accessible online or by phone, so you should also consider this.
8. Do banks offer bonuses for switching?
Many banks offer incentives for switching to their current accounts. You may also take note of this, although you should weigh them up against the features and services the account offers or lacks.
9. Is the account easy to switch to?
Many people are cautious of switching accounts because they are concerned about the time and effort that will be consumed. Most banks and building societies are making it uncomplicated for you to switch by doing tasks like moving your standing orders and Direct Debits for you, so you don’t have to work on this.
Current Account Switch Service is an industry-wide scheme that makes switching a current account faster and easier. It guarantees a precise and dependable service so that anyone who wants to change their provider can be worry-free about what will occur, and when.