Compare the rates for current accounts with these well known banks. Finding a good bank account is easier than ever.
Basic Current Accounts
Current accounts are usually the most basic products offered by high street banks, allowing clients to take care of their day-to-day banking transactions.
Basic bank accounts offer a place to store money that needs to be accessed on a regular basis, to make daily, weekly or monthly payments and withdrawals. Basic bank accounts furthermore allow clients to directly receive wages, pensions or benefits or set up Direct Debits or standing orders, which makes regular payments like utility bills more convenient, and are generally a cheaper alternative to direct funds transfers.
Usually basic bank accounts come with a debit card (some even with cheque-books) and can be operated online, by telephone or in branch.
In most cases money can be withdrawn free of charge at any UK cash machine with a free cash withdrawal sign; if they do charge for a withdrawal, this information is usually displayed on the machine.
However, some basic accounts may only come with a cash card, which means that you can only withdraw money from ATMs which belong to the same banking group as your account.
Basic bank accounts are frequently advertised for people with low credit scores, as they usually do not provide overdraft facilities. So, an advantage of basic bank accounts is that anyone can apply for them and the chances of passing the credit check are very high, as those accounts are particularly designed for people who are not eligible for standard bank accounts. For this reason, past credit problems are usually not barrier for getting a basic account.
If your application is turned down, you are always entitled to request an explanation, and failing with one bank does not automatically imply that other banks are not willing to offer you a basic account.
Applying for a basic bank account
In order to apply for a basic bank account, you usually need to provide a document of identification such as a passport, European Union member ID card or driver’s license and you are often asked for a proof of address, all administrative steps that need to be taken by the bank to prevent money laundering or fraud.
While basic accounts are generally free, banks tend to charge extra for a range of additional services, such as faster payment options or transfer to accounts outside of the UK. They can also charge an “unpaid transaction fee” if a debit card payment is made while there is no money in the account at that time.
When operating your own account, keep in mind that you can receive support and information from a number of places and can usually contact your bank online, via phone or in branch.
Some banks may even offer customer services on social media platforms. Once you have your account in use, always be careful and precise when giving out your banking information for incoming or outgoing payments, such as your sort code and account number. Banks may not be liable for wrong money transfers and it might be difficult to redeem the payment once it has left the own account.
Choosing a basic bank account
UK Net Guide have a huge selection of all UK current accounts offered.
As low fees and the lack of overdraft facilities allows customers to keep track of their money and avoid additional charges, banks tend to under-advertise these account options, as they have to cover most of the administration costs themselves.
However, this does not mean that your bank does not offer basic bank account options and it is always worthwhile to ask at customer services and find the best options available.
Some things to bear in mind when choosing a bank account include:
- Do not take anything for granted. Not all banks offer the same terms and conditions for a basic account. Always think about your needs and requirements before opening a basic current account. Consider the mode of operation, the type of service you are expecting, whether there is a bank branch or cash machine close to the place where you live and where you can check your account balance.
- Ask yourself what type of debit card you would like to use. If this is important for you, check whether your account allows you to use post offices to deposit money or whether your account option allows for a buffer zone to take out smaller amounts like £5 or £10, even if your account balance is slightly lower.
- Banks often use welcome packages or basic bank accounts to attract new clients and then try and push them into a standard bank account, as it is more profitable for them. Always consider those possibilities, especially if you want to keep tight control over your expenses and not want to run the risk of paying overdraft charges on a standard bank account.
- If you are concerned about your credit history when applying for a basic account, check beforehand what sort of credit check the bank is running for your application. If they run a full credit check, this normally leaves a record on your credit report and too many of such checks in a short time span can negatively affect your overall credit score. As opposed to this, simple enquiries run by a bank do not have an impact on your credit score. Take such aspects into account before completing your application.
Can you read more about individual banks on our Top 10 Banking Sites page if you want to know more about a bank before making your decision.
Current Accounts - Focus Overdrafts
If you are opening a current account with a bank, you are looking for an easy and flexible way to take care of your day-to-day financial transactions. Current accounts allow you to deposit and withdraw money at any time of the day, offering clients the ability to take care of their monthly payments, funds transfers, Direct Debits or standing orders.
Banks and building societies that offer current accounts have different terms and conditions in regard to their overdraft policy, but unless you go for a basic current account, most banks allow their clients to spend more money than they keep in their account at a certain moment in time.
Overdrafts are a short term cash flow solution, not a long term one.
In terms of eligibility, not all bank clients are equally eligible to the same overdraft offers. Banks usually run a credit check before allowing overdraft facilities, taking into account loans, credit cards and other account arrangements, which can mean that clients with bad credit history, a criminal record of fraud or undischarged bankruptcy may not have access to overdraft services.
If you have a current account and do go overdraw without permission, you will be charged for “unauthorized overdraft”, which can be fairly costly. Fees and higher rates can also apply, especially if a previously arranged overdraft amount is exceeded.
Authorized and Unauthorized Overdrafts
Usually banks distinguish between authorized (arranged) and unauthorized (unarranged) overdrafts. In regard to authorized, banks usually agree on a set limit with you possibly one year, then it will be reviewed and a set agreed overdraft limit; for example £500 agreed overdraft limit.
You will pay interest on the amount you are overdrawn on, usually on a daily basis.
If you are switching current accounts and want to benefit from a welcome offer, check with the bank before you switch that any current agreed overdraft will be honored.
Authorized overdraft services are usually offered for most current account packages (except basic current accounts), even if you haven’t specifically asked for this, the logic is to help you avoid unauthorized overdraft charges. These charges vary greatly between the different banks and can be tied to other packages such as reward or cashback schemes.
Commonly overdraft charges can either be made up of interest, which may go up to 15-25% equivalent annual rate, or it can be a fixed daily, monthly or weekly. So, if you do make use of an overdraft frequently, and tend to go in the red every once in a while, it really is worthwhile comparing different rates and offers before opening or switching a current account.
As opposed to an arranged overdraft, an unarranged overdraft indicates that either no limit has been agreed upon between the bank and you or that you, the account holder, have exceeded a previously agreed limit by taking more money out of the account. Unarranged overdrafts are expensive and you should make sure that you stay within any agreed overdraft limit otherwise you will have high and unwelcome charges to pay.
An authorized overdraft facility allows for great flexibility in the management of personal finances and is useful if you receive unexpected bills before a monthly salary or pay-cheque arrives, and at various times of the year, birthdays, Christmas.
Choosing the right current account overdraft
Overdraft rates on current accounts and charges tend to vary greatly. Rates range from daily fees for every time the account falls into the red to fixed monthly cap that limits the maximum that can be spend on overdrafts. Given this, it's always worth making the effort to compare accounts, taking all services on offer into account to find the most suitable deals for your personal requirements.
Top Tip - If you find yourself frequently being overdrawn, go for an account that offers you an interest-free or low interest overdraft facility.
Always think about your priorities before choosing current account services. You may find that the overdraft facility is not the most important feature for you, and might want to focus on other aspects of your offer, such as a competitive interest rate or specifically tailored client services.
Before agreeing upon an overdraft arrangement, make sure that this is generally the best choice for you. Make sure you avoid the highest fees and keep in mind your long-term expenses before using an overdraft.
Banks and building societies usually also offer alternative basic accounts without an overdraft facility, which are specifically useful for customers with irregular incomes or young savers with little experience. This choice might be the better option if you want to keep tight control over your regular expenses. If you really want to keep track of your spending but keep an overdraft for unexpected bills or payments, take into account that overdraft should be seen as an emergency option or short-term credit.
Again we must state that overdrafts often come with considerable charges, especially if you are overdrawn a lot. Explanations of these charges might be quite complicated, so it is important to ask your bank for full information and transparency about all fees involved.
In some cases a loan or regular credit card may be worth considering as an alternative.
If you know that you may need to increase your overdraft in some extraordinary cases and can plan this well in advance, try and choose an account that allows you such exceptions and get in touch with your bank if you feel that your limit needs to be temporarily increased. Also bear in mind that an overdraft is not always guaranteed and can be withdrawn by your bank for different reasons. In any case, your bank needs to notify you about any changes they make after its been agreed.
Depending on your own background, banks often offer different overdraft arrangements tailored for specific target groups, such as students or recent graduates. Be very clear about your needs and requirements and have a look at those different options, such as student account overdrafts and other special offers.
Once you have entered an overdraft agreement, remember that making use of an unauthorized overdraft should be avoided at all costs, as it usually comes along with excessive extra payments and banks can charge you monthly or daily fees as well as transaction fees. All of this can add up, especially if you're not able to clear an overdraft and get back into the black straight away.
With interest rates on overdrafts so high 15-25% apr being typical, if you are overdrawn every month for most of the month, it may be worthwhile looking at a personal unsecured loan as an option, as there are some very low rates currently on offer.
Current Accounts - Best Interest Rates
Current accounts let you make flexible and quick financial transactions on a regular basis. However, flexibility often comes at a cost, usually in regard to significantly lower interest rates compared to other account types.
Banks and building societies usually offer better interest rates on savings accounts, where your money is normally left over a longer amount of time.
Lately, specifically targeting customers who make little or no use of their overdrafts facility, banks have come to offer competitive interest rates on current accounts to attract new clients, often beating offers for some savings accounts, and this can be an important factor for choosing the right current account.
Current accounts with the best interest rates offer the basic services of a current account, but pay you interest on your money. So they allow you to deposit and withdraw money and provide a deposit card, cheque-book offer the usual different platforms for customer service; via phone, online or in-branch whilst paying you a decent rate of interest on any credit balance.
Choosing the best interest rate
Before choosing your account, you should check whether your bank requires a minimum balance that needs to be kept in the account to qualify for a certain interest rate. Some banks tie interest rates to your account balance, asking for £1,000 or £1,500, and you can sometimes earn more with a higher balance, but you can also lose out if your balance either decreases under the required minimum or exceeds a maximum threshold.
You may also need to pay in your monthly salary which may have to be over £1,000 to qualify for the interest rate on offer.
You may find that the account is capped, as in you will be paid interest up to say a limit of £3,000 but nothing on any amount over £3,000 (so interest paid on the first £3,000 only)
You may find that the current account has tiered interest rate structure, to encourage you to leave more money in it.
Other things to bear in mind selecting a current account paying interest:
- Are you a student or recent graduate? Banks like to attract specifically this group of potential clients at an early stage and do so by offering high interest rates and other rewards. Thus have a look at specific student or graduate accounts to benefit from the best offers.
- Keep your eyes open for interest-rate-offers with a time-limit. Many banks and building societies offer high rates as part of a welcome-package, which may expire after a year and your returns may shrink afterwards. If you still want to benefit from this offer, consider moving your funds after this time. Banks often take into account and profit from the fact that customers like to stick with a bank as moving funds is always considered an extra effort. Remember to plan this procedure well in advance and keep in mind the time of expiry to react flexibly to possible changes.
- Some banks offer current accounts linked to a savings account, and may pay a significantly higher interest rate if you choose such a package. However, before you go for such an option, compare and shop around to see whether this is really the best deal for you.
- Always take your time browsing the market for the best offers. It will pay off to take some time comparing different offers before making a final decision. Take into account that a high interest rate is only one component of a current account offer. You could also consider linking a current account with a savings account and transfer financial surpluses regularly if you want to benefit from both high interest rates and financial flexibility.
- If you are generally looking to deposit a larger sum of money that you do not need to access regularly, a current account with a good interest rate might not be your best option and you may find more profitable alternatives if you take a look at savings accounts or high interest bonds. The more money you have available to lock away for a fixed period of time, the more likely it is that you are better off with a savings account that offers high interest rates.
Current Accounts with Rewards
With the banking sector becoming more and more competitive, a number of banks have started to offer a diverse range of rewards to attract new clients to a current accounts.
These are called reward current accounts or packaged accounts. Generally, these accounts provide the same services as regular current accounts, allowing you to make your daily financial transactions in a quick and flexible manner. Hence they come with debit-cards and cheque-books and can be used to deposit and withdraw money, allowing you to cover monthly payments such as utility bills, rent payments and council tax via direct debits or standing orders.
Current accounts can usually be administered online, through the phone or directly at a counter of the branch.
In addition to those regular services, banks have come to introduce reward packages to make current accounts more attractive.
Usually these reward schemes are specifically designed to attract new clients and so they will expire after a set time, more often than not one year.
Rewards can include the waiving of a monthly account fee or overdraft charges for a certain time, gift cards, mobile phone insurance, free travel insurance or a car breakdown cover. Some banks also give preferential rates on financial products like mortgages or foreign currency. Alongside such rewards, banks might also offer cashback or pay a cash bonus for new clients, who choose to switch accounts from another bank. These cashback payments are usually made within three months of switching the account.
Disadvantages of Reward Current Accounts
As switching bank accounts has become significantly easier and more and more people take advantage of the great range of rewards offered by banks for an account-switch, there is a broad range of reward-packages to choose from.
However, as these reward offers often function to attract new clients, they are frequently tied to certain terms and conditions such as higher overdraft charges or monthly fees.
So, while many packages might look attractive at first glance, a thorough investigation and research may show that some rewards might even be cheaper if they were purchased separately.
Some parts of your package might not even be suitable for you, for example if you are ineligible due to age or job restrictions, or get free car breakdown cover when you don’t have a car! In consequence, advantages can easily be wiped out when such aspects are not considered.
Choosing the Right Reward Current Account
As with choosing any other financial package to help you manage your finances, it is always worthwhile to take some time and shop around for the best offers.
Aim at finding the right balance between attractive rewards, but also general offers, that exceed the duration of the welcoming package, such as overdraft charges, the mode of operating your account, client services or restrictions imposed on certain types of financial transactions.
- Think about the products and offers that best meet your requirements. Are you looking for monetary payments, regular monthly rewards for keeping a positive balance or having regular payments into your current account?
- Or are you a frequent driver or traveler, looking for an insurance package that could be covered by a reward scheme for a current account?
- Cash bonus payments and rewards do not always pay off. This is due to the fact that reward bank accounts may impose high overdraft charges, hence those accounts are only suitable for savers barely making use of their account overdraft. Before making your choice, ask yourself what kind of account user you are. If you often draw upon your overdraft, you should consider sticking with a regular current account without cash bonus but lower overdraft fees to save money in the long run.
- To be eligible to receive a reward packages, the bank might ask for certain requirements and introduce basic terms and conditions, such as asking you to use the Current Account Switch Service, requiring you to pay in a regular minimum funding or your monthly salary. Your credit history can equally effect your eligibility for certain reward packages.
- Be careful as if agreed requirements are not met, for example if you do not keep a minimum deposit in your account, you maybe charged a monthly fee, which can wipe out some of the benefits you receive as part of the reward offer.
- Banks usually require you to close your old account elsewhere before you can open a new current account with them. Some banks might also only allow you to receive their reward offer once, even if you choose to open more than one account at a time or make use of several different services. Check beforehand if you are planning to make use of all the rewards offered in your package and make sure you cannot find a better deal with the same conditions elsewhere.
- Always keep your eyes open to avoid additional monthly fees or case-by-case charges, as some banks might charge you for transfers or impose a maximum of x number of ATM-withdrawals in exchange for attractive reward offers.
- If you sign up for a rewards offer tied to certain conditions, follow those requirements to avoid additional charges and meet all qualifying criteria, for example if you are required to pay in a set amount each month to receive a bonus payment, make sure you do it.
- Stay flexible. If you choose to take full advantage of all the rewards and offers out there, keep looking around, do not stick with an old account because it seems convenient and take into consideration that changing accounts might really pay off, as long as you keep close attention to the small print and find those offers that suit you best, you may find that switching once a year lets you continually get the rewards.