Current accounts: FAQs
Banks ask you to provide various forms of ID when you switch to them
Aren't all current accounts the same?
Standard current accounts offer the same features – chequebook, debit card, direct debits, and so on – but they vary enormously in the interest rates they offer on credit balances, charges if you go overdrawn and quality of service.
There are also new types of account, such as basic bank accounts and all-in-one accounts, that may suit some people better than a standard account. Depending on your account provider, there is also usually the option of upgrading to a packaged bank account, for a monthly fee.
For more information, see our guide to packaged bank accounts.
Will I earn interest on my money?
That depends on the account. Many pay interest when your account is in credit. Some offer competitive rates with no strings attached, but others either pay a measly 0.1% or require you to have a minimum balance or pay in a minimum income. Some pay no interest at all.
What happens if I accidentally go over my overdraft limit?
You'll pay interest and often other charges too. The rate is usually very high if you haven't arranged the overdraft in advance, so try to avoid doing this. Consider one of the many accounts that include a small free overdraft automatically.
Some accounts will give a larger interest-free limit of £50, £100 or more – be careful, though, as they may have high overdraft interest rates once you go above these limits.
What is a basic bank account?
These are for people who find it difficult to get a standard current account, for example, because they have a poor credit record.
Most offer a fairly wide range of facilities, including a cash card, standing orders and direct debits, but they do not normally offer a chequebook or overdraft and are designed to prevent you becoming overdrawn.
Basic bank accounts can be a good choice if you find it hard to keep control of your spending.
How does an all-in-one mortgage work and how much could I save?
Also known as current account mortgages, these combine different accounts to minimise the interest you pay on your debts.
Although there are differences in how the accounts work, they generally reduce the interest you pay on debts, such as a mortgage, by offsetting the money in your current account against them. Some also maximise the interest you earn on your current account by linking it with your savings.
However, the amount you can save by linking your mortgage and current account is relatively small – linking your savings as well will save you much more.
I've been with my bank for 20 years - is it worth switching?
Many people think that having been with a bank for years gives them some kind of special relationship. But banks want to keep all their customers happy and no bank we know of offers long-standing customers preferential interest rates.
By switching accounts, you could save money and receive a better quality of service. This is especially important if your account is with the 'big four' high-street banks – Barclays, HSBC, Lloyds TSB and NatWest – as most pay pitifully low interest on credit balances. Their overdraft rates are also usually much higher than the best available.
Additionally, these banks tend to frequently score below average in Which? surveys for customer satisfaction.
Is switching accounts difficult?
In a Which? survey, 74% of the people who had switched account said the process was easy, with 32% finding it very easy. See our reviews of current accounts to compare the best on the market.
I'm overdrawn – does this mean I can't switch?
No. Banks love overdrafts as, instead of paying you interest, they charge you interest. If you've got an authorised overdraft and have a record of using it sensibly, then most banks will consider taking the overdraft on.
Why have I been asked to produce loads of proof of ID to open an account?
Banks and building societies have to comply with strict money laundering rules, designed to prevent the recycling of money from drugs crime, terrorism, and so on.
When you open an account, the bank or building society must check you are who you say you are and that you live where you say you do, so they will ask you to provide separate proofs of identity and address.
Proof of identity could be, say, your passport or driving licence, while proof of address might be a utility bill or statement from your existing bank.
How long does it take to transfer cleared funds from one bank to another?
Banks use the Bankers Automated Clearing Services (BACS) system to transfer funds between accounts. This used to take at least three days but a new faster payments system was introduced in May 2008 that allow funds to reach the recipient's account on the same day you ask your bank to transfer them.
How do I complain about my bank?
Most current account providers are signed up to the Banking Code, which sets out good practice guidelines for how they should deal with their customers. This includes having a formal complaints procedure.
Your first step should be to complain to the bank itself. If possible, put your complaint in writing and keep copies of letters and so on. Be clear about what went wrong and how you think it should be put right.
You should give the firm time to respond to your complaint. If the firm doesn't respond within a reasonable time, however (usually about eight weeks), or you're unhappy with its decision, you can take your complaint to the Financial Ombudsman Service.
You can get a copy of the Banking Code from your bank or the Banking Code Standards Board.