Current accounts: Features explained
If you're often on the go, make sure you can access your account online
Credit interest
If you're always in credit then you'd be advised to open an account which will give you something back for your balance. Beware though; there is a big difference between the best and worst rates.
Some banks still pay no interest at all on current accounts and the largest banks typically offer only 0.1% interest on credit balances to most of their current account customers.
One unwelcome trend is that banks with better rates are becoming choosy about their customers. For example, you may have to deposit at least £500 or £1,000 a month to receive the interest.
We'd like banks to offer good rates of interest to all their customers, not just higher earners.
Overdrafts
An account with an interest-free overdraft can be a good idea if you regularly dip into the red. Many accounts will include a small free overdraft as standard, while some give a larger interest-free limit of £50, £100 or more.
It’s wise to watch your spending if you're at risk of falling below the interest-free portion – some banks have high overdraft interest rates once you exceed your pre-agreed limit.
Even with an authorised overdraft, there may be other charges, such as an arrangement fee and/or a usage fee that you pay each month or quarter that your account is overdrawn.
With some accounts, there is also a transaction charge for each item paid into and drawn out of your account while you are overdrawn. However, the number of accounts that make these charges is diminishing.
Internet and telephone banking
If you're on the go or want to manage your finances online an account with internet banking is a must.
Today, the vast majority of branch-based accounts offer internet and phone banking as well, while some are designed to be run exclusively by phone or internet.
A full phone or internet service should allow you to do all of the following things over the phone or completely online: get a balance enquiry; check recent transactions; set up and amend/cancel standing orders and direct debits; set up bill payments and pay bills; do a one-off transfer between your own accounts held at the same bank, to another person's account held at the same bank, and to someone else's account held at another UK bank; and be available 24 hours a day and 365 days a year.
Most cash machines are free to use
Cash machines
Whatever type of account you have, access to cash machines is free in almost all cases. The only cash machines you have to pay to use are convenience cashpoints, often found in garages, pubs and shops.
These charging machines are run by banks and building societies – an on-screen message should warn if you're going to pay a fee. Other providers are not covered by the Banking Code, but they should still tell you whether you will be charged.
Basic accounts
Basic bank accounts, available from most high street banks, cater for people who find it hard to get a standard current account, perhaps because they have a poor credit record. Most offer a fairly wide range of facilities, including cash cards, standing orders and direct debits.
They do not normally offer a chequebook or overdraft and are designed to prevent you becoming overdrawn. Where the account includes a debit card, this is usually a Solo or Electron card where your account is checked for funds before each transaction.