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10 things you need to know about bank accounts

Earn extra cash on your current account

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You could get a better savings rate than you’re on now by switching to a Which? Best Rate account

To get the best deal on your bank account, as well as the best customer service, follow our 10 top tips below.

1. Zero interest on credit balances. Many of the big banks pay just 0.1% interest on credit balances, if they pay any interest at all. Lloyds TSB’s Classic Account and Natwest’s Current Plus Account pay 0.1%, while the Barclays Bank Account, Halifax’s Reward Account and HSBC’s Bank Account pay nothing at all.

2. Top for credit balances. If your bank account is usually in credit, the best-paying accounts are Santander’s Preferred In-credit Current Account, Lloyds TSB’s Classic Plus and Classic Vantage and Coventry Building Society’s First Account, currently paying 5%, 2.5%, 2% and 1.1% respectively on balances of £1,000.

3. Top for large overdrafts. If you’re, say, £500 overdrawn for two weeks each month for a year, the best current accounts for you are First Direct’s 1st Account, Norwich & Peterborough’s Gold Account, Santander’s Preferred Overdraft Current Account and Smile’s Current Account.

4. Top for customer satisfaction. Interest rates are not the only important factor when choosing a bank account. As you’re likely to have a fair bit of contact with your current account provider, customer service is also key. Top for customer service is First Direct with an impressive customer satisfaction score of 89%, followed by Smile (87%), The One Account (86%), Co-operative Bank (86%) and Nationwide (76%).

5. Bottom for customer satisfaction. At the other end of the scale are those providers that offer poor customer service. The dubious distinction of coming last for customer service rests with Santander (Abbey) at just 48%. Barely any better are Bank of Scotland (49%), Northern Bank (49%), Halifax (51%), Ulster Bank (53%), NatWest (54%) and Barclays (54%).

6. Packaged accounts – worth the money? come with extras such as travel insurance and breakdown cover. Costing from £60 a year with Barclay’s Current Account Plus up to £300 a year with Lloyds TSB’s Premier Plus Current Account, they’re only worth bothering with if you use at least two of the benefits. Don’t be pressured into upgrading your account and watch out for short-term promotional fees which later jump up dramatically.

7. Using your debit card abroad. If you’re travelling to Europe, Nationwide is the only high street provider that doesn’t charge extra for using your debit card overseas.

8. High unauthorised overdraft fees. If you tend to go over your overdraft limit without permission, the charges you’ll get hit with vary enormously between banks. Take as an example a customer who is £30 into his or her unauthorised overdraft for three days, made up of a £10 cheque on day one, a £10 direct debit on day two and a £10 standing order on day three. Penalty charges with Halifax would be £15 and with Barclays £22. And yet, at the other end of the scale, Norwich & Peterborough would charge you a hefty £88 in penalty charges.

9. £100 to switch current account. First Direct and Santander each offers £100 bonus if you switch to its current account from another provider. Which? Award-winning First Direct is so confident you’ll be impressed with its customer service that it promises to pay you a further £100 if you decide to switch away from it between six and 12 months after taking out the account.

10. New entrants to the current account market? With Metro Bank launching its first branches next month and Virgin and Tesco still widely believed to be about to enter the bank account fray, don’t stick with your current bank out of a sense of loyalty. If the rates are poor and the service disappointing, .

Best Rate current accounts

To find the best current account for you, check out Which? current account reviews. Whether you’re looking for the best account for credit interest or the best for overdrafts, we find the best deals.

For the best service, check out Which? Recommended Providers for current accounts.

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