It allows you to:
· Pay bills by Direct Debit or standing order.
· Receive automated payments such as salary, wages or benefits.
· Access to an overdraft, although this will need to be authorised by the bank.
· Pay for things with a debit card and withdraw money from cashpoint machines.
If you’re thinking about opening a packaged account, be sure to check out how many of the additional benefits you would actually use and whether you can get them cheaper elsewhere.
Some current accounts offer extra features for which they charge a fee (often between £10 and £15 a month).
These are known as packaged accounts.
· Special offers (e.g preferential interest rates on overdrafts)
· Car breakdown cover
· Insurance cover (e.g travel or mobile phone insurance)
· Extra services
Fee-free basic bank accounts
These are often used as a stepping stone to a current account.
A basic bank account doesn’t normally have an overdraft facility but does allow you to:
· Pay bills by Direct Debit or standing order
· Receive payments such as salary, wages or benefits
A fee-free basic bank account might be right for you if:
· You have a poor credit record or you’re on a low income
· You don’t need the extras that a current account offers, for example an overdraft facility
Jam jar accounts
These accounts are sometimes called budgeting accounts or rent accounts and are designed to help you budget.
They let you divide your money into different ‘pots’ or ‘jars’.
You decide how much money goes into each pot by working out how much you need for your bills and how much is left over for spending or saving.
They also allow you to:
· Pay bills by Direct Debit or standing order
· Receive payments such as salary, wages or benefits.
One disadvantage of these accounts is that they charge a monthly fee
A jam jar account might be right for you if:
· You want an account that helps you to budget
· You want to avoid charges for refused Direct Debits
· You rent a council or housing association property – in which case your landlord might pay the monthly fee for you
Bank accounts for students and graduates
Most banks offer a specific student account, usually with an interest-free overdraft up to an agreed amount.
Banks often offer attractive accounts to graduates to try to secure them as long-term customers.
Decide what charges and features you want to compare
Fees, charges and overdraft costs
Fees can vary a lot between banks and between accounts, with one of the highest fees being charged for going over your agreed overdraft limit (if you have one).
If you regularly spend more than you have in your account, choose one that will give you an overdraft up to an agreed limit without charging fees and/ or with a low interest rate.
Interest rates on credit balances
If you’re careful about your spending and never go overdrawn, have a look at the accounts that pay interest on your credit balance.
However, if your earnings are on the low side and you do sometimes use your overdraft, don’t pay too much attention to the credit interest – focus more on the charges instead.
Many banks offer deals to attract new customers, but be sure to check if there are strings attached.
Look beyond any short-term offer and make sure that, when it ends, the account will still be the best for you.
· A cash incentive
· Higher interest for a period.
Decide how you want to deal with your bank
Do you like dealing with a person in a branch or would you prefer the convenience of telephone or internet banking?
Not all banks provide phone, internet, mobile banking, postal and branch services, so make sure you’ll be able to bank how you want to.
If you like going into a branch, choosing a bank you can easily get to will be the most important factor.
Make sure there’s a cashpoint machine you can use free of charge near where you live or work.
Otherwise you might be charged between 75p and £10 for withdrawing money.
Is it worth switching your bank account?
If you’re unhappy with the service you are getting from your current bank, it’s easy to change.
Your new bank will do the work for you and there’s no need to deal with your old bank.
It’s worth checking every year that your bank is offering everything you need. If not, think about switching.
It takes just seven working days to switch your account under the Current Account Switch Service.
You choose the date you want to switch, and agree this with your new bank.
They will arrange to move all your incoming and outgoing payments to your new account.
The government is working with the banks on plans to give customers their account data in a simple, standardized format that can be used in comparison sites.
This will make it much easier for you to do quick and easy comparisons of current accounts, including the fees, charges and benefits, and make informed decisions on whether there are better accounts for you to switch to.