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finance: Current Accounts

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Features That Your Current Bank Account Should Have

Banking with a current account is essential, more so than a savings account. Current accounts are convenient for day-to-day transactions compared with savings accounts. Savings accounts only pay interest on the amount accrued and are not meant for regular transactions.

In terms of convenience, current accounts allow you to deposit and withdraw money from the bank or from a high street automatic teller machine (ATM), receive and send money transfers, pay utility bills and other payments by direct debit or standing order, make foreign exchange transactions and make use of reward cards offered by the bank from time to time.

Banks offer current account customers a range of credit and debit cards. The cards are a convenient way to pay for goods and services and have virtually replaced cheques and cash as a method of payment. A word of caution, banks will not protect you in the event of illegal use of a debit card by others and also the money has to be in your current account when paying by debit card. In the case of credit cards, the bank will protect the holder if the card is used by others or the payment is lost.

Whether you are looking to open a current account for the first time or switching your account to another bank, the first thing you should check are the bank’s terms and conditions and their charges for the services provided. These are published in the bank’s brochures available at the bank.

Overdraft Limit:

Banks offer current account customers an overdraft facility. The amount will depend on your financial status and has a strict limit. Higher interest rates apply to this overdraft when the customer becomes overdrawn so that careful management of this facility is essential.

Read More Below

Company Monthly Charge Buffer Overdraft Interest Rate/Charge Maximum Interest Free Overdraft
Santander (123 Current Account) £2 £12 £1 per Day None
Nationwide FlexAccount £0 £15 18.90% None
NatWest (Select Account) £0 £6 19.89% /£6 per month £10
First Direct (1st Account) £10 £10 15.90% £250

Interest Rates:

Generally current accounts do not pay any interest on amounts accruing. There are however certain banks which do pay interest on current accounts. The interest rates are very small and there is a service charge applied which is higher than for the no interest current accounts.

You are also required to maintain a minimum balance in your current account at all times to qualify for the interest. If you fail to maintain the minimum balance, you will end up paying the higher service charge without benefit of interest. Interest rates do vary from bank to bank and if you are sure you can maintain the minimum balance, you should look for a current account offering the highest interest rate. The bank should explain the type of rate offered. Rates can be gross with tax taken at source, AER (annual equivalent rate, simple or compounded).


Banking is now integrated with the latest technology offering customers instant access to their banking information through internet banking via a computer or mobile phone. You should check that a bank offers 24/7 customer care services and for convenience the bank should have a branch near your place of work or your residence.

Free Account:

Due to tough competition, many banks are offering current account facilities for free. With these accounts, you are not required to pay basic service and transaction charges. The bank only charges for additional services such as international transfers and for overdraft facilities. Before you select a bank for your current account, shop around as much as you can for the best deals and offers available in the market.

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