Bank accounts have different overdraft rates and some pay interest on your balance. Use the filters to choose account types and brands, and table headings to sort your results on what matters most to you.
A current account is a bank account that gives you instant access to your money and that you can use for your day-to-day financial life. It lets you receive your salary, pay your bills, make purchases, and send and receive payments; many accounts offer all this for free. You’ll get an account number, a sort code, a debit card and usually an internet banking service, mobile app or both. Typically, you won’t get a great interest rate on money you’ve deposited in a current account, but most offer an overdraft (which will cost you in interest charges).
While accounts’ basic functions are similar, there are some key differences when it comes to interest rates, customer service, online and app features and, of course, switching incentives like free money. One major difference is that some accounts are protected by the Financial Services Compensation Scheme (FSCS), and some aren’t. The FSCS protects deposits up to £85,000 in your account if you bank goes bust.
Current account jargon explained
Funding requirement. Some accounts require you to pay in a certain amount regularly – for example, every month – to qualify for perks, or even to be eligible for the account. It’s a way of ensuring you pay in your salary. AER. Annual equivalent rate. This is a way of showing the interest you’d earn in a year on money you deposited into an account, and helps you to compare accounts. EAR. Equivalent annual rate. This is the interest rate that applies when you borrow money – when you use your arranged overdraft, for example. It shows the interest you would be charged over a year if your account were to remain overdrawn. Arranged overdraft. If your account goes into the red, the bank will charge you a set EAR. Before you go overdrawn, you need to arrange this facility with your bank.
How to compare current accounts
The best current account for a school leaver in their first job may not the best one for a frequent traveller with complex financial needs, so you’ll have to figure out which banking features are the most important to you.
Here’s our checklist for how to find the right current account for you.
1. Check the ways you can bank. Do you need an extensive branch network that you can visit in person, or are you happy to manage all of your finances online or on a mobile app? And if your bank doesn’t have branches, can you still access customer support at a time that suits you? 2. Check the features.Some current accounts offer fairly basic features, which is fine if you just need your salary to be paid in and your bills to be paid out. But if you’re looking for a slick mobile app, spending categorisation and budgeting tools, or the ability to arrange an overdraft easily, you’ll need to make sure the account offers all that. You might also decide you want an account with FSCS protection, and many accounts in our table offer this. 3. Check the fees and costs. With free current accounts (all major high street and digital banks offer these), there can still be charges for certain types of transaction, such as using your card overseas, or even paying cash into your account if you’re with a mobile-only bank. If you’ll need an overdraft, confirm what interest rate you’ll pay. 4. Check if a “packaged” or “premium” account would be better value. Some accounts charge a monthly fee in return for a “package” of extra benefits such as mobile phone and travel insurance, breakdown cover or cashback on your bills. These are only worth getting if you would use the benefits and have checked standalone policies wouldn’t be better value for you. 5. Is there a joining or switching incentive? Banks are vying for customers and they often have tasty offers on the table to get you to sign up, or to switch your current account from your existing provider. The most popular incentive is (unsurprisingly) a cash lump sum, so if you’re considering a new current account anyway, you might be able to make a bit of money from it too. But factor the rest of the checklist points into your decision, particularly if you’ll need an overdraft.
Have you thought about a mobile-only bank?
Digital banks like Monzo, Starling. or Revolut have stolen the headlines in fintech for the last few years. In the Finder office we’re big fans – here’s why:
Cool features. The best thing about them. Digital banks are constantly evolving and adding interesting features. The whole experience feels more user-centred and it’s easier to keep an eye on your spending, make budgets, and personalise the whole thing too.
Easy to set up. You just download the app, enter your data and confirm your identity. It usually takes less than 10 minutes.
No fees. This usually also applies to spending abroad.
How to switch current account
If you’ve had your current account for years, the idea of switching may sound daunting – many people stick with bad deals just to avoid the hassle. However, the process is in truth quite simple thanks to the Current Account Switch Service (CASS).
Any banks signed up to CASS will switch over your account for you in seven working days. You don’t need to do anything, except pick out your new current account and decide on a switch date. Here’s how it works:
Your balance and recurring payments are automatically transferred to your new account. This includes both direct debits and standing orders.
Your old account is closed. Your transaction history will not be transferred to your new account, so it’s a good idea to make sure you’ve got all your bank statements first.
Incoming payments to your old account will be redirected. A message with your new bank details is also automatically sent to the payer.
Depending on what your new bank is offering at the time, switching through CASS may also allow you to access switching bonuses and rewards.
Bank account switching (not necessarily through CASS) has been most popular amongst generation Z (those aged 18 to 24), according to a Finder survey of 2,000 Brits conducted in September 2020. Over half (57%) of generation Z had switched their main current account within two years of turning 18.
Joint current accounts. Most current accounts can be opened together with another person (your partner, another member of your family, a friend). Just be aware that this creates a financial association between the two of you, which may potentially impact your credit score. Learn more on joint accounts here.
Bad credit. Most banks perform a credit check when you apply for a current account. If your credit score is less than ideal, you may still be offered an account, but you may not get an overdraft. Learn more on current accounts for people with bad credit.
Student accounts. If you’re a student, you can bag great perks and rewards and a fee-free overdraft with a student current account.
Children accounts. In order to be eligible for an adult current account, you usually need to be 16 or 18. However, children current accounts are available to kids as young as 11.
Business accounts. If you run a limited company or are a sole trader, it’s a good idea to keep your business finances separated from your personal finances. You can do this with a business current account.
Potential current account fees and costs
When picking a new current account, check all the potential costs. Here are some of the fees you may come across:
Monthly fee. Most current accounts are free, but some will charge a monthly fee, especially if they offer special perks and benefits.
Foreign transaction fee. Many debit cards charge a fee when you spend in a currency other than sterling. The foreign transaction fee often amounts to around 3% of the transaction. If you want to avoid it, you could consider having a dedicated account for when you’re travelling – digital banks like Monzo and Starling don’t charge foreign transaction fees.
ATM withdrawal fee. Withdrawing cash may come for a fee with some current accounts, especially if you do it overseas.
International money transfer fees. Sending or receiving money in a currency other than sterling is likely to be quite expensive with a standard current account. You may want to consider a money transfer service instead.
Cheque fees. There’s usually a pretty hefty fee for cancelling a cheque.
Overdraft charges. Overdrafts tend to be costly. Always check how much your bank charges before using yours.
We’ve outlined two examples below showing how the cost of a £500 overdraft can vary, depending on what EAR (effective annual rate) your bank charges you. The difference can be huge – you’d save £100 a year in interest on an overdraft of £500 if you picked an account with an EAR of 15%, compared to a rate of 35%.
To be eligible to open a current account, you must be a legal UK resident, and at least sixteen years old. Some banks may stipulate that you must be eighteen if you don’t have parental approval. You may also need to be credit checked – this is because many current accounts will come with an overdraft that may be reduced if you have a poor credit history.
With most banks, you can usually apply online – you will need to provide your personal and financial details. In some cases, you may then be asked to pop into a branch to have your ID verified. If you’re applying for an account with a digital-only bank, you’ll usually need to apply from the mobile app and to provide a picture of your ID.
You usually can. You’ll have to get in touch with your bank, who will be able to turn your personal current account into a joint account.
There are no fixed rules and you can keep as little as £1 into your current account. However, people usually have their salary paid into their current account and keep most of it there to spend it over the course of the month – together with some emergency funds that are thus easily accessible if anything goes wrong. It’s also a good idea to open a savings account to put your savings aside (so you’re less tempted to spend them). Finally, keep in mind that some current accounts may require you to deposit a minimum sum every month in order to access certain benefits.
It all depends on your circumstances, but in a nutshell, you want: a) no fees b) agility (your account must be easy to manage and use) c) some nice rewards and perks if possible. In our opinion, the first two things beat the third one – rewards and bonuses are great, but being able to keep on top of your finances for free and with no headaches is much more important.
Matthew Boyle is a banking and mortgages publisher at Finder. He has a 7-year history of publishing helpful guides to assist consumers in making better decisions. In his spare time, you will find him walking in the Norfolk countryside admiring the local wildlife.
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