What you need to know about current accounts
About current accounts
When it comes to looking after your money, you want to make sure you use accounts and providers that are easy to use, safe and suit your needs. A current account is considered as a bank account that covers all your daily spends and regular finance activities. However, is a current account right for you and how can you find one that best suits your needs?
What is a current account?
A current account is a bank account that manages your day-to-day money. A current account can be used to pay bills, daily shopping needs and direct debits. It can also be the account where you receive wages and receive money such as benefits, tax credits and transfers from people.
A current account offers a number of functions such as;
- Paying for items with your current account debit card
- Withdraw money and check balance using ATMs or at a counter
- Pay cheques into
- Pay bills, write cheques and transfer or send money to people
- Receive payments such as wages, investments or maintenance expenses
- Transfer money directly into your account with minimum fuss or requirements
- Set up direct debits and standing orders to pay for goods and services
- Use online or phone banking to manage your account and check your balance
- You may also be able to apply for an overdraft on your current account.
The requirements of a current account
LTypically, you need to be over the age of sixteen years of age to open a current account. However, some banks and providers offer children’s current accounts for children as young as seven. Often banks will need a parent or guardian to help open the account with them. You will also need to ensure you have a valid proof of identity and proof of address. The current account provider may ask to see more than one proof of identity and address.
The current account provider is also likely to check your credit score and could decline you if you have a bad credit score. Alternatively, they may just refuse an overdraft element of the current account.
Costs of a current account
Many banks will not charge you for opening a current account. However, some may stipulate that you have to have a certain amount of money paid into the account every month to take advantage of their offers. There are some fee-free basic bank accounts that you can use if you do not qualify for a current account.
While many banks offer an overdraft for your current account, they may charge you interest or a fixed fee for using it. You may also pay a high charge if you go over your agreed overdraft limit.
If there is not enough money in your current account to pay your standing orders or direct debit, then a bank may charge you for every payment that is refused. In some cases, this can be £25 per transaction that fails.
If you go over your overdraft limit, then your back can charge you for each transaction you try to make, even if the payment does not go through. The transaction fee can vary between banks, however, can be up to £25 per transaction. This means if you try to withdraw money from an ATM four times when you are overdrawn, you could face a bill of £100.
Some banks will apply an annual or monthly fee to your current account. Current accounts usually have a cost when the offer the customer a benefit, such as cashback accounts, where you can earn money just by using your current account to spend in certain shops or pay for specific bills. Some banks will also charge for high-interest accounts, where you have to option to obtain interest on the money that is in your account.
Types of current accounts
There are many different types of current account available, and banks and providers will vary with their terms and the benefits they can provide. Some of the current accounts on the market include;
Choosing the right current account for you will depend mainly on how you want to use your current account. Banks and providers will offer various deals and special offers to attract you to do your banking with them. This means it is usually easy to get a good deal with plenty of benefits from the bank. Make sure to shop around to find the best deal for you.
As well as the particular advantages they offer their customers, have a look at their facilities too. Aspects such as mobile banking apps can be very useful. Having a provider which makes banking easy could save you valuable time and stress.