In the modern world it would be impossible for many people to function without their bank accounts, but with such a huge range of current accounts available choosing a bank account can be a bewildering challenge for the uninitiated. For this reason its perhaps unsurprising that many people end up with an account that is totally unsuited to their needs. But for such an important and ubiquitous product wouldn’t it make sense if we all made a little effort to teach ourselves about what’s available to ensure we end up making the right choice?
What is a current account?
A current account should be looked upon as a place to keep the money that you will use in you day-to-day business, the place where your wages will be paid into and the account you’ll use it to make everyday purchases throughout the month. Any current account from a UK bank will usually include a cheque book and a cash card/debit card, giving you easy access to your cash at all times. A current account will pay interest on your money and will usually include some sort of overdraft facility.
Bank Account Interest Rates
Some of the largest banks in the UK also happen to be the ones that pay you the lowest interest rate on your savings so it pays to shop around. The best rate in the UK at the moment is from Alliance and Leicester which offers savers an impressive 8.5% AER (fixed for 1 year) on balances up to £2500. Be aware that many banks are currently paying 0.1% interest, a rate at which you might as well be keeping your money under your bed.
Bank Overdraft Charges
Hopefully you won’t be needing to pay any of these nasty charges but if the unavoidable happens it always pays to be well prepared. Overdraft charges with British Banks at the moment an range from 0% up to around 20% so it definitely makes sense to check in advance how well your bank measures up. The best deal at the moment is the Alliance and Leicester once again which charges 0% on arranged overdraft. This account is the one to choose if you’re in the UK, at least until next year when the 8.5% interest on credit balances deal runs out.
Bank Fees
Monthly fees have become rarity for UK current account holders although it looks as if they may be starting a reappear. Last year Citibank and First Direct began charging customers a £10 a month fee for the use of certain current accounts, justifying the charge by including new services that most customers will never use. Check that your new account doesn’t have any hidden charges before you sign up.
Other Things To Take Into Consideration
Does an account allow you to make “bill payments”, can you use it to set up standing orders and direct debits? You might also want to consider the standard of service offered by a specific bank. This is especially important if you’re setting up an account through a local branch where you will often be dealing with human beings rather than a computer screen in the course of your business.