Guide To Current Accounts

A current account is the engine room of an individual’s finances. A current account is a bank account that allows account holders to deposit and withdraw their money. There are over 50 million active current accounts in the UK and there are a few different types of account available.

A Comprehensive Guide To Current Accounts

Types Of Account

There are different categories of current account available:

Basic Current Accounts

Unlike a standard bank account (see below) this type of account does not offer overdrafts or cheques, which prevents the account holder from being able to access a borrowing facility.

Basic accounts are a good initial step for people starting out in managing their own money. They are also the type of account that is recommended if an individual is having trouble obtaining a standard bank account.

Basic bank accounts are like any standard current account in that deposits such as wages can be paid in directly, a debit card can be used to withdraw funds and direct debits and standing orders can be set up.

Standard Current Accounts

Standard bank accounts generally come with a cheque book and debit card and most do not charge a fee. Some standard current accounts might offer preferential rates and charge a small fee for offering this and other benefits. A standard account may also have an overdraft facility that will charge interest on any money borrowed.

Student/Graduate Current Accounts

These accounts are designed for people who are in, or have recently completed, higher education. They normally come with an interest-free overdraft facility, although the terms and period of the overdraft offered varies between providers.

Student/Graduate Current Accounts

These accounts are designed for people who are in, or have recently completed, higher education. They normally come with an interest-free overdraft facility, although the terms and period of the overdraft offered varies between providers.

Premium Or Packaged Current Accounts

Many banks offer accounts that charge a monthly fee for a package of additional features and services such as mobile phone insurance, travel insurance, breakdown cover and preferential overdraft rates.

Switching A Current Account

Switching a bank account need not be a tricky process. In fact these days the banks do most of the work on behalf of the account holder. It is certainly much easier than it was a few years ago and it is often possible to receive a financial benefit too. Many banks offer cash-back deals to incentivise people to make the move, so it is worth shopping around to see what is on offer.

All an account holder needs to do to switch banks is to contact the bank they wish to move to and the bank will organise the rest. The existing bank is required to hand over all the necessary information relating to regular direct debits and standing orders within three days of the application made by the new bank, and then the new bank sends the account holder the details so that they are able to verify their accuracy.

The new bank will normally offer a free overdraft facility whilst the changeover takes place and, for most, the transfer goes smoothly although it may well take a few weeks to receive new cheque books, bank cards, PIN numbers and phone passwords (where requested).

From September 2013 a new 7-day switching scheme will be put in place in the UK meaning that switching accounts will be backed by a new current account switch guarantee provided by The Payments Council. From launch, almost 100% of current account providers will offer the new service.

All banks will be required to move to online payments and customers will be provided with a guarantee that they will be refunded any interest and charges made on either account because of the switching.

Choosing The Right Current Account

There are many attractive deals available and as the number of people switching may be set to grow, so too will the deals on offer. It is wise to keep an eye on the current deals and remember to shop around.

24/07/2013 11:48:28 Eren

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