What to look for in a current account?
Most people will have a current or checking account at a bank or building society. A current account is usually used to deposit your pay check and pay bills. Although this sounds simple enough, financial institutions are vying for your money, and there are many different current accounts and features to choose from.
It pays to look and compare current accounts on offer and find the ones with the features that best suit your needs. Some of the best benefits and most competitive rates are offered by non-traditional banks, such as those with no branches. By not incurring the cost of establishing branches, they can offer more interesting features to customers.
Do current accounts pay interest?
There are some current accounts that pay interest and others that do not. However, generally speaking, current accounts do not pay interest, as banks would rather you opened a separate savings account as well. Having said that, some banks will pay a low level of interest on current accounts, although usually only on savings over a specific balance. Because of this, it does not really make sense to look specifically for current accounts that pay interest. Instead, you should be looking for current accounts that have no or few fees and open a savings or investment account too.
What features do current accounts have?
Characteristics of current accounts vary greatly from institution to institution. This means that it pays to do some research to find the services that best suit your needs. Look at the fees for current accounts, as most banks will offer current accounts with no fees as long as you maintain a certain balance or deposit a certain amount of cash each month. If you are young and are just starting to work, it may make sense to find a bank that only requires a low balance for a fee-free current account.
Overdrafts are another feature that many current accounts have. Some banks will automatically offer you an overdraft, while others will require you to apply. Check also how overdraft costs are assessed by the bank – this can be an interest rate, a usage fee or so forth. If you are going to use the overdraft feature of the current account on a regular basis, you do not want an account that charges by usage, for example.
As many people now use e-banking and phone banking, this may be a feature you want on your current account. Not all banks offer e-banking or phone banking, while some will require a certain number of e-banking transactions per month if you want to use the feature free of charge.
Some banks are getting more creative and offering some interesting features to attract new customers. These include text alerts of any activity on your account, cash back on utility bills, 0 per cent interest in overdrafts for those switching banks and cash back for those that switch. It really does pay to do some market research.