The highly competitive banking environment in the United Kingdom has led banks and other financial institutions to create a number of unique current accounts that offer different features in order to attract the best customers. These features range from high interest rates for those who carry a balance to low interest rates for those who regularly overdraw their bank accounts. Understanding these different features and the advantages of each will allow a consumer to choose which account is the best current account for his or her personal financial situation.
Once little more than a novelty, online banking has largely replaced banking in person as almost every standard bank transaction can now be completed online including depositing paper cheques. While almost all banks offer online banking, a few banks still do not. A person shopping for a new current account and wanting online banking will need to be certain that the bank offers it. The usability of a banks online banking services from both a computer and a mobile phone or other device is another consideration for those looking for a new current account. Choosing the bank with the best online presence or mobile application can make banking simpler and less time consuming. Those wanting to bank in person or through the post office should also check out a bank to make sure that there is a local branch nearby or that post office transactions are allowed.
In the past, current accounts generally paid no interest on the money held in the account. However, many modern current accounts do pay interest to the account holder. While the amount of interest that the bank pays is generally small, the amount often increases for those with higher monthly deposit amounts or average account balances. For example, a bank may pay one percent in interest for those with 1,000 pounds in their account and pay two percent to those with 2,000 pounds. For those who can qualify for the most exclusive accounts, some banks pay five percent interest or even more on current account balances.
Overdraft fees and interest charges can represent a significant expense for those who overdraft their accounts on a regular basis. While many banks charge a stiff penalty for overdrafts, most also offer accounts that provide some level of free overdraft protection and reasonable overdraft charges for higher amounts while also charging a monthly fee on the account. Though most people would probably prefer a free current account over one that charges a monthly fee, the overdraft savings could make the monthly fee a wise investment over time. Those interested in overdraft protection should note that most banks only offer this to those account holders with decent credit scores. In general, the better a persons credit score, the more overdraft protection that he or she will be able to obtain.
Account Holder Benefits
Many banks offer free or low-cost benefits to their account holders. These benefits vary greatly from discounts on cruises to cash back for paying utility bills through a direct debit. Though the benefits offered on some accounts can be frivolous, others are actually quite useful. For example, some banks offer free travel insurance, which is a nice benefit for those who frequently travel. Of course, cash back offers for utilities and other mandatory payments are also a good benefit. Many banks also offer free cash to new account holders, which is always a great benefit. Those looking for a current account should carefully consider the usefulness of the benefits offered by various banks as part of their decision of which account to choose.
Foreign Debit Card Charges
In most cases, banks charge nothing or only a small amount for the use of a debit card. However, this can quickly change when the account holder uses the card outside of the UK. Foreign country purchases and currency conversions can result in significant charges for those who travel out of the country frequently. Banks sometimes charge a foreign loading fee, a purchase fee or a withdraw fee depending on the transaction. However, frequent travelers can find current accounts that charge no fees, though these accounts typically have a monthly fee or have strict approval guidelines that many people will not meet.
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