A current account is a vital part of our everyday lives, and acts as the hub of our financial activities. Our wages are paid into the account, many of our bills are paid from it automatically, other bills are paid by checks drawn on it, and it is from this account that we usually withdraw our cash for everyday spending. As these accounts are so important, it is perhaps a little surprising that the number of people who actively look for a better account with more features is comparatively quite small.
Many of us stick with the same current account all our lives, or at any rate stay with the same bank, and this is often the bank we choose by default because of family history or local loyalties. However, current accounts have changed dramatically over the last decade, not least because of the arrival of online banking, and by not looking at the alternatives more closely you could be losing out.
The first thing to look at is the rate of in-credit interest that the bank will pay on your balance. In traditional current accounts, this interest was a negligible figure of rather less than 1%, if it was present at all. Compare this with the rates paid by savings accounts, which even in the worst cases usually pay at least 3%, and you can see that such low interest is a raw deal. The advent of direct banking, both online and by telephone, has changed all this. The rates paid by banks on your balance have crept inexorably upwards, and nowadays you can expect to receive 5% or even more in interest when you're in credit. This rate is even close to some of the best savings accounts rates you can obtain.
On the subject of savings, many modern current accounts come with an attached savings account which gives current account customers a preferential rate, which could well be higher than you receive on your existing savings accounts, making a switch attractive. You may also be given the opportunity to apply for a credit card at a preferential rate, which could obviously be of benefit to heavy card users.
Another feature which more and more current accounts offer is a cheap overdraft facility. Going overdrawn on a traditional account can be an expensive business, especially so if your overdraft is unauthorised. Modern accounts can offer an overdraft facility as standard, with no fees, and charging interest at a rate well below the almost punitive rates once charged. In fact, some accounts even waive interest payments completely in certain circumstances, such as going temporarily overdrawn or not exceeding a previously agreed level of debt.
There are many other features available in today's breed of current account, from cashback on debit card payments, to special member's club discounts and offers, but even the two main ones presented here - higher interest earnings and cheaper overdrafts - should be enough to make holders of old fashioned current accounts take pause and consider whether the time is right for making a switch. And with most banks now offering an easy switching service to transfer everything across with the minimum of fuss, you've little to lose by exploring the idea further.
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