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Current accounts are designed for everyday transactions like paying your bills or general spending – these accounts are also typically where your salary will be paid into. Also known as a bank account, they tend to come with a cash or debit card, allowing you to make purchases or withdraw money.
There are many different types of current accounts available on the market to suit a variety of needs, including those offering an agreed overdraft, high rates of interest, or accounts catering to consumers with a poor credit history.
If you know which account you’re after, you can click through to the dedicated bank account comparison chart above or read on to discover which one is right for you.
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Here’s a brief overview on the types of current account available:
Standard current accounts, which offers you all the 'standard' account features, but nothing extra. These accounts may or may not charge a monthly or annual fee.
A packaged bank account is a current account that includes additional products and services – such as breakdown cover, mobile phone insurance, travel insurance, home emergency cover – exclusive access to other products from the bank, for example an exclusive rate of interest on a savings account and retailer offers and discounts. These accounts usually charge a monthly fee.
Basic or guaranteed accounts can be helpful for those with a bad credit history or those that do not want to have an overdraft. These types of bank accounts often do not require a credit check.
These accounts while accessible, may charge certain fees either as a regular charge and/or for transactions.
Current accounts with overdrafts include a facility to borrow money in the short term from your bank. If you use your overdraft then you will normally be charged interest on the amount used. You should agree an overdraft arrangement with your bank before going overdrawn. It’s important to carefully consider what you’re looking for with this type of bank account, as the best current account for overdrafts may be the one offering higher limits on what you can borrow, or the one offering the lowest interest rates depending on your situation.
Some current accounts won't charge you a monthly fee although they are likely to still charge fees and/or interest for overdrafts. A free bank account may also offer interest on credit balances and may also have funding requirements.
High interest current accounts offer you a competitive interest rate on funds up to a certain balance and/or monthly cashback for keeping your account in credit. These accounts may come with monthly fees, and will likely require a certain income and number of standing orders or direct debits, but could offer you some extra cash on a monthly basis if you use them well.
Designed to meeting the financial needs of students, student bank accounts tend to offer the same features as standard bank accounts alongside interest-free overdrafts and student incentives such as discounted rail travel.
As an alternative to packaged bank accounts, you may want to organise insurance and breakdown cover individually. Learn more and apply direct today.
The world of banking has evolved with different types of current accounts designed to suit the needs of different types of people. For example those with a poor credit history can now open an account with a range of banking services, such as accepting direct debits and includes a card to make online and instore payments. Those looking for the best perks and incentives could also consider a current account switching offer.
Whether you’re going after the latest switching deal or just fancy a change, moving current accounts is a relatively straightforward process thanks to the Current Account Switch Service (CASS). Using the CASS, all you have to do is apply for an account, and your new provider will take care of moving across any Direct Debits and standing orders under the Current Account Switch Guarantee. Read our current account switching guide to find out more about moving accounts, and which providers participate in the CASS – you'll find that almost all do nowadays.
If you’ve had a look over the different current accounts available, the next step is determining which one to open. However, it's important to bear in mind that there isn't one, single best current account in the UK; the best option for you will depend on your personal circumstances. For example, if you're often overdrawn, you'll likely be attracted to an account with overdraft facilities. If you never go overdrawn, on the other hand, you might want to take advantage of a high interest current account instead.
If you're looking for the best bank account that gives you something back, a switching incentive might lure you in with some offering up to £125 to switch. However, a little bit extra every month might work out as more lucrative over the long run, so you may want to consider a cashback or interest-paying current accounts instead. Regardless, remember that a lot of incentives will require you to close your old account, so you can't just open an extra account for a cash offer.
Whatever you are after, make sure to compare current accounts on all their features, not just their benefits, otherwise you might find that a cashback offer is undone by a high account or overdraft fee.
Some types of bank account charge fees, for example a packaged bank account has a monthly fee to offset the cost of additional products and services bundled with the account. You should consider if you will use the add-ons included in a packaged account and if so if it is good value to pay the monthly fee.
Those bank accounts designed for those with bad credit may also charge fees, often a monthly fee and some transaction fees. In this case, the account provider is looking to cover its operating costs and generate profit.
There are current accounts that don't charge fees, but they may require you to deposit a specific sum of money each month to qualify.
You may be required to pay in a minimum amount of money per month. Usually, this restriction is applied to high interest current accounts, which offer a decent in-credit interest rate in exchange for your commitment and regular income. Aside from a minimum monthly funding amount, these accounts may require you to hold several direct debits on it, to make sure your account with them is your main banking product.
If you are likely to have a credit balance then a high interest current account may be better for you. These current accounts usually offer a higher rate of interest than standard current accounts usually up to a set balance. Remember that with a current account, interest rates may not be paid at all, or at a very low rate, so it may be worth placing any money that exceeds this limit into a savings account instead. Also keep in mind that these accounts tend to come with high overdraft rates, so you should only consider an account offering credit interest if you’re confident you won’t find yourself regularly using an overdraft.
If you are likely to dip into the red on your current account, you should consider one that charges a low rate for arranged overdrafts or offers you an interest-free tier before you get charged. This can prove to be very valuable if your income and outgoings are nearly the same and your account balance goes near or below zero on a regular basis.
Current accounts from challenger banks are usually only accessible by an app or the internet. Some bank accounts will also offer access to your account through retail locations such as the Post Office, this is handy if you need to pay cash into your account.
Most high street current accounts can be operated across a range of channels including phone, branch, online and app.
If you need to withdraw cash from cash machines you should also check the cost to do this. You can also find cash machines near to you using the LINK ATM locator.
There is a different purpose for a savings account to a current account. A current account has more functions than a savings account, designed to facilitate your day to day needs to pay bills and pay for goods and services. Whereas a savings account is designed to help you build deposits over time and reward your efforts in interest.
Opening a current account typically won’t affect your credit score, unless the account you’re applying for has an overdraft facility. As this constitutes a form of credit lending, the provider will likely perform a hard credit check which can temporarily lower your credit score, which could be further impacted when opening multiple accounts requiring a credit check in quick succession.
Yes, high-interest current accounts can offer reasonable rates on your in-credit balance, though remember, even the best current account interest rates will struggle to match top savings returns and often only apply for a limited period. You can compare the best interest current accounts here.
Yes, there are free current accounts available that come without monthly or annual fees. Be aware, a ‘free bank account’ will still charge fees for overdrafts and for some other types of transactions.
The column 'Overdraft Rate' will show you the rate that you are charged if you go into an arranged overdraft. Unarranged overdrafts must not be charged at a higher rate than arranged overdrafts. You can find both the arranged and unarranged overdraft charges for each account by clicking on 'Further Details'. Your overdraft limit will be determined by your credit history – your provider may change it depending on whether and how you use it. Read our guide to current account overdrafts to learn more.
While providers use the funds in bank accounts to lend to others in the form of loans and overdrafts, gaining interest (and therefore money) in return, if a good rate of interest is offered on the account, they naturally make less money from it. That’s why these accounts tend to come with fees and/or high charges, such as for overdrafts or bounced cheques.
They also take a cut of each debit card payment made (called the interchange fee) and make money from fees and charges for things like overdrafts, refusing a payment due to a lack of funds in the account or using a debit card abroad, where they may charge a fee and make a profit on any currency exchange rate they offer.
Banking providers are constantly battling to gain your custom, which can often lead to competitive deals with varying benefits on offer. That’s why it’s always a good idea to compare bank accounts to find the best one for you – and to review any accounts you already have to ensure you’re not missing out on more lucrative perks. As these providers regularly change their offers, usually without adjusting the deal their current customers are already getting, it pays to keep a weather eye on the market.
There are a growing number of online-only banks; some of these are challenger banks such as Atom, Starling and Monzo, while others are brands that are part of a larger banking group. There are also fintechs that offer banking type services but are in fact a payment services provider rather than a bank. These online banks and services do not have any branches. Find out more about how online and digital banking apps work and how safe they are.
Yes, these days the vast majority of banks and building societies offer the convenience of online applications, including providers operating via mobile app for those looking to manage their banking on the go. For many, these digital-only banks may seem less secure than their more conventional counterparts, however, generally speaking, online banking is just as safe as going into a branch or using a phone. You can find out more about this by reading our what is the safest way to bank online guide.
You’ll find that there is no ‘best bank’ when it comes to current accounts, as while one provider may work for someone else, it may not necessarily align with your own preferences. For this reason, it’s generally best to compare a variety of options before settling on the account you want to open based on what you’re looking for – this could include whether you’re after an account with an overdraft, one offering high rates of in-credit interest, or if you’re struggling with a poor credit history, you could consider a basic bank account.
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