Current Accounts

Understanding Current Accounts

  • Current account, a bank account that allows its holders to perform financial activities like deposit and withdraw funds any time without prior notice.
  • It is used for everyday banking, like receiving wages, paying bills, and setting up standing orders and direct debits.

Features of Current Accounts

  • Overdraft Facility: A common feature of current accounts that allows the account holder to withdraw more money than they have in their account, within a pre-agreed limit.
  • Interest: Some banks provide interest, though usually at a lower rate than savings accounts.
  • Access your money: This account offers easy 24/7 access to your funds through cash, debit cards, and online banking.

Types of Current Accounts

  • Standard Current Accounts: These offer basic features of a bank account including card for transactions and overdrafts, with no monthly fees.
  • Packaged Accounts: These come with additional benefits such as insurance, but usually have monthly fees.
  • Basic Bank Accounts: These offer fewer features and are usually provided to those with poor credit history.
  • Student Current Accounts: These are geared towards students, often offering perks such as 0% interest overdrafts.

Choosing the Right Current Account

  • When choosing a current account, it’s important to look at all the features and benefits offered by the bank such as overdraft limit, any fees charged, the level of customer service, and the potential for earning interest.
  • It’s also essential to consider your banking needs and habits - if you frequently dip into your overdraft, an account with a lower interest rate might be ideal. If you rarely use your overdraft, then an account that offers in-credit interest might be a better choice.

How to Open a Current Account

  • Opening a current account usually requires the applicant to be over 18 (in some cases, 16), resident in the UK, and pass credit check.
  • Documentation required typically includes proof of identity (passport, driving licence), and proof of address (utility bill, bank statement).