KnownYourMoney Compare Current Accounts

Compare Current Accounts

Compare the best current accounts available from the major high street banks and internet providers. Know Your Money also provide a comprehensive guide to choosing and switching your current account which can be found under ‘guides’ in the current account section.

Choosing a current account

In recent years the UK current account market has diversified to offer a wide range of products covering everything from basic, no-frills accounts to the increasingly prevalent kitchen-sink-and-all packaged accounts to niche accounts aimed at particular target markets.

Below take a look at the various types of current account, what benefits they offer and which type of customer they may suit best:

Main types of current account

The basic current account: Most banks offer two types of basic current account: one allows you a chequebook and an overdraft facility, the other doesn’t (which is great if you do not want to borrow or become overdrawn). The basic current account nowadays typically comes with a number of standard features:

• Free everyday banking
• Online and phone banking
• Bill payment – via standing orders and direct debits
• Cash withdrawal from almost all UK cash machines (some cash machines charge a fee)
• Cash-card enabling you to pay for goods and services
• Monthly statements

Since basic current accounts include all the essential banking features and rarely come with a monthly charge they are recommended to anyone looking for a no-nonsense, free bank account.

The Packaged Current Account: The packaged current account is your basic current account with extra frills. The frills are wide ranging and differ between banks – the same bank will usually offer a whole range of packaged accounts with tiers of increasing features including:

• Higher credit interest and/or lower cost overdrafts
• Free house, car and travel insurance
• Free mobile phone insurance
• Free car breakdown insurance
• Protection from Identity theft
• Earn airmiles, travel benefits and discounts
• Card protection
• Commission-free foreign currency and more

Sadly the ‘frills’ aren’t on the house, so in order to take advantage of them you will have to pay a monthly fee for your account. The average monthly fee is around £13 however it can range from £5 to £25 (or put it another way – £60 – £300 per annum). Packaged accounts meet the needs of some customers but for many they are a waste of money. Most customers are persuaded to upgrade from their fee-free account by their existing bank rather than actively looking to upgrade themselves – but packaged accounts are not suitable for everyone.

When it’s worthwhile

• You are a homeowner, car owner and travel abroad regularly
• You have a hectic lifestyle and don’t have the time/energy to shop around to get the best buys
• You wouldn’t otherwise have cover
• You NEED at least two of the main benefits being offered
• The superiority factor of your ‘prestigious’ account is a perk worth paying for

When to pass on it

• You already shop around for Best Buys
• You want higher level insurance than the ones being offered in your package
• When the benefits being offered aren’t ones that you actually NEED!

The small print

• What’s the minimum deposit? You may have to agree to deposit a certain amount in to your account each month (e.g £1000 per month)
• Do you need to earn a minimum amount? One bank gives a reduced monthly-fee if you earn more than £100,000
• Is further registration required? You often actually have to register if you want to take advantage of each benefit available within your package
• Do the ‘benefits’ cover everything you require? For example; the package account may only come with basic breakdown cover. If you need breakdown from home then it’s not going to be that useful if it’s not included
• Do you really need all those benefits? Worldwide travel may sound fine but if you don’t go further afield than the Costa-del-Sol – you could get your travel insurance much cheaper elsewhere

Niche current accounts

The young person’s account: Knowing how infrequent we change our current accounts, banks are particularly eager to seize our burgeoning number of youngsters. Today’s young pocket-money saver will be tomorrow’s high flyer. Natwest, for example, allow young account holders to upload or create their own design to be printed on to their cashcard – thus allowing them to have their favorite picture of themselves and/or friends on their card. Added to this – the juvenile account holder also has access to a website designed especially for them in mind with financial guidelines/offers and ideas. Other temptations from banks include free text or music downloads and attractive discounts to cinemas and high street stores.

The student/graduate account: Again, like the young person – a student/graduate account is a lucrative new customer. Not for the initial years when the student is struggling to make ends meet but for the transition from student to worker and beyond.

Most banks have special offers for students. Railcards, Youth Hostel Association membership, iPods, digital cameras and so on are all regularly given away as free gifts. More importantly, the account also tends to come with an interest-free overdraft and low-interest credit card, although you should be wary about getting too far into debt.

Yet it’s not just the free gifts and the financial incentives being pitched at the student- the banks also can offer assistance with budgeting calculators, volunteer job contacts and funding contacts. And as you move towards graduation and beyond, there are other facilities available such as personal loans and mortgages to help you get on the property ladder – some banks will automatically upgrade you to their graduate accounts in the third year of your studies.

The offers change all the time, so it’s simply a case of seeing what’s out there at the time that you’re opening your account.

The premium account: Unsurprisingly, the banks pull out all the stops to get wealthy individuals to bank with them. With this in mind, premium accounts roll out a red carpet of exclusive benefits to well-to-do customers such as priority branch and telephone service, wealth management assistance and international travel and leisure services. Eligibility for these accounts is significantly higher than on regular packaged accounts – the HSBC Premier Bank Account, for example, requires a salary of £100,000 – so the majority of customers will miss out.

The non-resident’s account: Whether banks tailor individual accounts to specific nationalities or put forward a ‘one-size-fits-all’ approach – each of the major banks now offer a host of provisions aimed at the non-resident either studying or working in the UK. The smaller banks are catching up slowly to what appears to be an expanding market. If you are a newcomer to the UK HSBC gear their ‘Passport’ service to you – marketed in eight different languages (Bulgarian, Czech, French, Portuguese, Russian, Chinese, Filipino, Polish, Romanian and Spanish) – the account provides exclusive access to the relocation service red24 giving practical information on housing, schooling, police, health service, jobs and employment and also contacts for embassies and consulates. With Barclays, the preference is to make available staff that can speak your native-tongue. The bank has more than 30 branches with Polish-speaking staff for example (although mainly in Greater London). Its branch in Ealing Broadway, west London, an area with more than 40,000 Poles, has eight Polish members of staff.

The islamic current account: Lloyds TSB were the front runner in creating a suite of products for the Muslim customer – including both a student Islamic current account and a standard current account following the Islamic practice of Shariah. Interest is not acceptable as it is believed to divert resources from the poor to the rich therefore not only is interest on the account (debit or credit) not permitted, the money itself must not be used by the bank in any interest-based or non-Shariah approved activity.