A current account is basically a bank account that allows you to pay in and withdraw money as well as pay bills. There are hundreds of current accounts to choose from these days.
Often, we are encouraged to switch current account to get the best deal, as different current accounts charge in different ways and provide different benefits. In September this year, the Independent Commission on Banking (ICB) report recommended that banks make it easier for consumers to switch accounts, to help bring more competition into the market. We should see 'seven-day switching' by 2013.
Some banks even offer incentives to switch account. The Co-op is currently offering £200 to switchers and Santander offers up to £300 to switchers. To qualify for the rewards, Co-op customers must pay £800 into their current account for the first three months - and Santander customers, £1,000 every month.
It's important to research current accounts before switching to make sure the deal is right for you. Are you happy with the interest it'll pay, for example, or the way it charges for an overdraft? Different people are looking for different things, so there's no single account that's 'best' for everyone.
Different types of current account
There are many different types of current account. Here are some examples of what you'd typically find with different kinds of account.
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Standard current account - With a cash card or debit card, overdraft.
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Student current account - With cash card or debit card, interest-free overdraft.
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Graduate account - With a cash card or debit card, a low-interest overdraft (which could be for a fixed amount of time).
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Accounts with extra services - With a cash card or debit card, internet and/or mobile banking, extra benefits and features like travel insurance with packaged accounts, or budgeting and money management services, like the thinkbanking current account.
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Instant-access savings account - With a cash card or debit card, a higher rate of interest on credit balances than certain other accounts.
Applying for a current account
There are moves to make account switching simpler for consumers, but all sorts of other factors could affect whether you can open a certain account - such as your age, your residency status, the documents you have to prove your identity and your credit history.
When choosing a current account, consider whether your application is likely to be successful before applying.
For example, you might like an overdraft, but if your credit history is less than perfect, you may simply not get one. Other accounts, such as those without credit checks or accounts that help with budgeting, may be more appropriate.