The Best And Worst Current Accounts

Our research proves that practically all current accounts are complete turkeys, so treat yourself to a star account before Christmas!

Around six in seven adults (85%) have a current account, but the vast majority of these forty million people don't have the right bank account to suit their needs.

One reason why many of us end up with inferior current accounts is that the choice of accounts is vast. In fact, the Fool's search wizard (which is powered by independent financial researcher Moneyfacts) lists 118 different conventional current accounts, including thirty-five 'premium' accounts. In addition, there are fifteen student accounts, seventeen accounts aimed at young people, and ten accounts for graduates. Talk about being spoilt for choice!

Naturally, analysing more than a hundred different current accounts to find your ideal account is next to impossible. However, thanks to the wonders of the Web (to be precise, our search engine), with just a few clicks of your mouse, the hard work is done for you. Hey presto, here are the Best Buy current accounts for those who prefer to stay in credit:

THE MAGNIFICENT SEVEN: Best Buy current accounts for credit interest on £1+

Provider and account name	Credit interest rate (% AER)	Notes
Alliance & Leicester Premier Direct	6.10	You must pay in £500 a month 0.10% paid on excess balance over £2,500.
HSBC Bank Account Plus (this is a packaged account)	6.00 (for 12 months)	0.1% paid on excess balance over £2,500. Monthly fee: £9.95 for 6 months, then £12.95.
Coventry BS First	5.35	You must pay in £1,000 a month. Includes a bonus of 0.85% for the first year.
Halifax High Interest Current Account	5.12	You must pay in £1,000 a month. 0.1% paid on excess balance over £2,500.
Nationwide BS FlexAccount	4.25	You must pay in £1,000pm to earn this rate. 0.25% paid on excess balance over £3,000.
Lloyds TSB Classic Plus	4.00	You must pay in £1,000 a month. 0.1% paid on excess balance over £5,000.
Cahoot Current	3.75 (no chequebook)	With chequebook, rate is 3.65%. 3% paid on excess balance over £250,000.

If you can't afford to pay in at least £1,000 a month, then an Alliance & Leicester or Cahoot account would be a good bet. For customers with high balances (up to £250,000), the Coventry BS First account pays the highest rate on the entire balance.

On the other hand, if you're one of the 35% of all current accountholders (that's fourteen million people) who sometimes rely on their overdraft to tide them over, then you need to pay particular attention to overdraft rates and charges. Indeed, as I warned in The Shocking Cost Of Seeing Red, some banks charge annual interest rates of over 30% for unauthorised overdrafts, plus disgracefully high fines for bouncing (or accepting) cheques, standing orders and direct debits!

I've checked the Fool's search engine to find the Best Buy current accounts for an approved overdraft of £500. The good news is that you don't have to wade through another table, because two of the current accounts listed above also top the table of Best Buys for borrowers! The Alliance & Leicester Premier Direct account charges 0% for a year on up to £2,500 and then 5.9% EAR, while the Nationwide BS FlexAccount charges 7.75% EAR.

Finally, I had planned to provide you with a list of all the truly awful current accounts: those which pay annual interest of 0.1% on credit balances, while charging 15% to 35% a year for overdrafts. However, the list was enormous and included just about every UK bank and building society. So, I'll keep it simple: if you don't have one of the accounts listed above, then you probably have a dog rather than a star account!

More: Use the Fool to find cracking current accounts!