Six cracking current accounts!

Need a new current account? Take a look at these beauties...

These days, we often discuss which is the best savings account or credit card. But how many of us give the one thing we probably use the most – our current account – the same thought? I doubt very many of us do.

But whether you’re prone to dipping into your overdraft, or you always stay in the black, you may find that by shopping around, you can find a better current account than the one you already have.

That’s because certain current accounts are more lenient than others when it comes to using your overdraft, while others will reward you for staying in the black.

So let’s take a closer look.

In the black

For those of you who never use an overdraft, it’s well worth choosing a current account that rewards you by paying interest on the money you have in your account. The table below highlights three of the most competitive current accounts for those of you who stay in the black:

So, as you can see, if you know where to look, you really can be rewarded for using your current account! All of these accounts require you to pay in £1,000 a month, but if your account is being funded with your salary, this shouldn’t be a problem.

The Santander Preferred Current Account is particularly competitive because it offers a fantastic interest rate of 5%. What’s more, you’ll also receive £100 for simply switching over! However, on the downside, the 5% interest rate only lasts for 12 months. Once that year is up, the rate drops to a paltry 1% - so you may want to think about moving to yet another current account.

Plus, we all know that Santander doesn’t have the best track record when it comes to good customer service.

Alternatively, with the Lloyds TSB Classic Account with Vantage, you’ll need to have at least £5,000 in your account to benefit from the 4% interest rate. If you have less than this you’ll earn a lower interest rate.

To give you an idea of how much you could be earning, if you have between £3,000 and £4,999, the rate will fall to 3%, if you have between £1,000 and £2,999, you’ll earn 2% and if you have anything below £1,000, you’ll earn a tiny 0.10%.

Personally, however, my favourite current account is the Halifax Reward Current Account because it pays you £5 every month, providing you pay in the £1,000 – and this occurs whether you’re in credit or overdrawn! It really is that simple.

In the red

But what if you’re prone to dipping into the red on a regular basis? Several lenders have revamped their overdraft structure over recent months, with the majority of them switching to a fee-charging overdraft system instead of an interest-charging one. As a result, you could be getting seriously stung if you do regularly use your overdraft.

Fortunately, the following current accounts allow you to avoid that.

Santander Preferred Current Account

First up, we have one account that has already appeared in this article and that’s the Santander Preferred Current Account. As well as offering a competitive interest rate of 5%, this account also offers an interest-free overdraft for the first year! And Santander says it will match your previous overdraft up to £5,000.  

After the 12 month period, a daily arranged overdraft fee of 50p per day will apply, capped at 10 days. You can find out more about this account in New 5% current account with free overdraft.

First Direct 1st Account

If you require a smaller overdraft, the First Direct 1st Account offers an interest-free overdraft of £250 – permanently. What’s more, you’ll also receive £100 in cash for switching to the account, and if you’re not happy with the account, you’ll be given another £100 to leave!

Just bear in mind, you won’t earn interest on this account and you will need to pay in £1,500 a month to qualify (or take out another First Direct product, such as insurance).

The other major advantage to the First Direct 1st Account is that, unlike Santander, First Direct is renowned for its excellent customer service. So if this is a priority, this could be the account for you!

Citibank Access Account

Meanwhile, the Citibank Access Account offers a £500 interest-free overdraft, so this offers another attractive alternative. You will need to credit your account with a minimum of £1,250 per month.

Be warned though, if you go over your £500 limit, you’ll be charged an interest rate of 16.9%. An arrangement fee of 0.50% (minimum £20) may also apply.

Co-operative Bank Current Account Plus

The Co-operative Current Account Plus offers an interest-free overdraft of £200, providing you pay in at least £800 a month. If you go over this, however, you’ll be charged £20 a month.

Finally, if you're trying to get rid of your overdraft, make sure you read Three ways to get rid of your overdraft for good.

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