First Class Current Accounts

Say a resounding no to poor in-credit interest rates and excessive overdraft rates. We review a handful of the best current accounts and suggest you get busy switching.

Many of us have got into the good habit of checking the best buy tables when it comes to choosing savings accounts or cash ISAs but are we quite so careful when it comes to selecting a current account? So I think we're due an update on the best accounts around at the moment.

Here we take a look at the top five accounts with the most attractive rates on credit balances as well as the five accounts which sting the least should you slip into the red.

If you usually stay in the black here are the top five current accounts which will allow your credit balance to work a little harder for you.

Top Five Current Accounts: In-Credit Rates

Company	Account Name	Credit Rate (AER)	Conditions
Abbey	Abbey Bank Account	8.00%	Must transfer existing balance to Abbey from another bank. 0.1%/0.25% AER on balances over £2.5K. Funding of £1K pm required.
Alliance & Leicester	Premier Direct	6.50%	Rate fixed until 31/07/08. Funding of £500 pm required. 0.10% AER (variable) on balance over £2.5K
Coventry Building Society	First	6.35%	Includes a 0.85% AER bonus for the first year. Funding of £1K pm required
Halifax	Ultimate Reward/ High Interest	6.17%	0.10% AER on balance over £2.5K. Service charge £10 pm on Ultimate Reward. Funding of £1K pm required on High Interest
Norwich & Peterborough	Gold	4.85%	0.25% AER on balance over £5K. Funding of £1.5K pm required

Data provided by Moneyfacts

Abbey is offering an eye-catching rate although you must switch your existing current account balance to them to take advantage of the deal. The account was launched in July and not surprisingly still tops the best buy tables. If you move to Abbey you'll earn 8.00% AER on balances up to £2.5K but watch out this rate only applies for the first 12 months, after this you may find you need to switch again.

The account offers two options; if you opt for the Preferred In-Credit Rate, you'll earn a rate of 2.5% AER on balances over £2.5K with a typical overdraft rate of 16.9% EAR (variable). You'll also receive 2.5% on the whole balance once the introductory 12-month offer ends.

Alternatively if you choose the Preferred Overdraft Rate option you'll pay a lower overdraft rate of 10.9% but you'll only receive an in-credit rate of 0.1% once the introductory period ends. You'll also receive that rate from day one on balances over £2.5k.

Other attractive accounts include the Premier Direct account from Alliance & Leicester which offers a fixed rate of 6.50% until 31/07/08 and the Coventry Building Society with a decent rate of 6.35%. But beware the latter interest rate includes an introductory bonus of 0.85% which will disappear after 12 months.

On the other side of the coin, if your balance has a tendency to stray into negative territory, the top five current accounts offer significantly lower overdraft rates than the average account.

Top Five Current Accounts: Overdraft Rates

Company	Account Name	Overdraft Rate (EAR)	Conditions
Alliance & Leicester	Premier Direct	5.90%	Interest free overdraft for first 12 months, max £2.5K. Funding of £500 pm required
Halifax	Moneyback Current Account	6.90%	Funding of £1K pm required
Norwich & Peterborough	Gold	7.74%	Funding of £1.5K pm required
Nationwide	FlexAccount	7.75%	-
Alliance & Leicester	Premier Current Account	7.90%	Funding of £500 pm required

The Alliance & Leicester Premier Direct account tops the table applying an overdraft rate of just 5.90% (AER) and, as an additional bonus the facility is interest free for the first 12 months.

Words of caution on overdraft rates here; if it looks like you're going to exceed your agreed limit ,don't bury your head in the sand. Landing yourself with an unauthorised overdraft can prove extremely costly. While you may be lucky enough to have an account which charges the same interest rate regardless, Halifax, for example, charges a staggering rate of 28.8% on unauthorised borrowing. Ouch! Far better to ask your bank or building society if they are willing to grant you a temporary extension rather than suffering exorbitant rates of interest.

Don't forget if you're only likely to require a small overdraft, some current accounts offer an interest free tier such as HSBC's Premier Bank Account which charges 0% on the first £500 (typical overdraft rate of 9.9% EAR (variable) once your account is more than £500 overdrawn).

For younger people

Not wishing to miss anyone out, Alliance & Leicester's online Premier 21 account is worth a quick mention. The account is available to those aged between 16 and 21 who are able to pay in at least £250 each month. The account offers an impressive 10% AER (fixed until 31/10/08) on balances up to £1K with balances over £1K earning 0.1%. It also currently offers a 0% EAR overdraft of up to £2,500 for those aged 18 and over with a £3 per month fee if the facility is used. The Premier 21 account pays almost twice as much interest as its nearest competitor so it's clearly worth bearing in mind.

It's a fact that numerous banks continue to get away with offering meagre interest rates of just 0.1% on their current accounts, or worse still nothing at all, with the most unforgiving overdraft rates standing at almost 20%. Switching from one current account to another is not usually the onerous task you may think, so there is really no reason not to ditch your dud account in favour of a more competitive offering.

More:Get Paid To Switch Banks | Earn 8% In Your Current Account