There are four current accounts which stand out on ratings websites and discussion boards as the people's favourites. We review them and compare them to the best buys.
Today a morose colleague asked me to write an article for people whose wives have just gained access to their current accounts. That sounds dangerously close to a minefield to me, so I'm going to take a look at which current accounts are the most highly regarded instead.
There's little data on this, but few accounts are mentioned favourably in discussion boards or on websites, so it's fairly easy to narrow the list down. I reckon the four accounts with the biggest fan clubs are Nationwide, smile, cahoot and First Direct, in that order.
Nationwide has two features that people particularly like. The first is the Nationwide card, as it doesn't charge currency conversion fees when you make overseas withdrawals. The second is being able to transfer money instantly online from the Nationwide Flex Account (a current account) to the Nationwide e-savings (a savings account) and back again. These accounts offer 4.25% and (up to!) 4.8% AER respectively. The current account also has an excellent overdraft rate of 7.9%.
smile and cahoot are liked more generally for what fans consider to be their quality customer and online services. They offer 3.04% and 3.75% AER credit interest respectively. Their overdraft interest rates are better than average at 11.9% and 11.8%. I'm with smile at present and so far I've been happy with them. On the other hand, cahoot has a £100 interest- and fee-free overdraft buffer.
Whilst the Nationwide, smile and cahoot all have fair to good credit interest rates, First Direct's is getting on the low side at 2%. It's overdraft interest rate is not bad at 10.9%. I believe people like it because it's supposed to have a smooth online service.
I also think customers like the incentives. First Direct often offers £25 or £50 to join (it's currently offering £50). It also sometimes offers money if you get a friend to join, although there has been some problems, as this post on our Current & Savings Accounts discussion board shows.
Personally, I don't get excited about any banks. To me, they are a means to an end, and that end is saving and making more money. I joined smile because of an offer they had at the time, but I'll be switching again sooner rather than later to take advantage of better wealth-generating small print!
So if you're Foolish like me and want to get a better deal, consider the following current accounts. Notice that all of them beat the Nationwide's savings account rate, so you can get better interest without having to transfer your money back and forth!
Best fee-free accounts
Provider | Credit interest | Overdraft interest | Overdraft features |
|---|---|---|---|
6.1% up to £2,500; 0.1% on the balance | 5.9% | 0% for 12 months on agreed amount up to £2,500 | |
Coventry BS First | 5.35% up to £250,000 | 0%, but only if you pay £5pm. | £250 interest- and fee-free overdraft buffer |
5.12% up to £2,500; 0.1% on the balance | 15.9% | 0% for 120 days on agreed amount up to £2,500 |
> Compare current accounts through The Fool.