The top 10 current accounts

Robert Powell runs down the 10 best current accounts according to your needs...

We’re all different when it comes to current accounts. Some of us will want a large overdraft, some a high interest rate and others will just want friendly customer service anytime anything goes wrong with their account.

So to help you find the right current account to suit your lifestyle I’m going to run down the top ten deals around at the moment and explain the pros and cons of each account.

Here’s a table with the details of my top ten (in no particular order!):

So let’s take a look at each type of account in more detail:

High interest

With inflation now running at a crushing 4% it’s never been more important to get a decent interest rate on your hard earned pennies. The Santander Preferred In-Credit Account offers 5% on balances up to £2,500 for 12 months – that’s a maximum £100 of interest after tax! Add into this the £100 cashback you’ll get for switching accounts and you’re looking at an attractive offer.

But as is so often the case, there is a catch! You’ll need to pay £1,000 into the account every month and switch at least two direct debits or standing orders. And if great customer service is what you’re after, I’d give Santander a miss; read Can Santander sort itself out? to find out why.

You’ll also need to get your skates on if you’re after this deal as Santander are revamping their overdraft fees next month and getting rid of this account in the process.

The Lloyds Vantage account is also a good option if you pay £1,000 into your current account each month and have a large lump sum you want to move across as well. You’ll earn 4% on balances above £5,000, but this is capped at £7,000, any balance above this won’t attract any interest.

Halifax’s Reward Account doesn’t theoretically earn you any interest, but you will get £5 cashback every month if you pay £1,000 in. And what’s even better is that this is net of tax – so you won’t have to pay any of these monthly rewards to HMRC.

Overdrafts

Despite the disdain of many lovemoney.com readers for Santander, the Spanish bank actually has a rather good overdraft account offering as well.

The Preferred Overdraft Account offers 0% on all overdrafts for 12 months but again you’ll need to pay £1,000 in a month and switch your direct debits and standing orders. Santander will match your previous overdraft limit up to £5,000; but, as always, what limit you get will also depend on your credit history.

However, this account is up for the chop next month when Santander changes their overdraft facilities; find out more about this by reading Santander to penalise disloyal customers.

If you really don’t want to plump for Santander then there are two other accounts with fairly competitive overdraft deals, and the good news is they’re both reported to have great customer service!

Smile came second in our customer satisfaction awards last year, and operates an ethical policy which commits them to investing your money in renewable energy and avoiding anything dodgy!  On top of this you’ll also get a £500 interest free overdraft for 12 months – after which the rate will revert to 15.9%.

And First Direct took first place in our survey, leading to it being crowned the sexiest bank account around! This could be because First Direct will give you £100 when you join them, and if you’re dissatisfied and decide to leave within 12 months they’ll give you another £100 to say goodbye!

The 1st account also offers a permanent £250 interest-free overdraft – after which you’ll be charged at 15.9%. But to be eligible for this account you will need to pay £1,500 into the account every year and use First Direct’s Easyswitch service to change over your direct debits and standing orders.

Spending abroad

Finding a ton of foreign currency charges on your current account is a sure fire way to put a downer on any holiday. So if you’re planning on travelling a lot in the next few years, it may be a good idea to pick up an overseas fee-free account.

Santander’s Zero Account offers fee-free overseas transactions as well as an interest rate of 5% on balances up to £2,500 and £100 cashback for switching. But unfortunately you will have to hold a Santander mortgage or investment or have £10,000 in savings with the bank to be eligible for this account.

Norwich and Peterborough Building Society’s Gold Classic Account also offers free overseas transactions and all you have to do is deposit £500 in every month or pay a monthly £5 fee. Watch out for N&P’s pricey overdrafts though – 17.9% plus a £5 fee, ouch!

Rewards

The Halifax Ultimate Reward Account is the only pick on my list that charges a monthly fee, £12.50 to be precise. But if you pay £1,000 into the account every month you will get £5 cashback – meaning you’ll effectively only be paying £7.50 every month.

This account is a packaged deal and comes with worldwide multi-trip travel insurance for two adults and children, AA breakdown cover and accident management, mobile phone insurance, home emergency cover, card protection, public transport accident cover, an ID theft helpline and protection covering lost, stolen or damaged items bought using the card.

Now, I’m always a bit sceptical about packaged accounts as you frequently hear horror stories about sneaky exclusions or huge excesses in the add-on insurance policies. So if you are contemplating taking out this account, make sure you read the small print of all the policies to ensure that they do actually meet all your needs.

Read When a packaged current account is worth it as well as Why packaged accounts aren’t worth it for some more tips and advice as well.

More: Get a great current account with lovemoney.com | The best current accounts for 2011  | Demand satisfaction from your bank in 2011!