Looking for a new current account, but don't know where to start? Check out these six simple tips to help get you started.
The good majority of us have a current account. But how many of you actually use your current account to your advantage?
For most of us, a current account is simply the place where our salary goes, only to be zapped back out again moments later. And as a result, you might not have given much thought to choosing the right current account for your own personal needs.
But finding the best current account to suit you is really important. So if you're not sure whether you need to switch, here are the top six reasons to do so!
1) Loyalty doesn't pay
If you've been with the same bank ever since you were a teenager and you've always thought your loyalty would pay off, think again. Banks rarely reward you for your loyalty - in fact these days, they only tend to reward 'new customers'.
So if your current account has been with the same bank for several years, it's time to change it! You can earn £100 just for opening an account with First Direct, for example. When was the last time your existing current provider paid you £100? If the answer is: erm, never, then what are you waiting for? Shop around and see what's on offer via the lovemoney.com current account centre.
Scared it will involve lots of hassle? Switching current accounts has become much easier over the years, so there's really no excuse not to hunt around for a better deal. Most banks and building societies have a current account switching service and in most cases just a couple of signatures will transfer your standing orders and direct debits from your old account to your new one. Simple.
2) Stop paying interest on your overdraft
If you're always in the red, you need to choose a current account that offers a good overdraft deal. You don't want to get caught out paying a stack of interest on your overdraft, when there's absolutely no need.
The Alliance & Leicester Premier Direct Current Account offers an interest-free overdraft for the first 12 months (on overdrafts up to £2,000) - which is a pretty great bonus if you ask me! After that, you'll be charged 50p per day up to a maximum of £5 a month.
Alternatively, the Abbey Preferred Overdraft Rate Account also offers 0% on agreed overdrafts for the first year. After that, you'll be charged 12.9% EAR.
So if you're currently being charged to use your overdraft, get switching to a better account!
3) Earn interest
On the other hand, if you rarely dip into your overdraft and generally stay in credit, make sure you're being rewarded for your good behaviour!
Receiving a decent amount of interest on your current account seems to be becoming a thing of the past, with fewer banks and building societies offering a return on your funds. But some current accounts will still reward you for staying in the black, so make sure you shop around.
Both the Alliance & Leicester Premier Direct Current Account and the Abbey Preferred In-Credit Rate Current Account, for example, offer a fabulous interest rate of 6% on balances up to £2,500 for the first year. That's more than most savings accounts are currently paying! The downside is that you need to pay in £500 a month to the Alliance & Leicester Premier Direct Current Account and £1,000 to the Abbey Preferred In-Credit Rate Current Account, although you can immediately withrdaw this money. Also, the rate on both accountswill drop to a tiny 1% once that first year is up. So you may want to shop around again in a year's time.
If you're lucky enough to have £5,000 or more sitting in your current account, it's also worth checking out the Lloyds TSB Vantage account which offers an interest rate of 4% on balances between £5,000 and £7,000. It also offers 2% on balances of £2,000 to £3,000, and 3% on balances between £3,000 and £5,000.
4) Get rich rewards
Some current accounts come hand in hand with a range of perks. This can simply be a cash reward for opening the account, or benefits such as travel insurance and breakdown cover. Just be warned that in most cases you'll need to pay an annual fee for these benefits.
So if you fancy getting your hands on a bit of extra cash and you're not too fussed about earning interest on your current account, you could take a look at the First Direct 1st Account, as I mentioned earlier. First Direct is renowned for its excellent customer service, and although this account won't earn you any interest, you'll receive £100 just for opening the account! What's more, if you're not happy with the account and decide to leave within 12 months, you'll be given another £100 to help you move elsewhere!
The downside is, you need to be able to pay in £1,500 every month to this account to qualify.
Don't despair if you don't earn this much. If you're prepared to pay for your benefits, you could consider opening a packaged current account.
The Lloyds TSB Premier Account, for example, charges £25 a month. And for this fee, you get a range of benefits such as worldwide travel insurance, AA breakdown cover, mobile phone insurance, home emergency cover, and travel/holiday perks.
Sounds pretty tempting right? But if you are considering opening a packaged account you need to consider whether the fee you'll be paying each year definitely makes it all worthwhile. You might find you're better off shopping around and paying for the 'perks' yourself. To find out more, read Don't pay a packet for a packaged current account.
5) Get the best deals
If you're after a personal loan, credit card, or other financial product, you may find that by switching your current account to a different lender, you can get a better deal.
For example, if you have a FlexAccount with Nationwide, you will be able to apply for the Nationwide personal loan. This offers a typical rate of 7.9% APR for loans of £7,500 to £14,999, for up to five years and is one of the lowest rates currently available.
Similarly, if you're looking for a new 0% balance transfer credit card, apply for a Natwest current account and you can also apply for the Natwest Platinum Credit Card. This credit card offers a 0% balance transfer period for a fantastic15 months - a very competitive offer.
Alternatively, you might prefer the RBS Platinum Card which also offers a 0% balance transfer period for 15 months if you have an existing RBS current account.
6) Stop paying unnecessary bank charges
Finally, another great reason to switch your current account is to side-step bank charges. What you're charged for and how much you're charged can vary considerably from lender to lender.
For example, if a cheque or direct debit bounces on your account, Nationwide will charge you a whopping £30. Natwest, on the other hand, will charge you £5. I know which I'd rather pay!
So if you've been caught out by bank charges in the past and think you've been treated unfairly, there's no better reason for switching your current account to a better one!
Hopefully at least one of these six reasons to switch your current account will have got you thinking. So don't delay, get switching today!
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More: Clearer, fairer current accounts | Don't get stung by bank charges