If you're struggling to shrink your debts, a bad current account can make things worse. Bag a Best Buy replacement today!
When you're up to your eyeballs in debt, life is made even worse by two things piling up: interest and penalty charges.
I know this from personal experience, having spent much of the Nineties wrestling with almost £50,000 of non-mortgage debt. At my peak, I had three personal loans, an overdraft and thirteen credit cards to cope with, plus my mortgage and other living expenses to pay. Unsurprisingly, I spent most of my time and money juggling my finances, often robbing Peter to pay Paul in order to make ends meet.
What made life even more painful were the hefty rates of interest charged on my debt mountain (often exceeding 20% a year), plus the fines which I paid for missing or late payments, exceeding my credit and overdraft limits, and so on. Looking back, I can't believe what an awful mess I was in!
Anyway, life would have been a lot easier if I'd had a better current account at the time. When, as often happened, I slipped over my overdraft limit, I got clobbered by an unauthorised overdraft interest rate of over 25% EAR, plus a fine of around £30 for each time that my overdraft grew or a debit was rejected. (Nowadays, it's a doddle to reclaim these charges, as our guide shows.)
Nevertheless, If I were struggling with debt today, I'd be sure to look around for a better current account. By switching to a Best Buy current account, you can pay lower rates of interest when you're overdrawn, earn higher rates of interest when you're in credit, and avoid those sky-high fines.
Using the independent, unbiased search engine which powers the Fool's current account centre, I've come up with the following list of Best Buy current accounts for people who frequently send their current account into the red:
Top three current accounts for low-cost overdrafts
Company/ Account name | Authorised | Unauthorised | Notes |
|---|---|---|---|
Zero on up to £2,500 for one year | 5.9 | Funding of £500pm required | |
Halifax | 6.9 | 28.8 | Funding of £1,000pm required |
Nationwide BS | 7.75 | 24.9 |
In summary, bagging a table-topping current account makes budgeting easier and allows you to pay off your debts faster. In addition, a tougher Banking Code makes it easier than ever to transfer between banks, so what's stopping you? Ditch and switch today!