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Current Accounts


Current accounts are those used for day-to-day living expenses. Account holders can add or withdraw money at any time and make payments via cheque or debit card.


Traditionally, money left in current accounts does not accrue much interest. Thus it's best if savers don't leave large sums of cash in those current accounts. New current accounts have come onto the market with interest rates to rival those of savings accounts. Such accounts only offer interest on a certain amount of money say up to 2,500 so take care to check the details.

Packaged Current Accounts

For a monthly fee, many banks offer packaged current accounts. These accounts typically offer better rates, authorised overdraft rates, and benefits packages, for a fee of around 25 per month. The benefits package can include things like international travel insurance, mobile phone insurance, preferential rates, and many other products offered by specific banks.

Such packaged accounts are looking more appealing due to the bank charges battle, but many of them offer the lowest interest rates on the market and some charge incredibly high rates for authorised overdrafts. Additionally, by saving on the monthly fee and increasing the rate of return for deposits, account holders would actually be better off putting money in non-packaged accounts and buying those benefits separately.

Bank Charges Battle

Seven banks and one building society have been embroiled in a two-year legal battle with the Office of Fair Trading (OFT) concerning overdraft charges. The banks lost their appeal to the High Court in May 2009 and the dispute has now moved to the House of Lords, the highest legal authority in the UK.

The controversy surrounds overdraft charges, fees that can cost customers up to 35 for each instance. The OFT contends it should be able to assess the fairness of such charges and should it prevail, it's expected to release a report critical of the practice.

Banks make around 2.5 billion per annum on such overdraft charges. There are currently at least 1.1 million bank charge reclaims that have been put on hold while the battle continues. If the Office of Fair Trading prevails, the banks would have to pay billions in bank charge repayments.

The legal battle has made switching current accounts much more common. When choosing a new current account, make sure to check for high fees, overdraft charges, and minimum monthly contributions. Still, with the many options in the marketplace, customers may get better interest rates, better service, and more flexibility if they simply conquer inertia and do their research.

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