Many people simply open a current account and stick with it, often staying with the same bank they joined when they left school!
However, the market has never been more competitive with all kinds of tempting deals and great interest rates designed to lure you away from your existing provider. And in the world of banking, loyalty very often just means missing out on a better deal elsewhere…
But selecting the right bank account may seem like an overwhelming task, with armfuls of accounts being touted as the best thing since sliced bread. If you are considering changing your bank account but are at a loss where to start, let us help you on your way…
And the best account is….
Sadly no such thing exists. Wouldn’t it be great if there was one account which was the ‘best’ in the market? Unfortunately, there is simply an account which is best for you…but that might be very different to the best option for some-one else.
In order to determine what account would be best for you, a whole host of factors need to be taken into consideration, such as:
- Do you use an overdraft regularly?
- What’s your credit rating like?
- Do you want an account with lots of benefits attached?
- Is your account always in credit?
- Do you use online services only or would you prefer a local branch?
To make sure you are answering correctly, you might find it useful to cast your eye over your last bank statement, or go online to browse through your account. Take an honest look – how often are you in credit? Do you regularly rely on your overdraft to get you through the month? It’s important to understand how you use your bank account in order to be able to identify the account which will present the best value for you.
The different options
If your account is always in credit, you might be best off with a bank which offers a good rate of interest on its current account. Why bother with a bank that boasts free overdraft facilities if it’s something that you never use?
Be aware that in order to qualify for high interest bank accounts you might have to agree to deposit a minimum sum every month so make sure that you earn more than this amount otherwise there is little point in making the switch. There may also be a maximum ceiling, above which the interest rate drops. If this is the case, consider moving any excess over the ceiling into a savings account.
If on the other hand, you would be lost without your overdraft, have a look for an account which offers a fee-free overdraft facility as this could save you a significant sum every month. Do make sure you look at the fine print because what appears to be a good deal might have hidden charges for using the overdraft. An alternative could be an overdraft which has a low interest rate instead.
If you have a lower than average credit rating, getting a fee-free or low interest overdraft might be more difficult as banks have quite demanding criteria for the best lending deals (which is what overdrafts are classed as). However accounts which are designed specifically for individuals with bad credit can often work out cheaper. For example, you may only be charged once for a bounced direct debit rather than every time a payment is returned.
If you use insurance products regularly, or perhaps breakdown insurance, it might be worth considering whether a packaged account would work out cheaper for you. In return for a small fee every month you could also be given travel insurance, mobile phone insurance, breakdown cover plus other extras such as music downloads and DVD rentals.
If you go for this option, it’s essential that you check the terms and conditions properly to make sure you understand what exactly you are covered for.
Changing bank account
The easiest way to compare the different accounts available is to use a good comparison site. This holds all the information in one place and usually has a link directly to the deal if you find one you like. This can save a lot of time poring through the small print on the various websites.
If you decide to switch, you will be relieved to discover the process is nowhere near as draining as it used to be. Banks know that one of the reasons you might be reluctant to leave your current provider is because of the hassle, even with the best current accounts offers from other banks. Therefore, the vast majority have specialised teams who will arrange everything on your behalf including setting up the direct debits and standing orders. Your existing bank and your new bank will organise everything between them; you won’t need to lift a finger once you’ve signed the initial paperwork!
Weighing through oodles of terms and conditions to find the perfect bank account for you doesn’t need to be difficult if you follow the above process. Identify your needs to whittle down the choice and then use a comparison site to find the bank offering the best deal that suits your needs.
Don’t stick with a banking dinosaur that doesn’t reward your loyalty, use the technology available to make sure you get the most from your money, whatever your financial needs are.
Written by Samantha Wood, who studies varies types of bank account in her financial services writing role.