Your current account is the hub for all your daily finances, so it pays to pick a good one and run it well. Use your current account with these 9 rules in mind to make the most of your money and never get caught out again.
A current account is something nearly everyone has. You make contact with it daily and much of your livelihood revolves around its incomings and outgoings. As such it’s vital you get one that works in a way to suit your circumstances, and just as important that you can run your account according to a few basic rules. Here are our top 9 to go by.
1. Stick to your limits
All current accounts come with a limit that you must stick to; if you dip below this, you’re likely to incur nasty penalties from your bank. That limit might be £0 if you do not have an arranged overdraft, or minus £500 if you have a £500 overdraft in place. Regardless of what your limit is, make sure you know it and stay on the right side of it.
If you do anticipate needing to spend over this limit one month, ask your bank for a temporary overdraft extension. Though you may still have to pay a fee for this, it’s likely to be cheaper than simply running into unauthorised overdraft territory without asking.
2. Don’t pay for what you don’t need
Nowadays lots of people have package current accounts, which means that along with the usual chequebook and debit card that come with a basic account you’ll also be entitled to perks such as travel insurance and exclusive access to a range of other banking benefits.
Though the sense of being part of an elite club can be appealing, the catch to this is a monthly fee. What’s more, it’s likely that you could get a better deal on travel insurance and other benefits elsewhere that would suit your circumstances more than a one-size-fits-all product.
As such if you do have a package current account it’s worth reviewing this closely and deciding if you do really need the benefits offered for the price you are paying for them, or you might benefit from getting them elsewhere.
3. Stay informed
Keeping tabs on your day-to-day banking is essential if you want to be in control of your finances. As such one of the most important things to do when it comes to running your current account is to check your balance regularly, either at a cash machine, on a mini-statement, or using online banking. Some banks now also offer text alerts which will regularly inform you of your current available balance. As well as checking your live balance on a regular basis (ideally, every day) you should also always pay close attention to your monthly statement.
Though it’s often tempting to shove your statements under a pile of papers marked ‘bank stuff’ and never look at them again, checking your statement is important for two reasons: first, to keep yourself informed of the monthly incomings and outgoings in your current account, and second, to check for any anomalies that could indicate your account has been used fraudulently.
4. Keep enough in the account to cover outgoings
Most people will have some kind of direct debit or standing order set up on their account, which means that at one or several points in the month money will be leaving your account automatically. It can be easy to overlook these outgoings as it isn’t necessary to authorise them specifically every month, so make a note of any direct debits and standing orders on your account and always make sure you have enough in the bank to cover them – or you could face penalties and charges.
Likewise if you have sent a cheque in the post or have made a debit card payment remember that these will both take some time to process and so there will need to be enough money in your account over the next few days to cover them. If you are a regular cheque-user remember too that cheques are set to be phased out by 2018, so it may be a good idea to begin familiarising yourself with electronic forms of payment now.
5. Get something in return
Current accounts aren’t only designed for holding your money; you can also earn interest on balances that are in credit. Granted you won’t earn as much interest as you would on balances in a savings account, but if you spend most or all of the month in credit, it makes sense to earn a little back on this by getting a current account with a decent rate of interest.
However it’s best not to keep large amounts of money in a current account if you are looking to earn interest from it – make sure you have the majority in a high-interest savings account so that it’s working as hard as it can.
It's generally wise to avoid savings accounts that are linked to your current account as these are likely to command lower-than-average rates; instead you should shop around to find the best savings account for you.
6. Play by their rules
If your current account comes with conditions that require you to, for example, pay in a minimum amount every month, it’s worth making a note of this and ensuring you can meet this requirement on a monthly basis. If you have any doubts about your ability to pay in a monthly credit or stick to any other rules that come with an account, go for one that doesn’t have strict stipulations otherwise you're likely to be charged.
7. Sweep your leftovers into savings
Many current accounts come with a sweeping facility which means that any money left in your account at the end of the month will be automatically ‘swept’ into a high interest savings account of your choosing. This can be really useful in making the most of any leftover money each month and ensuring you’re getting a return on it.
If your account doesn’t have a sweeping facility, you can always perform the sweep yourself by checking how much you have left in your account at the end of the month and transferring as much as you can over to your savings account.
8. Keep in contact with your bank
It’s really important that your bank has all your up-to-date details such as your address and phone number, so if any of these change, make sure to inform your bank right away. Keeping in close contact with your bank will mean you’re always aware of the goings-on in your account. If your bank holds the wrong address for you, your statements won’t reach you, along with new debit cards when yours expires, and so on.
9. Stay on the ball
Once you’ve found the perfect current account you may want to rest on your laurels and never have to look for another current account again. However loyalty to a particular bank rarely pays, and you’ll benefit more from reviewing the market on a regular basis to see if there might be a better account available that would suit your circumstances even better.
This particularly applies if you’ve had a change of circumstances, for example if you’ve had a pay rise – if you’re able to pay more into your bank each month make sure you’re getting an account that rewards you for it.
