Which current account should you get?

Many of us choose a bank account when we’re teenagers and then end up sticking with that provider for life. But having an account that’s well suited to your specific needs can save you money on fees and charges and also maximise any interest you earn.

There are many factors to consider, including overdraft rules, customer service scores, associated savings accounts and even perks, such as cashback, Airmiles, insurance and cinema tickets. Plenty of banks offer a switching bonus these days, which means changing providers can earn you some cash. 

Here’s everything you need to know about choosing the right bank to ensure your current account is right for you.

If you always have money in your account

If you usually have a positive balance and don’t use your overdraft often, you could get:

• A high-interest account that pays you interest on your balance, usually monthly or annually. Some current accounts pay more than savings accounts, but they typically limit the amount upon which they pay interest.

• A reward current account that gives you benefits in return for your spending, like cashback when you use your debit card.

• A current account that comes with high-interest savings. Several banks will let you open savings accounts that pay higher interest than you’ll find on the high street if you also bank with them. Here is how to work out if a savings account or current account is right for you. 

If you need an overdraft

Overdrafts are typically an expensive way to borrow money – and they are designed for extremely short-term borrowing or to be used in emergencies. 

New rules have scrapped fees and say that banks must provide one simple interest rate for their customers. Providers also can’t charge you extra interest or fees if you go over your limit into an unauthorised overdraft.

The changes are designed to make things simpler for people in debt, but as a result, most banks have increased their interest rates substantially for all customers. This includes those people that occasionally dip into their arranged overdraft. The vast majority of providers now charge 39.9% - a sharp increase since the regulations changed. 

While you won’t face extra fees anymore, using your overdraft every month or breaching the limit suggests you can’t live within your means. This can be a red flag to financial lenders such as mortgage providers. Our budgeting guides can help you cut costs, pay off debt and keep your overdraft for emergencies only.

Now that there are no fees and most providers charge 39.9%, there’s not much to differentiate banks from each other regarding overdrafts. Some such as TSB offer an interest-free amount, and others, including Monzo and Starling, have lower rates.

If you want extras with your account

Packaged bank accounts cost a monthly fee but also offer extras including financial products and other perks. Things to check for include:

• Breakdown cover

• Mobile phone insurance

• Travel insurance

• Home contents insurance

• Savings accounts

• Cinema tickets or magazine subscriptions

• Cashback

• Vouchers

You could save money and time if you find one with extras you need, but they sometimes work out more expensive than getting cover separately. Here is how to work out if a packaged account suits you.

If you share an account with someone else

Joint accounts allow you to name more than one person on an account, meaning it’s easy to share money and pay joint bills. They’re common among couples, particularly those that are married or own a home together - but they’re also growing in popularity for housemates. 

You should think carefully before opening a joint account as it means your finances will be linked to another person. This means that if they get into personal debt, it could affect your credit rating. If you’re buying a house with someone, you’re financially linked anyway, but if they’re university flatmates think twice before going down the joint account route.

Some banks only allow transactions if they are approved by every account holder. However, most allow anyone to make withdrawals, set up bill payments or make changes to the account. This means you should only share a joint account with someone you trust.

Compare joint bank accounts

If you have bad credit

Basic and prepaid bank accounts offer fewer features than other current accounts but could accept you even if you have bad credit.

Anyone can apply, regardless of their credit score, but you do need to be able to prove your identity and have a permanent address in the UK.

They do not offer overdrafts, so you can only spend money you have already paid into the account. However, you can:

• Have your wages paid in

• Withdraw cash and make payments using the prepaid card that comes with them

• Set up direct debits and standing orders to pay bills

Compare basic bank accounts

If you are under 18

There are many bank accounts that children and teenagers can open, and they offer most of the same features as adult bank accounts, including:

• Receiving payments like wages or bank transfers into your account

• Paying for things or withdrawing cash using a card

• Paying bills by direct debit or standing order

They do not offer overdrafts and come with different age limits, but you should be able to find an account if you are over 11.

Compare teenagers' bank accounts

If you are a student

Student current accounts offer a range of freebies like cheaper train tickets, gift vouchers, discount cards and cash rewards. All of these are worth considering when choosing an account.

Some accounts come with an interest-free overdraft that lets you borrow money for free while you are studying. Picking the best overdraft could save you more money than the freebies you can get are worth, so weigh up your options carefully.

Student overdrafts are usually interest free for several years, so you can pay them back after you finish your course. But be warned after the offer expires you will be charged interest.

If you run a business or charity

If you look after the finances of a business or a charity, you could open a current account to receive incoming funds and make payments to cover things like bills.

Instead of opening an account in your own name, you can instead open a:

• Business bank account

• Charity bank account

This helps you keep track of your business's or charity's money, and keeps it separate from your own income, spending and tax.

Compare business bank accounts

If you want to use your account online

Most bank accounts can be accessed and managed online, which allows you to:

• Transfer money between your accounts

• Check your balance or statement

• Send money to other people

• Pay bills to companies

• Send secure messages to your bank

Online banking is available 24 hours a day and is useful if you are unable to get to your bank's branches during their opening hours.