A current account is an account with a bank or building society that is designed for frequent use. Money can be paid in and withdrawn on a daily basis, without the need to give notice. Most people receive their wages in their current account. They are also used to manage most payments for bills and to store other incomes such as child benefits etc. This is a competitive market for Banks and each bank will offer different features and benefits to try and attract customers. The main features of a current account include...

• Rate of interest paid on positive balance

• Rate of interest charged on negative balance

• Overdraft limit

• Charges on unauthorised overdrafts

• Additional incentives

There are 4 main types of current account:

1. Standard

This is the normal account offered to customers with a reasonable credit rating. It includes features such as the ability to pay and withdraw money, cheque-book, debit card, interest payments on positive balance and a pre-agreed overdraft limit.

Advantages

• No charges on balance

• Wide range of facilities including cheque book, cash card and overdraft

• Convenient for receiving payments and making withdrawals

Disadvantages

• No additional perks

• High charges on overdraft facility

2. Packaged, premium

This account offers additional features to a standard account, for example car and house insurance, credit card protection, breakdown cover and cash back on certain transactions. The bank may have additional charges for these accounts so it is important to check that you are being offered a good deal.

Advantages

• No charges on balance

• Wide range of facilities including cheque book, cash card and overdraft

• Additional perks such as holiday/travel insurance, break down cover and phone protection

• Convenient for receiving payments and making withdrawals

Disadvantages

• Monthly charge

• May not meet customer needs or provide value for money to customer

3. Basic

This account offers only limited features designed for those customers who may otherwise find it difficult to open a bank account due to poor credit ratings. A basic account will not offer an overdraft and will not pay interest on positive balances.

Advantages

• Available to customers with poor credit rating

• Easy first step for individuals to gain access to basic banking facilities (deposit/withdrawal)

• Can pay in money/cheques

• Debit Card to pay in stores

• Free to setup/use

• Direct Debits/Standing Orders can be set up

• Restricts spending as no overdraft facilities

Disadvantages

• Limited facilities (No debit card or Overdraft)

4.Student

This account is designed specifically to meet the needs of learners. Common features include an agreed overdraft limit and incentives to join the bank, for example free rail cards or cash. Banks are keen to attract learners because once a young person has joined a bank they tend to stay with that bank for life. The internet is changing this as more information and comparison sites are available and it is becoming easier to change banks.

Advantages

• Course fees and student loans can be easily handled

• Bonuses offered aimed at students (Joining bonus/ Travel discounts)

Disadvantages

• Overdraft could encourage overspending

• Charges for overspending

• Limited facilities