SimplyFinance - Current Accounts

Unique Current Accounts

2007-08-16T23:00:00Z

A current account in the UK allows you to maintain a line of credit with the issuing bank, and it even allows you to withdraw money from ATMs affiliated by the issuing bank. Current accounts from different banks have certain features which may distinguish them from current accounts of competitors.

Unique Features of Current Accounts for Muslims

Lloyds TSB is one bank which allows Muslims to maintain current accounts in line with Shariah Law, also known as Islamic Law. Shariah Law requires any Islamic account to be free from interest charged on credit or debit transactions. Thus, Lloyds TSB avoids using funds deposited by Muslims in current accounts to earn interest in its investment activities.

The reason Shariah Law forbids the charging of interest on current accounts owned by Muslims is because in the time of the Islamic prophet Mohammed, many people earned huge profits from lending out money at usurious rates. This is why the Prophet taught that it is immoral to earn interest from other people. This law covers not just current accounts but other bank accounts as well (at least at Lloyds TSB). It is often availed of by Muslims who reside in the United Kingdom.

Unique Features of Current Accounts In Other Banks

Another UK bank, First Direct, imposed an annual fee of 120 British pounds on current account holders in 2006. According to First Direct chief executive Chris Pilling, the bank imposed the annual charges because of the huge number of dormant accounts and relatively inactive accounts under the jurisdiction of the bank, which cost money to maintain. For current account holders who wish to dodge paying this hefty annual fee, they must deposit a minimum of 1,500 British pounds per month in salary into their current account, or keep the same amount in their current account as average balance for the month. If they fail to do this, they will be charged the annual fee.

Other UK banks said they would still maintain free current accounts after the First Direct policy came out, though they did not rule out the possibility of charging for current accounts in the future.

If you'd like help finding the best current account for you, take a second to fill out this simple questionnaire, and a representative of SimplyFinance will contact you and introduce you to a financial institution representative that will answer any questions you may have about current accounts before they search to find the best current account for you.

CLICK HERE TO APPLY FOR A CURRENT ACCOUNT TODAY!

Finding the Best Current Account

2007-08-16T23:00:00Z

To go about finding a current account, you need to keep in mind certain basic criteria that will help you find the best current account for you:

Determine the interest rate – The balance of the credit available in your current account will fluctuate based on how much interest you will earn from maintaining that current account. Compute for the average balance you generally maintain from month to month. The majority of UK banks will permit you to transfer funds from your current account to a high-yielding savings account, if you prefer that. Online current accounts allow this to be done quite easily. Other UK lenders even have a stipulation that a certain amount from your current account will be deposited into the higher-yielding account at a certain time.
Be aware of charges for overdrafts – Overdrafts mean you have withdrawn more money than is actually available in your current account. When you do this, you might incur charges from your bank. Unauthorised overdrafts are particularly expensive to absorb. Some lenders permit you to increase the limits of the amount by which you can be overdrawn though.
Find out if online banking services for current accounts are available 24/7 – There are certain banks who turn off their online banking services at graveyard hours (like, from midnight to 6 or 7 am) so that they can have maintenance work done on their online banking system. Night owls who prefer to bank online at night may find this inconvenient for them, so be sure to ask about this before you agree to house your funds at a given bank.
Ask about online statements - Ask if the bank will provide bank statements online on a continuous basis. Some lenders do supply online bank statements but only for a certain period. Other banks only post online bank statements for the current month. Be sure which applies to you.
Find out about online bill payment - Ask if the bank allows online bill payments using funds from your current account. Most banks even provide an automatic bill payment option to take the burden of having to remember to pay your bills each month off of you.
Look for a bank that permits you to manage standing orders via the online banking system. If you opt for a direct debit arrangement, do not forget to finalize the direct debit arrangement with the company you will be paying.
Is the bank service oriented? When you ask many questions about their banking services (including those to help in finding the right current account for you), are the staff polite and knowledgeable, or do they act like they prefer that you leave them alone? Little things like this are warning signs that maybe you should try finding the right current account for you elsewhere.
Does the bank operate wrap or aggregate accounts? This service allows the bank to post all your online accounts (including current accounts) on the same webpage of their online banking service. This makes online banking quite convenient because you only need to remember one username and one password to access all your accounts. However, if someone with malicious intent manages to get that username and password set, they will have unlimited access to all your online accounts. So if you request for the wrap or aggregate accounts service, be prepared for this risk.
If you are a student, it may be advantageous for you to get a current account which is called a student account. You should be concerned primarily about interest rates and borrowing limits offered in the student account.

Other Aspects of Finding the Right Current Account for You

Overdraft charges – Usually, charges are deducted from current accounts when you are overdrawn. In that case, your lender may charge you either a penalty fee, more interest based on the amount of your overdraft, and/or another fee for cheques, direct debits, or standing orders that are sent back.
Access charges – If you use your current account via the international banking system, your lender might issue a charge for this as well. This may apply if you a) rely on a debit card to get cash from ATMs overseas, b) use travelers cheques to buy items, c) exchange British pounds from your current account into foreign currency, or vice versa, or d) cash a cheque from foreign banks.

Finding the right current account for you takes knowledge, patience, and sometimes a bit of luck as well. Take your time when deciding which account to go with, so that you know you'll be getting the best deal available.

If you'd like our help to find the best current account for you, take a second to fill out this simple questionnaire, and a representative of SimplyFinance will contact you and introduce you to a financial institution representative that will answer any questions you may have about current accounts before they search to find the best current account for you.

CLICK HERE TO APPLY FOR A CURRENT ACCOUNT TODAY!

Current Account Basics

2007-08-16T23:00:00Z

As part of discussing the basics of current accounts, let us define what a current account is (in UK banking circles.) A current account is simply a type of bank account that you place money in for an undetermined length of time. You (the account holder) still own the rights over that money deposited in your current account, but the bank will allow you to have a line of credit whose value is equivalent to the amount of money you deposited in the current account. Thus, your current account does not actually contain any money (meaning, cash) but instead your current account acts as a credit line extended by the bank.

How to Use a Current Account

The bank has a legal obligation to provide you with a means to access that line of credit, and that means is usually a cash card or debit card. These are two different types of cards. A cash card permits you to withdraw cash from your current account via the ATM (automated teller machine). A debit card, on the other hand, can be used for electronic shopping which means you allow the retailer to deduct the amount you spent on your purchases from your current account. A debit card can only be used if the amount (or line of credit) present in your current account is sufficient.Many banks now offer internet banking along with the current account service. The internet banking option will permit you to use your internet access to conduct various banking services (including paying bills, opening new accounts, and checking the balance of funds remaining in your account.) Another option that is provided with your current account is the telephone banking service.

More Current Account Basics

There are banks which provide a cheque book when you open a current account with them. With a cheque book, you have the authority to write a cheque representing payment for a particular expense. The amount on the cheque will be honored by the retailer if you have sufficient funds in your current account. To clarify it further, the retailer will deposit the cheque you signed in his own bank account, so his bank has the responsibility of checking if you have enough credit in your current account for the payment you owe the retailer. If you do not have enough funds (or credit) in your current account for the payment represented by the cheque, then the cheque you issued will bounce, and it will be returned to you. You then have the responsibility of making payments to the retailer in another way, and you'll be responsible for paying the NSF fees to your bank (non-sufficient funds).

Dormant Current Accounts

If you have not used your current account for quite some time, you must be careful that it is not classified by the UK government as a dormant account. Some people apply for a current account, use it for awhile, then forget all about it (for whatever reason.) Other people who own a current account may die, with their relatives and legal representatives being left in the dark about the existence of the current account. National Savings & Investments deems current accounts that have not been used for at least 15 years as dormant accounts. A current account is also considered dormant if you have failed to notify the bank in writing or in person about what you intend to do with your current account, for a period of time. If your bank discovers that you have a dormant current account with them, rules dictate that the bank should notify you in writing at the last known address you left with the bank. However, if the bank finds its letter to you returned, unopened, then the UK government has the right to declare your current account to be a dormant account. At that point, the UK government will try to assert ownership over the balance left in your current account.

Current Accounts and the UK Government

At present, the UK government requires an Act of Parliament before it can assume ownership over funds left in dormant current accounts. This Parliamentary decision will most likely be realized by 2008. The good news is, if the owner of the dormant current account is still alive after the UK government takes over his account, he can still claim ownership over it later (if he has enough evidence of ownership).

Reactivating Dormant Accounts

If your current account has been deemed dormant by the bank, you can still re-activate it by presenting your passbook and a valid form of identification to the bank representative. There are UK banks which are now actively trying to get the attention of the owners of dormant current accounts. If the owners do not reply, the government will be able to use the funds.

CLICK HERE TO APPLY FOR A CURRENT ACCOUNT TODAY!