Current Accounts

A current account gives you a secure place to keep your money on a day-to-day basis. Although most people use their current account purely for incoming and outgoing funds, banks will pay you interest on your money if you keep your current account in credit. So what features should you expect from a current account? Standard current accounts will give you a cash card and a chequebook to enable you to access money and make payments whenever you like. Some current accounts will also offer you an overdraft facility, which is effectively a loan from the bank to enable you to temporarily spend more than you have available in your account.

To help you to manage your money, most current accounts give you the facility to set up BACS (short for Bankers' Automated Clearing Systems) transfers to send and receive money, direct debits and standing orders, where you arrange for money to be paid from your account on a set day each month to pay rent and bills. The majority of the larger banks allow you to manage your current account online, and automating all of these transactions makes financial management much easier. As with any financial product, there are good value current accounts that offer you useful features and a decent return, and there are those that do not offer such a good deal. It's important to shop around for the best deal, bearing in mind what it is that you need from a current account. If you are likely to be regularly overdrawn, you need to look for an account that charges you a reasonable interest rate to use the overdraft facility. On the other hand, if you known that you will keep the account in credit and will add to the balance regularly, it's in your interests to choose a current account that pays you the best interest rate.

Features of a Current Account

• Cash Card. These days, most current accounts will provide you with a debit card that you can use to pay for goods, with the money debited directly from your account.  However, it is worth checking that the card you are offered allows card payments, because some will only let you withdraw money from ATM machines or bank branches.  Although this would help you manage your money, because you have to physically withdraw everything that you spend, it is less secure to always carry cash on your person.
• Withdrawal Limit.  Most current accounts will set a limit on the amount of money that you are able to withdraw from your account in a day from an ATM machine.  Usually you can withdraw a greater amount if you go into a branch and show some identification.  This is a security measure, but means that you need to plan ahead if you will a large amount of cash.
• Overdraft facility.  Most people don't think of an overdraft facility in this way, but it is in fact an unsecured loan from the bank.  Because you are borrowing money, the bank will charge you interest.  However, current accounts usually have a free overdraft limit, and as long as you stay within this, you will not be charged any extra on your account.