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How to choose the right bank account

Find out how to choose the right bank account for you. This could be whether you’re trying to decide what type of account best fits your needs or you want to know which account features you should compare. Or you might be considering switching your bank account.

Choose the type of account that suits your needs

Current accounts

Most people use a current account with a bank or building society to manage their day-to-day money.

It allows you to:

  • pay bills by Direct Debit or standing order
  • receive automated payments, such as salary, wages or benefits
  • have an overdraft, although the bank will need to authorise this
  • pay for things with a debit card and withdraw money from cashpoint machines.

To help you manage your money, you can:

  • use the secure bank app, to check and make payments
  • set up text alerts, to warn you of a low balance.

If you’ve dipped into your overdraft in the past, make sure you check fees and charges for going overdrawn.

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If you have difficulty opening an account with a bank or building society, it’s worth considering a credit union current account.

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Packaged current accounts

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Some current accounts offer extra features, which they charge a fee for. This can be as much as £25 a month.

These are known as packaged accounts.

Extras include:

  • special offers, such as preferential interest rates on overdrafts
  • car breakdown cover
  • insurance cover, such as travel or mobile phone insurance
  • extra services.
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Fee-free basic bank accounts

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A fee-free basic bank account might be worth considering if you can’t open a standard current account. This could be because your credit rating is low or because you haven’t got a credit history.

When you’ve had a fee-free basic bank account for a while, a bank might offer you a current account.

A basic bank account doesn’t have an overdraft facility, but it does allow you to:

  • pay bills by Direct Debit or standing order
  • receive payments such as salary, wages or benefits.
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Jam jar budgeting accounts

These accounts are sometimes called budgeting accounts or rent accounts. They’re designed to help you budget.

High-street banks rarely offer these accounts. Instead, you’ll have to apply via a credit union or your housing association.

Often, there’ll be a fee for these accounts of around £3-£15, although your housing association might pay it for you.

A jam jar account lets you divide your money into different ‘pots’ or ‘jars’.

You decide how much money goes into each pot. You do this by working out how much you need for your bills and how much is left over for spending or saving.

They also allow you to:

  • pay bills by Direct Debit or standing order
  • receive payments such as salary, wages or benefits.

A jam jar account might be right for you if:

  • you want an account that helps you to budget
  • you want to avoid charges for refused Direct Debits
  • you rent a council or housing association property – in which case your landlord might pay the monthly fee for you.
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Bank accounts for students and graduates

Most banks offer a specific student account, usually with an interest-free overdraft up to an agreed amount.

Banks often offer attractive accounts to graduates to try to secure them as long-term customers.

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Bank accounts for prisoners or people with convictions

If you’re in prison or have a conviction, you might be able to get a basic bank account.

Banks don’t have access to criminal records. But they do have systems to detect applications from people who have a record of fraud or related illegal activities.

All banks and building societies can reject applications from people who have a record of fraud.

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Comparing account charges and features

Fees, charges and overdraft costs

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Fees can vary a lot between banks and accounts, with one of the highest fees being charged for going over your agreed overdraft limit (if you have one).

Did you know you could save hundreds of pounds with an account that better suits your needs? If you regularly spend more than you have in your account, choose one that will give you an overdraft up to an agreed limit without charging fees and/ or with a low interest rate.

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Interest rates on credit balances

If you’re careful about your spending and never go overdrawn, have a look at the accounts that pay interest on your credit balance.

However, if your earnings are on the low side and you do sometimes use your overdraft, don’t pay too much attention to the credit interest. Focus more on the charges instead.

Incentives

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Many banks offer deals to attract new customers, but check if there are strings attached.

Look beyond any short-term offer and make sure that, when it ends, the account will still be the best for you.

Deals include:

  • a cash incentive
  • higher interest for a period
  • a monthly credit of usually around £5.

Customer service

You can use the Which? quality rating customer score to find the banks with the best customer score.

The rating takes into account things like service performance and dealing with complaints. This will help you find a bank that suits you.

Decide how you want to deal with your bank

Do you like dealing with a person in a branch? Or would you prefer the convenience of telephone or internet banking?

Not all banks will have a branch near you or let you have internet access to your account, for example.

When you’re looking for the right account for you, check how the bank lets you use it and which ways are important for you:

  • Telephone banking
  • Internet banking
  • Smartphone app
  • Cashpoint machine near you that’s free to use
  • By post
  • Via your local Post Office
  • Branch service – if you like going into a branch, choosing a bank you can easily get to will be important.

Compare different accounts using comparison sites

Comparison websites can be a good starting point for anyone trying to find a current account tailored to their needs.

Use our Bank account fees and charges comparison tool to see all the fees and charges that apply to bank accounts – it shows everything from overdraft fees to foreign cash withdrawal charges.

Here are a few websites that compare current accounts:

In Northern Ireland, you can also use the Consumer Council’s Current Account Comparison Table

Be aware that comparison websites won’t all give you the same results. So make sure you use more than one before deciding.

It’s also important to do some research on the type of product and features you need before making a purchase or changing supplier.

Is it worth switching your bank account?

If you’re unhappy with the service you’re getting from your current bank or building society, it’s easy to change.

Your new bank will do the work for you and there’s no need to deal with your old bank.

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It takes just seven working days to switch your account under the Current Account Switch Service. Almost all banks and building societies offer this.

You choose the date you want to switch, and agree this with your new bank.

They’ll arrange to move all your incoming and outgoing payments to your new account.

It’s backed by a guarantee that means you’ll be refunded any interest and charges on your old and new accounts if anything goes wrong.

Find everything you need to know about switching bank account on the Current Account Switch Service website

If switching isn’t for you, there still might be steps you can take with your existing bank account to minimise fees and charges.

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If you’re claiming Universal Credit

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
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