We look at what factors you need to consider when choosing a current account.
Did you know that we are more likely to divorce or move house than change current accounts? It's true! Most of us open our first ever bank account in our teens and then we stick with it forever and ever and ever. Why?
Nevertheless, if you have decided to take the plunge then how do you choose the best current account for your needs? Start by considering the features you want from your current account, like interest rates, charges, online availability and compare current accounts from there. All Fools will have different criteria when looking for a current account but, to give you an idea, here are some that you might want to consider.
Interest Rates
What rate of interest is paid on credit balances in your current account? This is important if you're normally in credit from month to month, so try to estimate your typical average balance. Most banks will allow you to move money from your current account to a high-rate savings account whenever you like - this is particularly easy to do online. With some, you can even request that any funds over a certain amount are automatically transferred ("swept") into another account to earn more interest.
Charges
It's obviously not very Foolish but, sometimes, overdrafts are necessary. If you think you'll need to go into the red fairly often, you should consider the charges for being overdrawn. And if you occasionally find yourself facing a really dire month, check the rates for unauthorised overdrafts, as these can be truly astronomical. (Best to phone them to ask for an increase in your overdraft facility in this situation, eh?)
Hours of Operation
Are you a night owl? Most online banks claim to operate 24 hours a day, 365 days a year. However, they generally go off-line in the dead of the night to do upgrades and things. Some banks actually close from midnight to 6am. If this is when you're likely to want to do your online banking or telephone banking, then these won't be for you.
Bank Statements
Do you look at your bank statements? Would you, if they were available online? Some banks offer online statements going back for several months, while others only offer the current month's transactions. Think about which you'd prefer.
Paying Bills
Your telephone bill lands on your doormat, but it's not due to be paid for two weeks. Will you remember to pay it on time, or would you rather set up a payment to be made in two weeks' time? Most - but not all - online banks offer a "bill payment" facility. However, if you tend to pay all your bills by direct debit, you don't need to worry about this.
Standing Orders & Direct Debits
Do you want to be able to set up, amend and cancel standing orders online? Not all of the online banks allow you to do this. With direct debits, bear in mind that they have to be set up with the company you're paying so, although you can cancel them by contacting your bank, you also need to contact the payee companies to notify them of alternative arrangements.
Efficiency & Service
Do you remember the "Chance" card in Monopoly that says "Bank error in your favour, collect £200"? Unfortunately, the reality is rather different! When a bank error favours you, the bank invariably spots it and takes the money back, so it's clearly important that your bank is efficient enough not to make mistakes. Unfortunately, it's difficult to know who is good and who is bad in this respect, but you can get a rough idea of how efficient the banks are by contacting them. Did you get polite and prompt responses? Are the features on their online banking website easily accessible? Is the online banking website fast or slow? If service is important to you, make this one of your top criteria.
Monthly Fees
It looks like monthly fees for current accounts could be on the way back. First Direct recently announced that it was introducing a £10 monthly charge for people who don't deposit at least £1,500 into their current account each month or maintain at least a £1,500 balance all month or have another First Direct product. It remains to be seen whether other banks will follow its lead.
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