Make sure you use a current account that suits your needs
Analysis of eight Banks by moneysupermarket.com has found that only two out of eight current accounts pay interest on balances in credit, meaning customers will need to look beyond rates to get the most out of their account.
Consumers should check which current account best suits their needs, whilst also taking advantage of added benefits such as the cash bonuses currently on offer. For example, the Preferred In-Credit Rate Account from Santander is not only offering a £100 switching incentive, but it also pays a market-leading interest rate of five per cent for the first 12 months on balances up to £2,500. The Reward current account from Halifax offers a cash incentive of £5 a month and further £50 cashback, when you switch at moneysupermarket.com. First Direct also offers a £100 switching incentive and has a fairly low authorised overdraft rate of 15.9 per cent EAR for its 1st Account.
If you tend to go into the red, the cost of being overdrawn is another really important consideration when comparing current accounts. RBS and Natwest have recently adjusted their overdraft fees to simplify the charging structure for customers. Whilst simplifying charges is good news, consumers should always work out how they will use their account, as someone overdrawn by just £7 for a week with an RBS or Natwest account could end up paying £6 per day in charges - that would be £42 in total.
Kevin Mountford, head of banking at moneysupermarket.com, said; "Many consumers are reluctant to switch their current account as they feel it's a complex process giving little benefit. In fact, the switching process is fairly straightforward and these days, most of the main banks have dedicated switching teams to ensure the transfer take place swiftly and smoothly. There are also a number of added incentives available at the moment as banks try to encourage more people to switch their current account such as an extra boost of £100 cash - a nice extra sum at a time when we are all watching the pennies.
"However, the main thing to understand about current accounts is that one size does not fit all and people will need different things from their bank account depending on their individual circumstances. Where possible consumers need to plan effectively to avoid going overdrawn, but for those who regularly use their overdraft a pre-authorised overdraft will be cheaper than slipping into the red without prior authorisation from their bank. Even authorised overdraft costs vary though so it's important to check the typical EAR rate being offered.
"It is worth looking into the finer details when deciding which current account to switch to. Whilst one consumer may be interested in the authorised or unauthorised overdraft rate, others may need a current account provider that is open 24 hours a week, or requires that their current account provider has a UK call centre. Whether it is good customer services, high in-credit rate, or low overdraft fees, the benefits of switching to a current account to meet your needs is essential.
"Those with larger sums of money languishing in their current accounts which offer no return should move it into a savings account with a better rate of interest. At a time when every penny counts, there really is no excuse for letting your cash languish in a current account that pays zero interest."