Compare  Switching Current Accounts

A current account allows you to deposit money in a secure place with a bank or building society. You can view your balance at any time using online banking, or using an ATM machine.

Your funds are available to make purchases using a debit card, but the account can be used for many other things including paying your bills, setting up direct debits or standing orders, making transfers and earning interest.

Your choice of current account completely depends on your circumstances, though a standard current account is the most common option. You might be eligible for the following types of current account:

• Standard current account – you will have access to all the standard features of a current account including a debit card, cheque book, the ability to set up direct debits or standing orders, cash withdrawals and in some cases an arranged overdraft facility
• Packaged current account – these usually come ‘packaged’ with additional perks including breakdown cover, travel insurance or mobile phone insurance, but can come with a monthly or annual fee
• High-interest current account – you can also take out a current account with a high rate of interest, meaning you can earn money on top of your balance each month
• Student account – designed specifically for those in full-time university education, these account often come with an interest-free overdraft
• Under 18 current account – these accounts are for young people who want to start off with a personal account. For those aged between 11-16, there will often be restricted access to facilities such as an overdraft to ensure the account holder can’t accumulate debt
• Basic current account – as a restricted version of a standard current account, it allows those with a bad credit rating to access limited features and stops them from easily accumulating any more debt

There is nothing stopping you from getting multiple current accounts, though you might find this will lower your credit score as it will seem like unusual behaviour to major banks and building societies if you have too many. This could even limit your access to financial products such as credit cards, personal loans or mortgages in the future.

If your current account balance goes below zero, one of three things will happen.

1. You will dip into an arranged overdraft – you might have to pay to use it or you could have an interest-free overdraft if that perk is included with your account
2. You will dip into an unarranged overdraft – your bank might inform you of using an unarranged overdraft and penalise you through charges or daily fees
3. Your latest payment will not go through – whether it is a purchase made on a debit card or a direct debit coming out of your account, it will simply not go through and you should be notified

You should be able to switch current accounts at any time, though it’s always best to check if you’re eligible to do so.

You might have to meet certain criteria with your new account provider such as having a certain number of direct debits or a minimum amount that needs to be deposited each month. In addition, sometimes your old bank will require you to settle any overdrafts prior to switching.

With the current account switch service (CASS) you can complete the switch in 7 working days. Depending on your circumstances, the service can even transfer overdrafts if your old and new bank or building society allow it.

An arranged overdraft allows your current account balance to drop below zero, up to an agreed limit arranged by your bank or building society. You are usually expected to pay a certain fee for using it, unless you have an interest-free overdraft as part of a student account or otherwise.

A packaged current account is usually ‘packaged’ with a number of useful benefits such as:

• Breakdown cover
• Travel insurance
• Mobile phone insurance

These come as a perk of using the account but will often require you to pay a monthly fee. However, as long as you make use of the perks, you will still end up in profit at the end of the month, compared to how much you would spend on the individual perks.

A basic current account is simply a restricted version of a standard current account, particularly useful if you have a bad credit score, but you still need a current account. You often won’t have access to facilities such as an overdraft, cheque book or the ability to set up standing orders, simply so that you can’t accumulate anymore debt.

There are current accounts designed specifically for students, often with freebies or perks that appeal to someone who enrolled on a full-time university degree course. Depending on the bank or building society, you might also be able to open a student account if you’re studying part-time.

The account usually comes with an arranged interest-free overdraft with a large limit to use for the duration of the time you are a student. Once you stop being a student, the student account will be converted into a graduate account or a standard current account, depending on the account provider.

If you’re aged between 11-16, chances are you will need a parent or guardian’s permission to open an account. A young person’s current account is often restricted so it’s difficult to accumulate debt, and is simply a secure place to store money and spend with a cash card when necessary.

If you’re aged between 17-18, you might be granted further access to a debit card and a cheque book depending on the bank or building society.

There are plenty of current accounts that will allow you to apply without having a credit check, but these are usually basic current accounts that have restricted access to a lot of facilities such as an overdraft, cheque book and the ability to set up standing orders.