About Current Accounts

About Current Accounts

What is a current account?

Current accounts are most often used for managing your day-to-day finances. You’re able to pay money in at any time and take money out whenever you need. Most people have their income paid directly into their current account and set up standing orders to pay monthly household bills and general living expenses such as mortgages or rent, council tax and utility bills.

Can I get an overdraft with a current account?

It’s usually possible to agree an overdraft facility with your bank on your current account and some people use this regularly each month to cover extra or unforeseen expenses. However, if you exceed your overdraft limit you can incur hefty charges, so it’s important to monitor your outgoings on a regular basis.

Will a current account come with a credit or debit card?

The majority of current accounts come with a debit card, which can be used to pay for goods and services instead of cash. You identify yourself either with a signature (which is also on the back of your debit card) but more commonly using a four-digit pass-code, known as chip and pin. The money is instantly debited from your current account so you must have the funds available (or an overdraft agreed). You’re also able to use your debit card to withdraw cash from your current account at an ATM (automatic teller machine). All high street banks have ATM machines, also referred to as ‘a hole in the wall’ and you can withdraw cash from any one, not just the bank you have your current account with. Cash should be available from an ATM any time of day or night free of charge. Occasionally some ATMs will charge for this service but must say so on the welcome screen. You’re also get a cheque book with a current account although fewer and fewer retailers will accept cheques.

Are there any disadvantages to having a current account?

The main disadvantage with current accounts is that they generally don’t pay much, if any, interest. If you’re fortunate enough to have money left from your income after your monthly expenses are paid, it’s best to move this to a savings account to receive a better return.

The market is becoming more competitive, and there are several types of current account to tempt you to switch. Some offer cash back for spending, others low overdraft charges; some have an excellent reputation for customer service whilst others may pay a better rate of interest for the first year. Whatever the deal, be sure to do your research and read the detail, as the offers may only apply for a short while.