Which current account is right for you?

For some reason most of us seem strangely reluctant to switch bank accounts. Whether through laziness, apathy or some misguided sense of loyalty even those self-professed ‘rate tarts’ out there are considerably less likely to change their bank account than they are to flit between the multitudes of 0% credit cards on the market.

It’s a shame really; chances are if you’ve stuck with the same account for a while you could probably find a better deal in the current market. The big high street banks are currently able to rely on this customer apathy and get away with offering seriously uncompetitive deals.

A brief scout around the market will reveal a wealth of highly competitive accounts offering everything from high interest rates to interest free overdrafts. So perhaps now’s the time to seriously think about making a change. If you’re put off by the thought of a long winded transfer don’t be – these days switching accounts couldn’t be easier, especially since banks have been able to transfer existing direct debits and standing orders to your new account for you.

So which account should you be switching to? Well, to some extent it depends on what your finances look like at the moment. If you’re generally in credit then you should be looking for accounts with a competitive interest rate. Top of the pile at the moment is the Abbey account which pays a very healthy 8% for the first year – a rate which actually trumps most savings accounts and exposes just how stingy many of the top current accounts are (Barclays, Natwest and RBS current accounts all offer  0.1%). Also impressive are the Halifax and A&L bank accounts which boast 6.17% and 6.5% respectively. One thing to keep in mind when considering these rates however is that they tend to be introductory rates, the Abbey account for instance will revert to 2.5% after the first year.

You should also consider how much you typically have in your account; the Abbey and A&L current accounts only offer their advertised rates on balances of up to £2,500 whereas the Coventry BS account pays 6.35% on balances up to a whopping £250,000. Having said this open an A&L account and you’ll be eligible for their exclusive 12% savings account – you could easily shift any money you don’t need to regularly access into this.

If you’re bank account is typically overdrawn then high interest accounts obviously aren’t going to be much use to you. Instead you should be looking out for low interest overdrafts. Again the A&L account is hard to beat, offering 0% on your overdraft for a whole year. If you’re struggling with an escalating overdraft this could be extremely handy in cutting out those niggling interest charges and getting your finances back on track.