A current account is a bank account that allows a costumer to access a range of everyday banking services, such as receiving money, paying bills, transferring money, paying things with a debit card, withdrawing cash with a debit card, setting up direct debits and standing orders to make regular payments. These accounts differ from savings accounts, which are not generally used directly for receiving and spending cash.
Choosing the best current account isn’t as simple for most of the people, because there are many types of current accounts designed for different financial circumstances. Let’s take a look at the most important information you need to know before opening a current account.
The different types of current accounts
There are many types of current accounts in the market. They have different features and each of these features affects the costs and the benefits. These are some of the main types of current accounts:
- Standard current accounts. They are very straightforward and come with a cheque book, a debit card and, usually, an overdraft facility of some kind.
- Basic bank accounts. They are similar to standard current accounts, but without a cheque book or overdraft facility and are generally aimed at customers with poor or limited credit histories.
- Student accounts. They are aimed to customers, which are in higher education, whether undergraduate, postgraduate or any kind of degree equivalent course. These accounts tend to come with interest-free overdraft and have varied limits.
- Youth accounts. They are aimed at the younger population and have limited features.
- Premium or packaged accounts. These accounts have more benefits as a standard current account, but sometimes they cost more.
- Other types of current accounts.
Current accounts fees and charges
There are various different fees and charges that all the costumers may incur while using the current account. The main fees and charges of a current account are:
- Penalty fees for any payments, cheques, or direct debits that bounce due to insufficient funds.
- Fees for using your account or associated debit card abroad.
- Monthly fees.
- Closing account fees.
- Opening account fees.
- Interest on your overdraft.
- Penalty fees for unauthorised overdrafts.
- Fees for banker’s references.
- Fees for banker’s drafts.
- Fees for duplicate statements.
These are the main fees and charges of a current account, but some banks can charge other fees.
Documents required to open a current account
There are necessary different documents to open a current account. The list of the documents depends on your unique situation and on the type of current account you are going to open. Collecting these documents beforehand, can help you speed up the process and get to the closing table sooner. Here’s what you can expect to need when you are going to open a current account:
- Photo ID, such as a passport, identity card or driver’s license.
- Proof of address, such as a telephone bill or utility bill.
- Proof of income.
- Bank statements.
- Letter from a recognised employer.
These could not be the only documents required to open a current account, so you need to be ready to provide all the documents the bank needs.
Choosing a current account that is right for you
Choosing the best current account is not a simple problem, but it’s vital for your financial health that you make the right choice and don’t get overwhelmed by the options. There are some basic things to consider and analyse before choosing the perfect current account for you. Here’s the list of what you need to do before opening a current account, so you can choose the current account that is right for you:
- Understand current account options and features.
- Understand current account costs and charges.
- Understand documents required to open a current account.
- Make a personal financial plan.
- Compare different current accounts offers.
Remember, it’s always best to have as much information as possible, before you open a current account.