Stuck in a rut with your current account?

	Compare leading bank current accounts.

Most of us are savvy about our savings, quick off the mark with mortgages and clued up on credit cards so why are we completely stuck in a rut when it comes to current accounts?

Current accounts are the one thing that pretty much all of us have, the BBC reported that according to the OFT there were at least 54 million active accounts in the UK so it’s not surprising that the current account market is worth £8bn. A report released this week by the EU consumer commission found that in the UK; householders were much more likely to use their account frequently with an average of 225 transactions per account in 2007 compared with the European average of 149.

The report, which studied the pricing of 224 banks across the EU, also found that in 2007 and 2008 only 9% of European consumers switched current accounts compared with 25% of car insurance customers.

So why don’t we switch current accounts more often? Well, in addition to misplaced loyalty and the perceived inconvenience of moving direct debits and standing orders, the EU Consumer commissioner Meglena Kuneva pointed out that complex pricing and hidden charges meant that it was ‘almost impossible’ for consumers to know what they were paying  so therefore the consumer is much happier to stay with own comforting, familiar bank.

As a result of not shopping around for current accounts and regularly switching we end up losing money by sticking with a low interest rate, or more often than not getting stung with very high rates on our overdraft facility.



So what should you look for when looking for a current account?

- Incentives – there’s little to choose between most current accounts and as the EU commission report found many current accounts are so complex that most of us just stick with what we have rather than deal with the hassle but incentivized switching should make it a much sweeter experience for example, cash back incentives or free travel insurance or breakdown cover which could mean you save in other areas of your finances. However if the account offers these little extras in exchange for a monthly fee then you need to carefully weigh up how much you need these extras and if you can buy them separately cheaper. For example, there is little point purchasing annual travel insurance in a package with your current account, if you only go away once a year.


- Interest rates – in the current recession, some current accounts could offer you a better return in interest on your money, however watch out for caveats such as interest rates only on offer for a set period of time, such as 6 or 12 months or some accounts limit the interest rate depending on the amount in your account, for instance £2,500.


- Overdraft Charges - a little contentious at the moment are the amount of fees charged to an account should it go overdrawn. The European Consumer commission found Britain to be ranked the 17th most expensive country out of 27 with the average current account charges amounting to £93. The test case contesting overdraft charges has shown some current accounts will charge extortionate amounts where the customer has not agreed an overdraft limit. Some banks will let you go overdrawn by a small amount without charging, but you should agree an overdraft as normally you'll be charged interest on the amount - and a fee on top in addition to any charges for bounced cheques or direct debits. Look out for accounts that may offer an interest free overdraft or no usage fees.

- Shop around and switch -  Loyalty is not usually rewarded by your bank and by not switching you end up paying hundreds of pounds for the familiarity and security of your regular bank when there are deals out there like the Alliance and Leicester Premier Current Account which will pay you 0.50% on balances up to £2,500, no usage charges on your overdraft for 12 months which depending on your situation they will try to match to your current over draft, they have a dedicated team to switch all your direct debits and standing orders for you and they give you £100 cash back just for switching and using their switching service!

The message is clear; switch and save money, the sooner the better.

2009-09-23 10:45:33 © Moneyextra.com

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