Fat CityWith increased competition between providers hotting up resulting in more and more good deals becoming available you can be forgiven for feeling somewhat confused when it comes to choosing a current account. However remember that there is no best current account. Your income and expenditure is different from everyone elses and it is important that you choose an account that fits your own personal cashflow situation.

Despite all the changes and innovations which have taken place during our lifetime we are still really conservative when it comes to our banking requirements. Are you one of the millions of people in the UK who have remained loyal to the current account you opened with your High Street Bank when you first left school or started work? Nearly 70% of us still have a current account with the four traditional banks which are RSBNat West, Lloyds-TSB, HSBC and Barclays.

However times are changing and different banking options are starting to become available:

  • Local Banks
  • Building Societies
  • Internet Providers

Current accounts pay you Annual Equivalent Rate (AER) on your credit. The amount indicates what the interest would be if it was paid once a year. So in other words the higher the AER the more interest you earn on your credit. It works the same way for your overdraft but money is deducted.

So before you take the plunge you need to think about the way you intend to use the account. If you rely on your overdraft go for an account with a low interest rate or interest free. If you're good at staying in the black opt for one that pays credit interest on balances - a high interest rate on your credit and low on your overdraft is the probably the best combination.

Some current accounts come with tiered interest rates. Different interest rates are applied to your money according to the balance. This can mean the interest rate paid on your credit will drop once you pass a certain threshold. Similarly the interest rate on your overdraft can rise if you borrow over a certain amount.

Helen says..Choose the account that best suits your circumstances. Do you want to talk to someone face to face without being passed from pillar to post? Do you want to pay your bills online? Examine the smallprint and compare details of different accounts.

Additional Resources and Accounts Worth Considering or Looking at:
HSBC Bank Account Plus - Earn more interest on your account.