Choosing a bank account

Current accounts are the most common type of bank account and are designed for everyday use. See how they work and what different types are available.

What is a current account?

A current account enables you to manage your day-to-day spending and income. With it you can:

  • Pay household bills and set up Direct Debits or standing orders to make regular payments
  • Receive money such as your salary, pension or benefits payments
  • Withdraw cash from cash machines and pay for goods and services with a debit card

Most current accounts also offer an arranged overdraft facility that you can use to borrow a small amount in the short term if you go overdrawn.

You can manage a current account online or through your bank’s secure mobile app. You may also be able to set up text alerts to warn you if your balance drops below a certain level.

Explore more: Banking terms you need to know

Different types of current account

Choosing the right account depends on your circumstances and the features you want. These are the most common types of account:

Standard current account

This is the most straightforward way to manage your money. It comes with a debit card, chequebook and usually an overdraft option.

Standard bank accounts won’t have any monthly account maintenance fees, and interest rates tend to be low.

Basic current account

Basic current accounts are a stripped-back version of standard current accounts.

These accounts usually offer the same basic services you get with a standard account, but without a chequebook or arranged overdraft facility. There are also sometimes restrictions on how much you can withdraw from cash machines in a single day.

Packaged current account

For a monthly fee, you may be able to benefit from a range of added extras that you wouldn’t get with a standard current account. These can include breakdown cover, mobile insurance cover, retail discounts and interest-free arranged overdrafts facility. Fees typically range from £2 to £20 a month.

Before opening one of these accounts it’s advisable to work out whether they will be cost-effective for you. For instance, if the account comes with free travel insurance and breakdown cover but you don’t drive or go away much, it may not be worth your while.

Student bank account

Specialist student bank accounts are designed to help those in further education manage their finances and access larger arranged overdrafts offer, which are usually interest-free. Most accounts also offer perks such as free railcards, vouchers and retail discounts. Don’t be too swayed by the freebies though – it’s more important that the account is financially right for you.

Once you finish your education, your student account will usually automatically transfer to a graduate account. 

How do you switch bank accounts?

The Current Account Switch Service has a 7-day switch guarantee, which means your new bank must arrange for all your existing incoming and outgoing payments to be transferred to your new account within seven working days.

Any payments sent to your old account by mistake will be indefinitely redirected to your new one, if required, ensuring none of your regular payments will be affected because of a switch.

Explore more: How to switch current account