Wondering what kind of bank account you need? Current accounts and savings accounts serve different purposes – see how they work and what they can do for you.
What is a current account?
A current account is an account used for everyday banking – you can receive money and make payments. Your salary can be paid into it and you can use it to pay your living expenses and bills.
Explore more: Benefits of a current account
What is a savings account?
A savings account is traditionally used for storing any extra money you have.
Explore more: How to save money
Types of current accounts
Most banks offer standard current accounts and current accounts with extras. Current accounts with extras are sometimes referred to as packaged or reward current accounts.
- A standard current account provides debit cards, overdraft facilities, direct debit and standing order facilities, and cheque books. They don't usually charge a monthly account fee.
- A current account with extras will offer additional features such as access to higher interest savings accounts, travel insurance and mobile phone insurance. They may charge a monthly account fee.
Banks also provide basic bank accounts, which can be used just for deposits and withdrawals. These don't offer overdrafts. They may also offer current accounts designed for students or graduates.
Explore more: Choosing a current account
Types of savings account
There are several types of savings account available. The one that will suit you will depend on your savings goals, how long you want to put your money away for and whether you have a lump sum to save.
- Regular savings account give you the opportunity to put away some money each month.
- Instant access savings accounts give you access to your money whenever you need it.
- Notice accounts require you to give notice when you want to take money out.
- Fixed term savings accounts or bonds are suitable if you can put a lump sum of money away for a fixed period of time.
- Individual Savings Accounts (ISAs) enable you to earn interest tax free (up to a certain amount).
Explore more: Savings accounts vs ISAs: what's the difference?