It does not matter who you are, there will probably come a time when you will need to consider opening a current account. This is generally a straight forward process, but a lot of people fall into traps because they have no prior knowledge of what current accounts are and what they should be looking for.
What Is a Current Account?
A current account is a simple account where you store your day-to-day money. Most people will be able to open a standard current account, the majority of which will offer a chequebook and a cash card, making it easy to get to your cash and spend as much as you want. Standard current accounts will also allow BACS payments, so you can receive transfers of money into your account. Some may also offer the ability to use an overdraft so you can borrow if you need to. Moreover, by keeping money in a current account you can gain interest (the percentage increase of a value of your money).
Most banks and building societies offer basic accounts (for those with poor credit history or those who need to watch their spending) which usually just offer a cash or debit card and does not let money leave your account without checking its balance first.
Features and Limitations
A particularly common feature is Direct Debit. This is the method of transferring money from bank to bank – this saves time on writing out cheques and having to deal with cash. It pays directly out of your account and is safer and can help you budget more effectively. Most standard current accounts will also offer a cash (ATM) card, a chequebook and a cheque guarantee card and some also allow you to set up standing order (arranging for a set amount of money to leave your account over a period of time).
Some accounts may want you to meet certain conditions, they may require you to pay in a minimum amount per month and limit how much you can withdraw per day (for example to £250 per day). Some may also force you to make a minimum amount of transactions over a certain period of time.
Why Should I Have a Current Account?
It is difficult to survive in these times without a basic banking facility. It allows you to keep track of your cash and offers you good incentives. It also allows you to purchase over a counter with a card, over the internet and also over the phone. You can also earn interest, which you cannot do if you simply work in cash all of the time. Lastly, it is normally a prerequisite to getting a job that you have some form of bank account so you can be taxed.