There is a wide range of bank accounts to choose from in the UK, and while options are always a good thing, this can make deciding on what will best suit your needs difficult. The following guide will explain your UK bank account options in simple terms, so you can be sure of not only making the right choice for your lifestyle, but finding a banking solution that’s as convenient as possible.
Main Types of Bank Accounts
Basic Bank Accounts
The simplest bank accounts offered by financial institutions are basic bank accounts. These differ from current accounts in that they don’t provide debit cards, cheque books and often no overdraft facility. They are ideally suited however for those with a bad credit rating or on low income, as they are easy to open and allow you to perform the most crucial banking functions such as getting money paid in and taking care of bills (including setting up direct debits and standing orders).
Current Bank Accounts
Most people have standard current accounts. These enable you to manage and run your daily finances as well as make payments using your debit card. They are similar to basic bank accounts in terms of the most important banking functions but they also offer added perks such as having an overdraft limit when funds are tight.
Packaged Bank Accounts
These are becoming increasingly prevalent and many banks will promote them to their current account customers who have a sound financial standing. Packaged bank accounts cost a set fee, which varies depending on the financial institution. The cost is justified however in that these types of accounts offer a package of additional benefits and services, which if suited to your lifestyle will save you money. You could for example be offered such perks as breakdown cover, travel insurance, mobile phone cover and pet insurance. When deciding on whether this would be worth the additional fee, it’s important to do your research to weigh whether the bonuses are cheaper as part of the package or whether it would be more cost effective to take them separately from other providers.
Choosing the Right Bank Account
The first thing you need to carefully consider when shopping for a bank account is your individual financial situation. Banks will offer a variety of accounts depending on your income, your credit rating and your circumstances. Some even have set criteria you will need to fulfil in order to use their free banking, such as paying in a minimum amount each month. For these reasons, it’s important to be clear on where you stand so you can target the offers that will best suit you.
The main benefits to look out for in a bank account include:
- A switch or debit card to easily make payments and be able to make withdrawals from cash machines as and when you need it.
- Phone and Internet banking facilities as these days we are often strapped for time so doing away with waiting in a long queue at a local branch is highly convenient.
- Good rates of interest on deposits so you can make the most of your money.
- A cheque book as another option for making payments (this can come in handy when you’re not near a cash machine or don’t have internet access).
- An overdraft facility to help cover expenses when you’re stretched a little too thin.
- A linked savings account so you can squirrel away money but have easy access to it when needed.
- Standing order and direct debit facilities so you’re regular monthly payments can be taken care of automatically.
Conclusion
With so many bank accounts offered either by High Street or Internet financial companies, you can be sure to find an account that will both meet your individual needs and make your life easier. The most important thing however is to thoroughly do your research and compare the different offers available on the marketplace. Also be sure to understand the fine print of what is offered to you so that you don’t have any disappointing surprises.
