How to choose the right current account

How to choose the right current account

A current account is a safe place to store your income and securely set up your direct debits and pay your bills. That’s why choosing the right account for you to open is very important.

Before choosing your current account, you need to consider what you need from your account, including the features, the benefits, the charges, and more. Take your time to consider your options because this will be the system that will be managing your money.

We have put together a guide to help you understand what you need to think about before opening a current account.

What are you using your account for?

The first thing you need to consider is what you will be using your account for. Will it be your main account which your salary is paid into and all your bills will come out of? Or is it a secondary account for trips and meals out?

If it’s your main account, you will also want to consider how you will be using it and what benefits or services will be useful to you. For example, is there a branch local to you? Would you rather conduct your banking from the comfort of your home and need a good digital or phone service? Do you need a service that will help you budget your money? As soon as you understand exactly what you need, you will be able to make a confident decision when choosing the right current account for you.

Look for interest rates

The interest rate that the account offers is also important to consider. An interest rate is a percentage charged on the amount you either borrow or save. Ideally, you would want a high-interest rate on what you save and a low rate on what you borrow. That way, you will get more money from the bank, plus charged less if you go into your overdraft.

Often banks offer a better deal on interest rates to new customers to help acquire those customers, but it will often change after the first year. The interest rates on the money you save in current accounts are also often lower than they are in a savings account. These are things you should look into and be aware of when picking your account.

Are you overdrawn?

If you often find yourself overdrawn, you may want to consider this when choosing your next account. You could opt for an account that has low-interest rates on what you borrow to lower the amount of bank charges that you receive, which in turn could help you get out of your overdraft.

You could also opt for an account with no overdraft to help you get out of the habit of using it, as well as consider an account with a budgeting app to help you take control of your finances, like thinkmoney.

If you decide to switch your current account while you’re in your overdraft, you may need to discuss this with your old and new account provider.

Consider your eligibility

Before applying for an account, you should make yourself aware of your credit rating. This should give you an indication of what kind of account you can safely apply for knowing you’ll be accepted. If you have good credit, then you can easily apply for any account. However, if you have bad credit, are unemployed, have been declared bankrupt, had a CCJ, or any other reason that may make you appear financially unreliable, then you might not find it so easy.

Many of the traditional banks will decline any applicant that has bad credit, so it is worth finding out your eligibility before you apply as each application will be recorded on your credit history. There are a few credit reference agencies that can calculate your score for you; the top three in the UK are TransUnion, Equifax, and Experian.

Here at thinkmoney, we don’t have credit checks and offer a current account to anyone to help them manage their finances with ease and get back on track.

What if I’m a non-British national?

If you are not a British national and are looking for a current account, you should still be able to get one without too much difficulty. It is your residency that is often more important than your nationality. Although, there may be a few more terms and conditions to consider and you may need to provide more documentation depending on the bank you are applying to.

The documents you will need include:

  • Proof of identity, including a passport, driving licence or national ID card
  • Proof of address, including a utility bill or a letter from a bank

What if I’m a non-British national?

If you are not a British national and are looking for a current account, you should still be able to get one without too much difficulty. It is your residency that is often more important than your nationality. Although, there may be a few more terms and conditions to consider and you may need to provide more documentation depending on the bank you are applying to.

The documents you will need include:

  • Proof of identity, including a passport, driving licence or national ID card
  • Proof of address, including a utility bill or a letter from a bank

It is also worth remembering that once you have chosen your current account, you do not need to stick to it. If you feel that it is not right for you, you can switch to another account. However, bear in mind that making too many applications can have a negative impact on your credit score.