With so much choice available in the current account market, sticking with the same provider year after year could prove a costly mistake.

To work out if your current account is right for you, you need to think carefully about how you use it. Here, we take a look at the best options depending on whether you spend most of your time overdrawn, tend to stay in credit, or are looking for added benefits.

Best current accounts if you’re overdrawn

If you spend time in the red every month, then you’ll need to choose an account offering competitive overdraft rates.

For example, if you are pretty much permanently overdrawn, Santander’s Preferred Overdraft Rate account is worth considering, as it charges 0% interest on overdrafts for the first 12 months, depending on your circumstances. After that, the rate is a competitive 12.9%, as long as you switch using the bank’s Account Transfer Service and pay in at least £1,000 into your account each month.

 In contrast, if you had the Halifax Reward current account, and were in the red for an entire year, overdraft fees would cost you an eye-watering £300. The reason for this is that accountholders must pay £1 a day for using their overdraft, with no monthly cap. The account pays account holders £5 a month if they pay in £1,000 a month even if they go overdrawn, so if you were overdrawn for 30 days fees would cost you £25 once the £5 credit is taken into consideration.  Bear in mind too that if you go overdrawn by £2,500 or more, overdraft fees are charged at an even steeper £2 a day.

But if you are overdrawn less than five days a month, then the Halifax Reward account actually works out as one of the cheapest, as the overdraft charge of £1 a day for balances under £2,500 is covered by the £5 monthly credit. You also get £50 cashback when you apply for this account through moneysupermarket.com.

Top current accounts if you stay in credit

Many current accounts pay a paltry 0.1% interest if you stay in the black, so if you rarely go overdrawn it’s worth choosing a current account which will pay you decent in-credit returns.

Santander’s Preferred in-credit rate account, for example, pays 5% on balances up to £2,500 and requires minimum funding of £1,000 a month. The account is also offering a £100 switching incentive if you move, making it hard to beat.

Other accounts paying decent rates of interest include the Lloyds TSB Classic Plus current account, which pays 2.5% on balances up to £2,500 and the Lloyds TSB Classic account with Vantage which pays 2% on balances up to £2.999. You must pay £1,000 a month into each of these accounts.

Alternatively, the Halifax Reward account is well worth considering, as although you don’t get interest when in credit, you do get £5 a month if you pay in £1,000 a month, plus the £50 cashback for switching through moneysupermarket.com.

Similarly, First Direct’s 1st account doesn’t pay any interest if you are in credit, but you do get £100 cashback when you switch. You must pay in at leas £1,500 a month, otherwise a £10 monthly fee will be charged. 

Accounts with added benefits

The number of packaged current accounts, which usually charge monthly fees from around £10 to £15 and come with perks such as travel insurance and breakdown cover, has boomed in recent years.

Yet many people fail to take full advantage of the added extras and get little in return for their monthly fee. You therefore need to make sure you make the most of the benefits on offer.

The Co-operative Bank is offering new and existing customers free access to its Privilege and Privilege Premier packaged current accounts for a 12-month period, representing an annual saving of £114.

You must apply before November 20 and pay at least £800 a month into your account to qualify. The bank claims that the total value of the benefits offered with the accounts is £600. They include worldwide travel insurance, mobile phone cover and discounts on linked products such as savings accounts and personal loans.

Customers can also choose to add Safeguard, which incorporates identity theft insurance and bag and contents insurance; Traveller, which provides airport lounge passes and lost passport and luggage recovery; or Gadget, which protects portable devices and gadgets, depending on their individual needs.

Other competitive packaged accounts include the Santander Reward current account which offers £450 worth of benefits. Among these are annual worldwide family travel insurance including winter sports cover, Green Flag breakdown cover in the UK, leisure and retail discounts and commission free travel money. This account has a £10 monthly fee and pays 5% interest on balances up to £2,500. You get £100 cashback when you switch to this account.

The Halifax Ultimate Reward account costs £12.50 a month, and, as well as paying you £5 every month you pay at least £1,000 into the account, it also comes with worldwide, mutli-trip family travel insurance, AA breakdown cover, mobile phone insurance and a 15% discount on Halifax home and motor insurance premiums.

Switch now

Whichever account is best for you, don’t put off switching any longer. There’s no reason to stay loyal to your current account if it isn’t making your money work as hard as possible for you.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.