Current account fees explained
Standard bank accounts don’t generally come with a monthly or annual fee, but that doesn’t mean they are completely free.
What fees might I incur with my current account?
Your overdraft
An overdraft is a way of borrowing money from your bank or building society by dipping below £0 on your current account.
There are two types of overdraft fees:
Arranged
Unarranged
Arranged overdraft fees are the amount you are charged to go overdrawn with permission from your account provider.
Unarranged overdraft fees are the amount you are charged if you go overdrawn without permission.
ATM fees
In the UK, taking money out of a cash machine with your debit card is usually free.
Exceptions to this rule include when you use so-called “convenience” cash machines in small shops or bars, some of which charge £5 per withdrawal.
You will also be charged both a fee and immediate interest if you withdraw cash using a credit card.
Some prepaid cards have withdrawal fees too.
Withdrawing money abroad
Banks can charge fees of up to 3% for using your debit card to withdraw foreign currency from cash machines overseas, and many account providers also impose currency conversion charges on both overseas withdrawals and purchases.
If you have to withdraw money abroad, try not to take out lots of small amounts as many banks have a minimum fee.
Making purchases using your debit card is often cheaper than withdrawing cash due to the extra withdrawal fees charged.
You can also improve the exchange rate you receive by paying in the local currency rather than in Sterling.
Exchanging money before you go and using a prepaid euro or dollar card are both sensible ways to avoid overseas bank account fees.
If you want to avoid incurring charges when spending abroad, there are specialist travel credit cards that provide these services.
CHAPs and BACS payments
CHAPS payments are payments to UK accounts that are guaranteed to arrive on the same day if you make them before a certain time.
BACS payments are mainly used for direct debits and direct credits from organisations, and are typically free.
Sending money overseas
If you need to make an overseas transfer, there will be a charge, but there is generally no charge to receive money from overseas.
It's generally recommended to use a dedicated international money transfer service to avoid paying excessive fees. If you're planning on sending money abroad, compare international money transfer providers to find the best deal first.
Monthly fees for premium accounts
Some bank accounts offer extra services or add-ons such as travel insurance or breakdown cover in return for a monthly fee. These are called 'packaged accounts.'
Banks and building societies may also charge a fee for accounts offering higher in-credit interest or lower overdraft rates.
What else might I be charged for?
Stopping a cheque
Getting a banker's draft
Ordering duplicate statements