“I can’t seem to dig myself out of my overdraft…”
The new M&S account is hard to beat when it comes to overdraft charges. You’ll get an automatic £500 overdraft while both authorised AND unauthorised overdrafts are charged the same effective annual rate (EAR) of 15.9%, which is, in itself, pretty competitive. The first £100 of your overdraft is completely interest-free and there are no additional fees or charges for going into the red. There are more benefits to this account too, which you can read about in this Focus On.
Only First Direct’s 1st account comes close to rivalling the M&S account, offering an interest-free £250 overdraft. Authorised borrowing above this amount is charged interest at 15.9% AER. Be warned, however, that there are hefty unarranged overdraft fees if you exceed your agreed limit, including a £25 ‘paid item’ fee and bounced payment charges up to £25.
Nationwide’s FlexDirect account is also worth a look if you know you’re only going to be overdrawn for a short period. It offers a 0% overdraft for 12 months, after which fees of 50p a day apply if your overdraft is pre-agreed. However, if you exceed this limit you’ll be hit with a hefty £5 a day charge for each day you’re over, capped at £60 a month.
Remember that current accounts which charge interest only as opposed to daily or monthly fees tend to be the cheapest if you are regularly overdrawn.
“I am looking for some extras on my account…”
If you’re looking for an account with perks, your best bet is likely to be a packaged account. These accounts tend to charge a monthly fee in return for benefits which typically include travel insurance, breakdown cover, and access to preferential rates on other financial products from the same provider.
For example, Nationwide’s FlexPlus account costs £10 a month and comes with travel insurance, breakdown cover, mobile insurance and various linked products.
M&S’s Premium account also costs £10 a month and perks include £40 a year in M&S vouchers, £127 of hot drinks vouchers for the M&S café, £45 worth of treats vouchers and M&S loyalty points when you spend at the store using your debit card.
Accountholders also get access to the bank’s Monthly Saver account, which pays an impressive 6.00% annual interest before tax provided you pay in between £25 and £250 a month.
M&S offers a Premium account with insurance too, which costs £17.50 a month and provides all the same benefits plus worldwide multi-trip family travel insurance.
“I have savings and want a high rate of interest…”
These days, some current accounts pay much higher rates of interest than easy access accounts. But there are often minimum funding requirements, so read the small print carefully before you apply.
The previously mentioned Nationwide's FlexDirect current account, for example, pays an annual equivalent rate (AER) of 5.00% fixed for 12 months on balances up to £2,500, but you must pay in a minimum of £1,000 a month. Once the 12 months are up, the AER falls to 1.00%.
The TSB Classic Plus account similarly pays 5.00% interest on balances up to £2,000 with no monthly fee, and you must pay in at least £500 each month to qualify.
Lloyds’ recently-introduced Club Lloyds current account also pays reasonable returns on credit balances. Rates are tiered, so that balances between £1 up to £2,000 earn 1.00% AER, rising to 2.00% on balances between £2,000 up to £4,000 and 4.00% on balances between £4,000 and £5,000. To qualify, you must use the account as your main current account and pay in £1,500 a month, and arrange for two direct debits to come out of the account each month. You can read more on the deal with our Focus On.
Santander’s 123 account similarly pays tiered rates of interest when you’re in credit, so you earn 1.00% AER for balances over £1,000, 2.00% for balances over £2,000, and 3.00% on balances between £3,000 and up to £20,000.
You also get 1.00% cashback on your water, council tax and Santander mortgage bills, 2.00% on gas and electricity and 3.00% on phone, internet and TV. You have to pay in at least £500 a month to this account, and there is a £2 monthly fee.
Another account worth considering if you’re always in the black is the Halifax Reward account. Rather than paying interest, this account pays a £5 monthly reward. However, to qualify, you must pay a minimum of £750 a month into your account, arrange two different direct debits and stay in credit.
“I do a lot of travelling…”
Hefty charges for using your debit card abroad are the bane of many travellers’ lives, but you can keep costs to a minimum by opting for an account with low fees for overseas use.
M&S’s new current account, mentioned above, carries no charges for making cash withdrawals when you’re abroad, although there is a 2.75% foreign exchange fee on overseas spending.
Other current accounts with low debit card charges for overseas spending and withdrawals include Norwich & Peterborough Building Society’s Gold Classic current account. This has no cash withdrawal fees worldwide and no overseas spending charges. You must pay £500 a month into this account, or maintain a balance of £5,000 if you want to avoid paying the account’s £5 monthly fee.
The Metro Bank current account, which is only available from branches in London and the south-east, also doesn’t have any foreign exchange loading or cash withdrawal fees, but only if you’re travelling in Europe. Outside Europe there is a load fee of 1.9% and a £1 cash withdrawal fee.
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.