We show you how easy it is to save money simply by switching your current account provider.
With many banks paying pittance in interest and charging extortionate overdraft fees, unless you've recently reviewed and updated your current account there is a good chance that you could save a significant amount of money by switching. Consider this, if you have stayed with the same account for years, at the best you could be lending your bank money virtually interest free and at worst you could be paying horrendous overdraft fees or shelling out monthly for benefits you don't even use.
How to find the account that will save you money
Unfortunately there is no such thing as a ‘one-size-fits-all’ current account. Instead, getting the best deal is very much down to matching account features available to your financial lifestyle. For this reason, before you even start comparing different current account options, it’s important to take an honest look at how you manage your finances.
To do this it helps to gather your last few month’s bank statements together and work out whether you spend most, some, or almost none of the month in credit (with a positive balance). This will help you to determine whether a high interest current account or one that offers a cheap overdraft facility will be more profitable for you.
High interest accounts
Thanks to fierce competition between financial providers many are now offering current accounts with incredibly competitive rates of interest, some even beating ‘best buy’ savings accounts hands down.
If you rarely carry anything less than a positive balance in your current account, taking advantage of these returns will really help you to maximize your money’s earning potential. Simply by switching to a high interest paying account you could save up to £60*.
If you can resist the temptation to spend, make the most of your current account’s attractive rate of interest by scheduling regular payments to be debited later in the month. This means your money will be sitting, accumulating interest, in your account for longer.
Most accounts only offer a high interest rate on limited balances (usually capped to around £2,000, give or take) so if a sweeping facility is available it definitely pays to use it. This is a service offered by an increasing number of banks and is designed to automatically ‘sweep’ any excess cash from your current account into your savings account each month, helping your money to work as hard as possible for you.
To set this up you will need to specify both a sweep date and the minimum balance you’d like kept in your current account (if you’re likely to carry a balance greater than that eligible for the higher interest rate it makes sense to fix it at this limit) then each month any spare cash will be moved to your savings so that it continues to earn the best rate of interest possible.
Many current account providers require you to pay in a certain amount of money each month to be eligible for their advertised rate of interest. It is however still possible to benefit from a decent rate of interest even if your monthly income is below this.
To exploit this loophole it is possible to artificially top up your income by withdrawing the additional amount from your current account and then paying it straight back in, making it look like there is more going into your account each month than there actually is. For example, say the benefit limit is £1,000 but you only earn £850 a month, you simply need to withdraw the extra £150 from your current account and pay it straight back in to make up to £1,000 income total). Better still, why not set up a standing order to automatically move the extra money out of your current account, into a savings or alternative current account and back again each month, making the whole process completely hassle free.
Click here to compare the best high interest current accounts.
Cheap overdraft accounts
If you see more of your overdraft than you care to admit an account that offers a cheap overdraft facility is going to be much more profitable for you financially. You really have two options, you can either go for an account that offers a 0% overdraft, although these tend to be limited to a fixed period only after which the interest rate rises, or you can look for an account that offers a consistently low overdraft interest rate.
If you often find yourself breaking your overdraft limit and being stung by hefty fees an account which notifies you by text when you’re nearing your maximum can be a good idea. This can really help you to stay on top of your finances, keep within your authorised limit and avoid much dreaded overdraft charges. Text services usually come at a cost but the monthly expense is likely to be much less than the alternative. Again. best buy tables tend to be the best place to find accounts that offer this service.
If you regularly dip (or wallow) in your overdraft it might be a good idea to look at your finances and create a budget to help you to live within your means. This will be doubly beneficial as you’ll not only avoid paying for your overdraft but you will also be able to move to an account that actually pays you.
Click here to compare current accounts that offer cheap overdrafts; you could save over £150 by switching**.
Compare current accounts in minutes
Once you’ve decided what to look for in a current account you’ll be in a position to start comparing the offerings from different providers.
As your current account is likely to be something you use almost daily, it’s important that it works for you. If you’re happy to use an account that operates solely online then this could be your key to some great deals, however if personal service is important go for a current account that offers banking by branch or phone. Similarly, features such as a sweeping service, text message alerts and a cheque facility may make or break an account for you.
By considering what you want from a current account you’re more likely to find one that serves you better in terms of finance and convenience.
Looking to best buy tables is the simplest way to find the right account for you; remember the higher the interest rate and the lower the overdraft charge the better. Click here for an up to date current account comparison.
Switching made simple
Rather depressingly statistics show that you’re more likely to get divorced than switch your current account and when you consider the money saving potential on offer this seems criminal. If you, like many, believe that switching is more trouble than it's worth you’ll be pleasantly surprised to learn that the process is actually incredibly straight forward and stress free.
Once you’ve found your perfect account you simply need to fill in an application form, this will take approximately 10 minutes, and your new account provider will do the rest of the leg work for you, from transferring direct debits and standing orders, to closing your old account once the switch has been made – what could be simpler?
For relatively little effort the benefits of switching current account are huge, of course the exact savings will depend on your circumstances but you could save up to £150 a year!
So what are you waiting for? Click here to begin your search for a new current account!
*Based on an average account balance of £2000 switching from an account which pays 0.1% on in credit balances to one which pays 6.5%.
** Based on moving from an account which charges 15.9% on overdraft balances to one which offers 12 months interest free. Overdrawn by max of £2000 for whole month. Save over £150
Compare current accounts via money.co.uk
