Choosing the right bank account
A common adage is that most people are more likely to get divorced than to change their bank account. With this in mind, many banks offer excellent deals to students, including cash rewards, high interest rates and low overdrafts, in order to attract them for life. Others will draw new customers with the promise of great rewards, which then disappear after six months or a year.
Nowadays, though, it’s almost laughably easy to change bank accounts. Almost all banks offer full switching services, where your standing orders and direct debits are all moved for you to a new bank. With no excuse not to go hunting for the best deal, the only hurdle is to identify which current account would be best for you.
Start by considering your financial situation. Are you generally in credit, or do you often slip into your overdraft? If your balance is usually in the black, then choose an account that will offer you a high rate of interest. While average current accounts offer an interest rate of just 0.1 per cent, there are providers out there that will offer you a better deal on your current account than you would get from some of the top savings accounts. Alliance and Leicester’s Premier Direct, for example, has an initial gross interest rate of 8.5 per cent on balances of up to £2,500.
Those who are regularly in the red, on the other hand, are going to need an account with low overdraft charges. Some banks will allow you a large overdraft while charging you up to 20 per cent interest when you use it; others can offer you an equally extensive overdraft for virtually no charge. Again, Alliance & Leicester’s Premier Direct account is a winner here – it offers an interest-free overdraft for the first 12 months, and after that authorised overdrafts are charged at 50p per day, up to a maximum of £5 per month.
Aside from your financial situation, you should also consider the level of service and the extras offered by your bank. If you need internet banking and 24-hour customer service, you will be looking at different options to somebody who is happy with a branch account. First Direct is known for the excellent quality of its call centres and high levels of customer service, while Alliance and Leicester offer extras like free travel insurance with its premium accounts.
Finally, remember to switch any surplus money from your current account into a high-interest savings account of a tax-free ISA. It may be easier to open a savings account with your existing financial provider, but it’s best to shop around first to see what deals are out there. |
