How to choose the right bank account

This guide to choosing the right account is for you if you are trying to decide what type of account best fits your needs and or you want to know which features of an account you should compare. It can also help if you are thinking of switching your bank account or considering a packaged account.

Bank account choices

Current accounts

Most people use a current account with a bank or building society to manage their day-to-day money. It allows you to:

  • pay bills
  • receive payments such as salary, wages or benefits
  • save money

Packaged accounts

Some current accounts offer extra features for which they charge a fee (often between £10 and £15 a month). These are known as packaged accounts. Extras include:

  • special offers (eg preferential interest rates on overdrafts)
  • car breakdown cover
  • insurance cover (eg travel, breakdown or mobile phone insurance)
  • extra services

Watch our video - How to choose a bank account

Basic bank accounts

There are 8 million of these accounts in the UK. They’re often used as a stepping stone to a current account. A basic bank account may be right for you if:

  • you have a poor credit record
  • you want to ensure you can’t get access to more money than you have in your account
  • you don’t need the extra things that a current account offers, for example an overdraft facility

Step-by-step guide to picking the right account for you

Step 1 - Decide how you want to deal with your bank

Do you like dealing with a person in a branch or would you prefer the convenience of telephone or Internet banking?

  • Not all banks provide phone, Internet, mobile banking, postal and branch services so make sure you will be able to bank how you want to.
  • If you like going into a branch, choosing a bank you can easily get to will be the most important factor.

Step 2 - Know what features to compare

Fees, charges and overdraft costs

  • Fees can vary a lot between banks and between accounts, with one of the highest fees being charged for going over your agreed overdraft limit.
  • If you regularly spend more than you have in your account, choose one which will give you an overdraft up to an agreed limit without charging fees and/ or with a low interest rate.

Interest rates on credit balances

If you’re careful about your spending and never go overdrawn, have a look at the accounts that pay interest on your credit balance. However, if your earnings are on the low side and you do sometimes use your overdraft, don’t pay too much attention to the credit interest – focus more on the penalties instead.


Many banks offer deals to attract new customers, but be sure to check if there are strings attached. Look beyond any short-term offer and make sure that, when it ends, the account will still be the best for you. Deals include:

  • a cash incentive
  • higher interest for a period
  • a monthly credit of £5

If you’re claiming Universal Credit

If you’re getting ready for the introduction of Universal Credit from April 2013 onwards, follow the link below to find out what your account options are and the pros and cons of each one.

Bank accounts for students and graduates

  • Most banks will offer a specific student account usually with an interest-free overdraft up to an agreed amount.
  • Banks often also offer attractive accounts to graduates to attempt to secure them as long-term customers.

Step 3 - Compare different accounts using comparison sites

Internet comparison sites make shopping around for a new account much easier, but it’s always best to use more than one comparison site to get a picture of all that’s on offer.

Is it worth switching your bank account?

  • If you’re unhappy with the service you are getting from your current bank then it’s easy to change. Your new bank will do the work for you and there is no need to deal with your old bank.
  • It’s worth checking every year that your bank is offering everything you need. If not, think about switching.
  • It takes just seven working days to switch your account under the Current Account Switch Service, an improvement on the previous process that could take between 18 and 30 days. You can also choose the date to switch, and agree this with your new bank.

Is it worth paying for a packaged account?

If you’re thinking about switching to a packaged account be sure to check out how many of the additional benefits you actually need. A Which? investigation into packaged accounts found many people already received some of the benefits of the account through existing products such as insurance policies. It also discovered that many of the benefits cost less if you bought them separately.