You might think that your current account is free, and doesn’t cost you anything. But depending on how you’re using your account, it might be costing you tens or hundreds of pounds. Maybe you’re paying a monthly fee for your bank account so it gives you extras like insurance or breakdown cover, but you don’t need these extras.
Make sure you’re getting the most from your bank account and switch if there’s something better for you out there.
Top tips for using your current account
You can make sure you’re not paying unnecessary fees and are making the most of your account by setting aside just a couple of minutes to act on one or more of these tips.
Set up free text alerts
It’s worth giving your bank your mobile number so you can benefit from a new automatic service. If your bank has your number, they’ll send you a text alert if you go into an overdraft. This means you can minimise the impact of any charges for going overdrawn.
There are also free text alerts you can request yourself. Some will let you know when your balance is getting low and some can tell you when money has been paid in or out of your account. It’s a quick and automatic way of making sure you know what’s going on with your account, making it less likely you’ll be caught out.
Turning on these alerts is usually easy. Log into your account on your bank’s website and turn it on in your settings. If you’re having problems, you can call your bank and they can set it up for you.
Use mobile banking
Using your bank’s app on your smartphone lets you do almost everything you can do in your bank using just your phone. That means you can check your balance, make payments, apply to change your overdraft - all whenever and wherever you want.
Banking apps are specially designed and tested to make sure they’re secure. They use special encryption, along with passwords, to make sure your account is safe from fraud.
Setting up mobile banking is quick. Have your bank card ready, and download your bank’s app from your phone’s app store. Each bank will have a different way of verifying your identity - you might get a call, have to answer some security questions in the app, or be able to visit an ATM to get a unique passcode.
After the app is set up, you’ll just need to enter your password to open it on your phone.
Find out what your bank charges are
Banks charge you for certain things, like foreign cash withdrawals or transactions when you’re abroad. Look online or get in touch with your bank for a list of all the charges they can make and what they’re for. When you know what and how your bank charges, you can then make sure you’re avoiding the charges or minimising them.
Speak to your bank
If you’re not sure your bank account is the right one for you, or what features it has to help you save money, speak to your bank. They’ll also help if you’re not sure about how to use any of your account’s features.
Most banks want to help you use your account to its fullest, helping you stay on track with your money.
If your account isn’t right, switch
If you’ve spoken to your bank and feel that the account isn’t right, now’s the time to think about switching. It’s easy to search for accounts to suit your needs, whether you’re looking for an account with a cheaper or bigger overdraft or one that pays you more interest when you have money in your account. See Should I switch accounts?, below.
Tips to make the most of your overdraft
If you have an overdraft that’s been agreed with your bank, there are a few things you can do to save money.
You’ll normally be charged for using the overdraft. Bank and building society interest rates on overdrafts range between 19% and 40%.
If you’re often in your overdraft, and can’t afford to clear it, your credit score will begin to go down, making it difficult for you to get the best credit interest rates in the future.
Check your Direct Debits and standing orders
Not having enough money to cover your Direct Debts or standing orders can be expensive. It’s worth checking them regularly and if you’ve not done this in a while, you might spot one that you can cancel, saving you money every month.
It’ll also minimise the chances of being hit with an unexpected bill that could take you over your overdraft, which would lead to extra charges.
Find out more about how to check your Direct Debits and standing orders on the Money Saving Expert website.
Find out the fees for using your overdraft
When you use your overdraft, your bank will charge an interest rate, so check what your bank charges you. Then check with comparison sites to see if you can find a bank account with lower interest rate.
Switch if you can get a better deal
If another account has cheaper rates, switch to save money.
If you’re using an unauthorised overdraft to cover day-to-day spending, it’s a warning sign that you’re getting into serious money problems.
Getting help early is the best way to stop the problem getting worse. You don’t have to be in debt to seek help - a debt adviser can help you budget and assess your income and expenditure before you get into any financial difficulty.
Should I switch accounts?
There are several reasons why you might think about switching:
- You’ve spotted charges on your account.
- You’re stuck in your overdraft and costs are adding up.
- The interest you’re earning on your account is very low.
- You’re paying for your bank account but doubt it’s good value for money.
- You want to get an introductory cash reward by switching, to help clear a debt or start a savings pot.
There’s now a big difference between what accounts from different banks can offer you, and switching accounts is easier than it’s ever been. It can be done in seven days when you use the Current Account Switching Service. That means all you need to do is check what the account you’re using does for you, and which account might fit you better.
Tips if you have a reward bank account
Reward bank accounts, also known as packaged bank accounts, normally require you to pay a monthly fee. They typically come with benefits like travel and technology insurance and discounts in shops.
If you’re paying a fee it’s worth reviewing if it’s good value for money. For example, research by Which? found that you can get the extra benefits they offer cheaper, and that some of the benefits simply aren’t very useful.
Or maybe you think you’ve been mis-sold a packaged bank account. If so, read these pages on Which? and Money Saving Expertopens in new window for more information.
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