Money Insider: Don't like your bank? Then leave it and find a current account that works for you

 

Despite a concerted advertising campaign from the banks, including the offer of a £100 cash incentive from some, most of us stick with the bank account we chose when we left university or started work.

But if you're unhappy with the service or charges on your current account, why not do something about it? A relationship with your bank should be long term, so it's worth getting it right.

The most important thing is to find an account that mirrors the way you manage your money, so whether it's a lowcost overdraft, the ability to earn credit interest/rewards or a cheaper debit card for overseas use, there's an account with your name on it.

The majority of the accounts offered by the high-street banks pay little or no interest on credit balances, while some charge more than 25 per cent for an unauthorised overdraft – just two reasons to look elsewhere.

If you keep an average of £2,000 credit in your current account, at 0.1 per cent you'll receive a paltry £1.60 (after 20 per cent tax) in interest for the entire year, yet with TSB at 5 per cent you would earn 50 times as much.

Another account worth a look is the Reward Current account from Halifax which pays you £5 every month as long as you pay in at least £750 per month and remain in the black. On the flip-side it is expensive if you're frequently overdrawn, as it charges a fixed fee of £1 per day for overdrafts up to £2,000.

For low-cost borrowing, consider the First Direct 1st current account where the first £250 overdraft is completely free, or alternatively M&S Bank where there is no interest on the first £100.

If you're a regular traveller then a debit card with no charges for foreign currency transactions should be a factor in choosing an account. My top suggestions are the fee-free cards on offer as part of the current account deals from Norwich & Peterborough Building Society, and Metro Bank.

Before you go out in search of a more suitable account, there are a few things you need to watch out for:

* You may be required to fund your account with a minimum amount each month; this can vary from £500 to £1,500 per month.

* Avoid packaged accounts where eager bank staff will try to persuade you to pay for add-ons such as mobile phone or travel insurance.

* Ask about the cost of an authorised overdraft and also how much you would be stung if you accidentally went over your limit – it's worth understanding what the penalties are if it does happen.

There's no benefit in remaining loyal to your current bank, so get out there and find something better – you've got nothing to lose!

Yorkshire celebrates with a good deal for children

As part of its 150th-year celebrations, Yorkshire Building Society is offering existing customers, who have been with the mutual for at least two years, the opportunity to open a children's regular savings account that pays 5 per cent interest.

The Celebratory Children's Savings account is available from Monday, and is for children between the ages of 11 and 15.

It pays the promotional 5 per cent rate for one year and allows savers to pay in up to £150 per month for 12 months, with a maximum of four withdrawals permitted during the period.

The account must be opened at a branch of the Yorkshire, Chelsea, Barnsley or Norwich and Peterborough building societies.

Andrew Hagger is an  independent personal finance analyst from www.moneycomms.co.uk

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