Personal finance: Go on, divorce the bank - Part 2: are you making the most of your current account?

Financial review: a six-part series on how to be prosperous in '99

RESEARCH carried out last summer by Abbey National found that adults are more likely to divorce than move their current accounts. This is despite a competitive market: the number of companies offering current accounts has swelled, with the Big Four high-street banks joined by building societies, new banks such as Halifax and Abbey National, and First Direct and Citibank, which deal over the phone.

Organisations such as Citibank, First Direct and Abbey National argue that they offer a far better package than the competition and give help to customers who want to move their current account. Their message is worth listening to; whether it makes sense to switch depends on the way you use your account.

Someone who is rarely, if ever, overdrawn should look for an account that pays interest when they are in credit; someone who needs to borrow will almost certainly be better off at a bank where there is no monthly fee for going overdrawn.

Some banks provide free temporary overdrafts or buffer zones for people who accidentally go overdrawn or exceed their limits. First Direct and the Co-op are most generous, offering an automatic pounds 250 overdraft.

Citibank has a pounds 500 limit, interest free, but the bank aims its account at those with an income of at least pounds 30,000 a year.

Abbey National and Barclays let customers draw on cheques on the day they pay them in, rather than waiting for the normal clearing process. Multi-function or debit cards are now essential for many people but not all banks will give a debit card to new customers.

A further question is whether you want a bank branch at all. First Direct operates only over the phone, although customers can use cash machines and pay in money through HSBC branches. Citibank has only a handful of branches, so most of its customers deal with it remotely, while the Co- op, Bank of Scotland and Royal Bank of Scotland also have fewer branches than rivals. With modern communications, this should not matter.

"If you want a branch, think about where it is," advises Brian Capon at the British Bankers' Association. "Is it better to have a branch where you live, or where you work? On the other hand, if you only want to draw cash out, look for a good ATM network." The growing popularity of automatic salary mandates and direct debits means fewer people need to visit a bank, so choice is not limited to shopfronts on the local high street.

Moving banks is not the only way to make your banking arrangements more efficient. The first area to look at is charges. Going overdrawn can be expensive. Sometimes it is possible to avoid this altogether, perhaps by changing the payment dates for direct debits or transfers from, or into, other accounts. Going overdrawn outside an authorised limit is more expensive still, with interest rates of 30 per cent or more and daily charges. The best approach is to apply for an overdraft or increase the authorised overdraft limit. Most bank managers respect customers who manage their money in this way.

The interest on current accounts in credit is so low it is almost negligible: the most generous pay around half a per cent. Barclays, for example, pays just 0.75 per cent on balances between pounds 100 and pounds 500 on its Instant Saver, but above pounds 500 the interest rate rises sharply, to 2.75 per cent.

Supermarkets and other phone banks such as Standard Life or egg offer high interest rates on instant deposit accounts, but there is always a delay (usually three working days) before you can withdraw cash. The money has to be paid into your current account before you can access it.

For day-to-day reserves, a savings account at the same bank or building society as the current account is more flexible. With phone banking and internet access, money can be moved instantly. This means it is possible to keep a very low balance in the current account if you watch your money closely.

Some savings accounts allow you to set up direct debits and standing orders, so you can arrange for all your bills to be paid and still earn interest on your money before it is collected. The Co-op Pathfinder account offers all this - the interest is 2 per cent up to pounds 2,500 - plus a combined cash and debit card.

The British Bankers' Association operates a web site, Bank Facts, with advice on current accounts and overdrafts: www.bankfacts.org.uk

Phone savings and banking: Co-op Pathfinder, 0345 252000; Co-op bank account, 0345 212212; Citibank, 0800 005500; egg, 0845 600 0292; First Direct, 0800 242424; Standard Life, 0345 555657.