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A current account is perhaps your most important financial product. After all, most (if not all) of your income and outgoings flow through your bank account, so it contains much of your financial life. Indeed, banks view current accounts as key customer gateways, because they know that once they have your current account, they often have your financial soul, too. That's because far too many customers -- up to seven in ten -- visit their bank for all of their financial needs, such as getting a credit card, personal loan, mortgage, insurance and so on. Alas, sticking to a single financial provider and failing to shop around is always a bad move! So, choosing the right bank account is a critical decision, yet most of us put little or no thought into it. Indeed, many of us simply open an account with the branch closest to us. For example, as a fresh-faced eighteen-year-old, I opened a NatWest account because it had a mini-branch and a cash machine on my university campus. However, six years later, while working in financial services, I found a Best Buy bank account, which I've stuck with ever since. Hence, there's absolutely no need to stay loyal to an old-fashioned bank account (one which pays, say, credit interest of 0.1% a year before tax, and charges, say, 15-35% a year for overdrafts), regardless of how long you've had it. Indeed, thanks to an improved Banking Code, switching bank accounts is now far simpler than it used to be. Essentially, there are two key reasons (other than wanting better customer service) why you should consider switching to a tip-top bank account: 1. Earn more interest when your account is in the black (in credit) Thanks to better budgeting and planning, I haven't been overdrawn for almost three years, so I aim to maximise the credit interest that I earn. On an average balance of £1,000, you can expect to receive a measly 80p a year after tax (0.08%) from a bog-standard bank account. However, with a table-topping current account, you could earn up to £40 after tax (4%), which is fifty times as much! According to Moneyfacts, Best Buys in this category for those paying in at least £1,000 a month include: 2. Pay less interest when your account is in the red (overdrawn) As I revealed in Ripped Off While In The Red, customers of the Big Four banks (Barclays, HSBC, Lloyds TSB and RBS/NatWest) are being taken for a ride when they are overdrawn. In fact, saying loyal to these banks is costing around millions of customers close to £100 a year in extra borrowing costs. What's even more worrying is that two out of three bank customers (66%) don't realise that they can switch to a better bank account when they are overdrawn. The truth is that banks are fighting a fierce battle for current-account customers, so transferring even a hefty overdraft shouldn't be a big problem. According to Moneyfacts, Best Buys for borrowing include (again, paying in at least £1,000 per month): In summary, why short-change yourself for another year? You could make hundreds of pounds by earning more credit interest and paying far lower interest rates and charges when you're in the red! More: Check out the ace accounts in our Banking centre | Avoid interest with a 0% credit card!
