What are you looking for in a checking account? You may want to get a better return on your savings, get rewards from your main bank, or just find a bank or mortgage company that gives you the service you want.
Your current bank account is the account you use the most regularly, whether it is a personal checking account or a business bank account. So it pays to make sure you get the best deal. Uswitch can help you find the best bank account for your needs by comparing offers in the market.
Whatever you are looking for, read our guide to learn more about the many types of bank accounts available in the market. Find out which features might be useful to you and which ones you might not need at all.
Switching Bank Accounts During COVID-19 Crisis With Uswitch
Even though we are in the middle of the coronavirus, it is still possible and easy to change bank accounts. In fact, it might be a good time for you to think about finding a better checking account if you do a general review of your finances and find out how to save money.
You can change your current account in seven working days, as part of an agreement between banks. If you want to take advantage of this service, it is the CASS guarantee (Current Account Switch Service) and all the administration will be carried out by your new bank.
This administrator includes, moving on your checking account balance, direct debits, salary payments and standing orders. You must close your old bank account as part of this expedited service. Any errors or charges are taken care of by your new bank, so this is a good service and should make the change hassle-free.
One big change from the coronavirus is that banks have been very busy helping their existing customers who have been laid off or laid off, and their call centers have been busy sorting through payment holidays and mortgage freezes for customers. . So you might find that right now some of the best incentives for change have been taken off the market. Banks could start reintroducing better offers once they have more capacity to accept new customers.
Changes to bank overdrafts
Just as the coronavirus hit, a new set of rules came into effect regarding current account bank overdrafts.
From April 2020, new rules introduced by the financial supervisory body, the Financial Conduct Authority, changed the way overdrafts were structured. The rule change was designed to make overdraft costs clearer and easier to compare.
However, so far it seems that although overdraft rules Make it easy to compare, overall the cost of borrowing money through your checking account has actually increased for many customers.
Under the new rules, banks cannot charge more for an unordered overdraft (when you dive into the red without arranging an overdraft in advance) than an arranged overdraft. The regulations also mean that banks must charge a single interest rate on an overdraft and cannot add any other additional fees.
For some people, it saved them money. But for others, it meant their overdraft size was reduced, and the overdraft limit penalty meant much higher interest rates.
While banks are under pressure to help customers who have been financially impacted by COVID-19, it usually means you need to contact your bank and explain your situation if you need help with your overdraft.
Which bank accounts are available to compare via Uswitch?
Today’s customers are not only faced with a multitude of providers offering different checking accounts; they are also faced with a choice of types of accounts.
Most banks and mortgage lenders will have a standard overnight checking account to hold your income and withdraw money. But they’re also likely to have a suite of other accounts, ranging from savings accounts to bundled accounts with premium benefits.
Before you start comparing providers, read our guides to learn more and make sure you can get the right checking account for your needs and lifestyle.
Current accounts – the current account
Most of us have a checking account to manage our money on a daily basis. We put our income into the account and then handle payments such as invoices, direct debits, and standing orders from the account.
If you need access to additional funds, either temporarily or over the longer term, your provider may offer you an overdraft facility to allow you to borrow. Most checking accounts will charge interest on the loan after you exceed the free overdraft amount.
In terms of interest paid on credit balances, standard checking accounts offer little or no interest on the money saved in the account, so they are not the best choice for savers.
You can compare current accounts with Uswitch and find an account that works for you with Uswitch.
High interest accounts – better returns on your savings
High interest accounts perform the same day-to-day banking function as checking accounts, but offer higher AER rates (the interest a bank will pay you on your deposit) than typical standard checking accounts.
Often, however, you will only receive this interest rate if you meet a provider’s conditions, such as making minimum monthly deposits into the account or paying an annual fee. You will also need to use this account as your regular checking account and not as a secondary savings account.
It’s also worth watching for how long you’ll receive the highest interest rate, as some accounts only offer it as a special introductory offer for around 12 months.
Basic accounts – help you manage your money
Basic accounts are similar to a checking account, but are designed for those with an imperfect credit management history or for those who want the absolute minimum.
Customers can deposit their salary or benefits into a bank account and access their money either by using a payment card (with an agreed withdrawal limit) or at the bank branch.
Basic accounts will not allow customers to have an overdraft or a checkbook, so are suitable for those who want to control their spending and stay in credit. Basic accounts are an option for customers who have had credit problems and may not be eligible for a checking account.
By creating a basic bank account and managing it efficiently, customers can increase their chances of being assigned a checking account in the future. The best basic bank accounts don’t charge a fee for managing the account.
Savings accounts – earn money while saving
Savings accounts are for clients looking to build cash flow, either for a special occasion, such as a wedding, or for the future, such as saving for children’s college fees.
A savings account can be opened with a wide variety of providers and typically requires the customer to pay a certain amount of money each month. These accounts often give a higher interest rate than a regular checking account, but are less flexible.
Restrictions may include:
Keep money in the account for a certain period of time
Pay in a minimum or maximum amount each month
A restriction on the number of withdrawals you can make
Your bank may also have an Individual Savings Account (ASI) which allows you to accumulate non-taxable interest
Like regular savings accounts, ISAs can come with similar restrictions on the amount of withdrawals you can make or how long you need to keep your money in them.
However, it is possible to find ISAs and regular savings accounts that give you instant access. This means you can access your money whenever you want, but it will impact the interest rate you get at the end of the month.
Usually, restricted savings accounts can offer better rates. Our varied list of guides will give you more information about ISA and savings accounts.
In return for a monthly subscription, some bank accounts will offer a premium account or a packaged account that offers you certain advantages in addition to your usual banking transactions.
These benefits typically include products such as cell phone insurance, breakdown cover, and travel insurance. They may also cover entertainment services such as movie rentals, music downloads and access to the airport executive lounge.
In addition to these benefits, some packaged accounts may offer preferential rates for other banking products such as loans or mortgages.
One of the problems with COVID-19 is that fewer people are traveling on business. Therefore, they are less likely to need the travel insurance, airport lounges, and other perks that normally come with premium or bundled checking accounts.
Compensation – combine your mortgage and banking
A compensatory mortgage links your main current and / or savings accounts to your mortgage. Each month, the amount you owe on your mortgage is reduced by the amount in those accounts, before calculating the interest owed on the loan.
So if you have an interest-only mortgage of £ 200,000 and you have savings in your compensation account of £ 50,000, for example, you are paying interest on £ 150,000. However, if you spend £ 10,000 next month, you will have reduced your clearing account to £ 40,000 and pay interest on £ 160,000.
So, as your checking account and savings balance increases, you pay less on your mortgage. As they go down, you pay more. These accounts require careful management of money to ensure you are paying off your mortgage and not wasting your savings.
They were more popular in the past when people had to pay taxes on the interest on their savings. Now, with the introduction of the government personal savings allowance, base rate taxpayers can earn up to £ 1,000 in interest before having to pay tax. This reduced some incentives to have a clearing account, as in the past interest and savings rates were higher and interest on savings accounts was taxed.
Learn more about current accounts and compare offers. Uswitch Bank Account Comparison Tool can help you find the bank and checking accounts that are best for you. You can also use the Uswitch business bank account comparison service to find a business bank account that suits your needs.