Best Bank Accounts

With some 300 plus bank accounts available on the market nowadays it is difficult to decide what to go for when choosing an account. You may be content with the rates and policies offered by your bank; however recent surveys have shown that 75% of British adults bank with one of the big four: Barclays, HSBC, Lloyds TSB and RBS/NatWest. These banks usually offer a limited amount of interest (0.1%), which is a pitiful amount compared to what else is out there (some banks are offering as much as 8.5%).

Deciding on which bank account is right for you is a challenging task on its own; the trick is to get the bank to work for you. You should factor in your income and how you spend your money; there are certain accounts that work better depending whether you are regularly in credit, regularly overdrawn or swing between the two.

If you are comfortable with online banking and have a regular income of over £500pm then Alliance and Leicester's Premier Direct account is probably the best account on the market paying a whopping 8.5% interest on balances up to £2,500 for the first year. It also has one of the top picks for overdrafts at 0% for the first year. If you want a branch-based account, then its Premier account has the same 0% overdraft facility, but pays much lower interest if you’re in credit (1.5%). An alternative to these accounts if you are regularly overdrawn is Santander’s (www.santander.co.uk) Preferred Overdraft Rate current account as it offers the same 0% overdraft for 12 months as Alliance and Leicester.

If you do not have a regular income then an Internet bank like Cahoot or Smile may be a good option, offering 3.75% and 2.5% respectively. These banks have no minimum pay-in so there is no earnings limit, however, as these are internet banks they operate exclusively online and you will have to weigh up the pro’s and cons of online banking.

If you are regularly in the black or waver between being in credit and overdrawn, Alliance and Leicester’s Premier Direct account is the best all-round account. Santander’s Preferred Overdraft Rate current account is a good option if you are regularly overdrawn and already have an Alliance and Leicester account. Alternatively, if you prefer online banking and have an irregular income, then an internet bank is probably the best option for you. Visit the Alliance & Leicester website for more information on savings.

Honest Johnny - The Consumers' Advocate.