Different people want different things from their bank account. For some, what counts is the interest they’ll make on their money; for others, it’s an affordable overdraft facility; and for others, it’s the ‘extras’ they get when they sign up to an account.
There are various types of current account out there, which is why it’s important to take the time to find the best current account for your situation. Let’s take a look at just three sorts of current account: basic current accounts, packaged current accounts and student current accounts.
Basic current accounts
Basic bank accounts are there to help those who find they can’t open a ‘standard’ current account for some reason, so they’re open to people with poor credit ratings.
Unlike ‘standard’ current accounts, basic accounts don’t come with overdrafts, which is why banks aren’t actually taking much of a risk by offering them to people who’ve not managed their finances particularly well in the past.
What they do provide is somewhere safe to put your income, along with access to things like cash machines and Direct Debits – important features in today’s modern world.
Packaged current accounts
Some accounts come with a range of extra features. They might offer travel insurance, for example, or breakdown cover – or give account holders access to better mortgage deals.
Then there are ‘managed’ accounts, which can actually help people manage their money better. The thinkmoney Personal Account works with a two-account system: the money for the individual’s essential bills is put into one account, and the rest goes into another. The idea is to make sure they can’t accidentally spend money they should be keeping for life’s essentials. There is a charge for this service – click here for more on the thinkmoney Personal Account and how it works.
However, packaged accounts tend to come with a monthly fee, so it’s important to make sure you’re actually going to use the additional features an account provides. If you’re not, then what are you actually paying the money for?
Student current accounts
As the name says, student current accounts are specifically designed for students, so they often offer discounts on things like rail travel. One feature students usually look for is an interest-free overdraft, although some will be just as keen to avoid going overdrawn!
Overdrafts can be very useful things if someone has to meet an unexpected expense, but a potential problem is that they can make it too easy to borrow money – it’s easy to come to see that overdraft as ‘your’ money, so someone with £100 in their account and a £1,000 overdraft facility might feel like they have £1,100 to spend.
Of course, that money has to be repaid – and the overdraft won’t be interest-free forever…