3 Common Charges on Current Accounts

The abundance of options in current accounts today allows customers to shop around for the best deals for their personal financial needs. As you search, it is important to understand that there are many ways these accounts can vary, including interest rates, included features and fees.

While interest rates and special features may be prominently displayed in the bank’s branch or on their website, it may take a bit more digging to discover all the fees associated with a current account. This article will provide a glimpse into some of the more common fees, so you know what to look for before you choose the best current account for you.

Limit Fees

Some current accounts have minimum balance requirements that must be maintained. If the account balance falls below the limit, a fee is typically assessed. In many cases, the banks that offer this type of account structure also pay interest on the accounts.

It is important to find out what the minimum balance requirement is to determine whether you will be able to remain above the limit the majority of the time. This way, the interest earned on the account is well worth an additional minimum balance requirement.

By the same token, current accounts that include overdraft facility will have a limit on the amount of overdraft protection available. If you exceed this limit, the fees on the account can be steep. You will also be charged interest on the outstanding balance on the overdraft each month.

While overdraft facility can provide peace of mind against an overdrawn account, it is important to weigh whether the costs associated with the overdraft make this feature a good value for the money.

Package “Deals”

Many banks offer current account “packages” that include a variety of features in a single product. However, these advertised deals usually come at a price, and that price can be much steeper than choosing individual features you will actually use.

For example, £12 a month may seem reasonable, until you calculate the annual cost and find you can get the same features in a different account for less. If you consider one of these packages, calculate the full cost of the account to ensure it really is the deal that the bank or building society promises.

Per Transaction Charges

Some banks might charge by the month or year for their current accounts, while others might assess a fee for each transaction you make.

If you are looking at a current account that offers these options, make sure you weigh the difference thoroughly to ensure you get the best deal. Customers who know they will do little more than write a handful of checks or make a transfer or two each month might actually get a better deal with a small fee for each transaction.

There are some free current accounts available today, but many more come with their own assortment of fees and charges. Make sure you know the charges on the account up front so you are not faced with any unpleasant surprises in the future.