Current Account vs. Basic Account: Which is Best?
Basic accounts have been the standard choice for most Brits, but current accounts for personal use are now becoming more popular as well. Current accounts typically offer more features, including overdraft facilities and online banking options. However, more features may also mean more charges and may be more account than you really need.
Between current accounts and basic accounts, which one is right for you? Consider these fundamental differences before you make your decision.
Basic Account
A basic account is a standard account that allows you to put money in and take money out as you need. However, your choices in deposits and withdrawals are much more limited with a basic account than a current account.
Common features of a basic account include:
- Ability to receive money
- Option to set up direct debits to pay bills
- Branch service to check balances and withdraw cash
- Possible post office branches for additional options
- Card to withdraw from cash machines
Some basic accounts may also offer the option of a debit card that you can use to make purchases. These accounts do not offer overdraft facilities and will not allow you to overdraw your account by more than £10.
Current Account
Current accounts offer all the features that basic accounts do, plus a few additional options. Some current accounts also pay interest on balances, although this is not considered a standard feature.
Common features of current accounts include:
- The option of a cash or debit card
- A checkbook for addition withdrawal options
- An overdraft facility (amounts vary greatly between banks)
- Ability to bank by phone or Internet
- Other services, such as cashing international checks
Some services may incur a fee, especially services like international check cashing or sending money abroad. It is important to know what the charges are before you open a current account.
Criteria for Choosing
There are a number of factors to consider when weighing your choice between a current account and a basic one, including:
- Age – Some services, such as a checkbook or overdraft facility, may only be available to account holders over 18. If you are younger, a basic account might be sufficient for you.
- Convenience – If you want to conduct your banking business 24/7, a current account offers Internet and telephone banking services. In addition, a debit card and checkbook allow you access to your funds any time of the day or night.
- Credit History – Customers with less than stellar credit may not qualify for a current account. In this case, a basic account may be the only option until you can rebuild your credit rating.
- Additional Services – Some current accounts might offer additional services like insurance. If you want a full-service banking experience, a current account might be the right choice for you.
The choice between a basic and current account really comes down to a matter of personal preference. Once you accurately assess your current financial needs, you will be better equipped to determine which will be the right account for you.
