Compare Bank Accounts
The Bank account comparison website and the different types of UK Bank Accounts
Bank accounts are a vital part of everyday life and 90 per cent of people in the UK use their account on a regular basis. Bank accounts offer many functions and features, which cater for our everyday needs such as allowing you to receive salaries and state benefits and other forms of payments received. When you open a bank account it allows you to control your money on a day-to-day basis giving you the facility to withdraw money in cash on demand, either over the counter or through an automated teller machine (ATM). Bank accounts enable us to organise their finances more efficiently through the use of direct debits and standing orders and gives us the ability to pay for products and services via debit card payments and cheques. Banks also provide a range of additional financial products and services such as savings accounts and bond investments, mortgages and personal loans, credit cards and insurance.
Bank Accounts with overdrafts
There are two types of overdrafts either ‘arranged' or ‘unarranged'. The main distinction comes to the interest rates and charges that apply arranged or unarranged.
Under an arranged overdraft the bank has agreed with you in advance giving you the right to accumulate a negative balance on your account up to an agreed level. If however you go beyond the agreed limit or, where there is no agreement in place and you go overdrawn this is considered as unarranged. With an unarranged overdraft you are expected to bring the account back within the limit that is agreed.
Online banking and Telephone Banking
Where as banks have traditionally delivered a bank account service through their network of branches new important additional channels have been introduced to cut down the congestion of branch banking which are online banking and telephone banking and are now becoming more popular. There are now new bank accounts available such as online banking which also offer a telephone banking service where you can control your banking account and view your statements, control standing order and much more.
All banks tend to offer a standard package of a debit card and if requested a chequebook, and an arranged overdraft. Depending on which bank account you have chosen will depend on the set of interest rates and charges for the account.
Free Bank Accounts
The most used bank account in the UK is the free-if-in-credit or free banking account because if you are in credit then you do not pay any direct fees for using your account. The free banking account is ideal for core services such as cheques and direct debits. Interest is usually charged on any money borrowed and usually significantly higher charges on borrowing beyond any arranged overdraft limit or if the bank refuses to make a payment that would take an account beyond such a limit. There may be little credit interest paid on credit balances. Some of the new free banking accounts offer special features, such as an interest free overdraft or £100 cash back or an opening a free bank account.
Although free bank accounts do not have any explicit charges for the account when you stay in credit, it does effectively have a cost, which may not always be apparent by way of interest forgone. This is the amount that consumers could earn by putting their positive balances in a higher interest rate account. Banks themselves earn revenues from credit balances by lending this money out at higher rates of interest.
Transaction-Based
The transaction-based model charges customers per transaction (or per block of transactions), for example, per direct debit, per cheque or per deposit. Sometimes referred to as the ‘pay-as-you-go' model, this was popular in the UK up to around 1985. And is the second best banking method used in Northern Ireland.
Monthly Subscription or Annual Subscription Bank Account
Consumers pay a regular fee monthly fee or an annual fee, which is taken directly from the account. Either there are no individual transaction charges or a certain number are provided free with a charge payable for any additional transactions. This bank account is generally not available in the UK
Packaged accounts
This bank account is a monthly fee where the subscription fee also covers additional benefits. These may range from travel insurance and road breakdown cover to discounts from a number of retailers and hotels. The packaged account is becoming a popular bank account due to the significant savings they can make especially on insurance.
For savings accounts, best bank accounts offer
- High interest payout
- No minimum balance account
- Linking to checking accounts so that you can pay all your bills through that account
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