Best current accounts

Ah current accounts. I’ll be honest, I didn’t give much thought to them throughout my whole 20s. I remained with the same bank that my dad set me up with when I was 12 so he could teach me how to withdraw my pocket money from the cash machine, all the way through to my 30s.

Even when I left the UK at 28 and moved abroad, I just went with the same bank everyone else had, offering basic bank accounts and not giving it much thought. This meant I would sometimes go into my overdraft and be charged, plus, I missed out on the new benefits coming through for so, sooo long.

Here’s the thing ladies, there’s new kids on the block and they’re whipping up a stir. It feels like the digital banking movement has exploded over the last few years, gaining traction after the 2007-2009 crisis when fintech startups first began to introduce challenger banks.

We want more from banks nowadays, with needs like higher interest rates, easier accessibility and travel and insurance perks. We want a bank that tailors to our specific needs at whatever stage in life we’re at, and the digital banking movement has made that happen. Traditional banks have had to up their game to stay in the competition, especially with most of their high street branches now closing. We can thank technology for that one.

Banks are constantly competing to not only get new customers, but also keep them. It’s a full on war using luring tactics for new and existing customers such as a current account switch service that offers bonuses and access to more rewards and offerings like package current accounts with a linked savings account and interest free arranged overdrafts. There are also deals on if you open a current account, with no need to switch your main account. Thanks to digital alternatives such as Revolut and challenger online based banks like Monzo, we’re leaving the traditional banks on our high streets and going rogue. We're no longer loyal for the sake of being loyal, we're loyal to the best terms for us.

You’re obviously looking for a new current account, that’s why you’re here, so in this guide we’ll go through what current accounts are, what to consider when choosing one, and what our top picks are. We'll also explore the ongoing battle between traditional banks and digital banks, and delve into fintech alternatives; helping you choose what’s best for you.

So let’s dive in.

What is a current account?

A current account is basically for your everyday banking. This is the account your salary is usually paid into, and serves as a hub for receiving and spending money. Some people use it to pay bills, set up direct debits and to keep their savings in (I don’t recommend this all from one bank account, read my blog on the accounts you need to have to organise your finances). Nevertheless, people usually open a current account to become the first port of call for their finances.

Your current account is more than just a place to stash your cash; it can also offer numerous benefits such as:

1. Debit card transactions: It provides you with a debit card for everyday purchases, making it a convenient and secure way to shop or dine.

2. Overdrafts: Some current accounts offer overdrafts to help you manage short-term financial challenges or any mishaps along the way.

3. Online and mobile banking: Most accounts come with digital banking features, making it easier to track and manage your finances from your smartphone or computer.

4. Interest and rewards: Some accounts offer interest on your balance or cash back rewards on spending.

As your current account is mainly the number one account you use on the day to day, you’ll want to make the most out of it.

What to look for in a current account

When choosing a current account, you should focus on what you need to fit your lifestyle. If you want to earn something for keeping your money with a bank, get an account that pays interest. If you travel a lot, get a current account with a bank that has low conversion and foreign transaction fees. If you have a habit of overspending, get an account that comes with a free interest overdraft facility. Customer service is important to you? Go with a bank that prioritises their clients and has 24/7 accessible help. I would always recommend a current account that comes with a debit card for everyday debit card spending as this will also enable you to pay on the go and withdraw money from cash machines.

It depends on your circumstances, but thankfully now there are so many options available that you can find a bank account tailored to your needs, and not only that, you can open multiple bank accounts, you don’t need to stick with only one (just keep an eye on your credit score if you're opening up multiple accounts). If you do only want one, I'd always recommend a packaged bank account, this is an account which offers multiple features and benefits.

Below are our top picks of current accounts with certified banks. We’ve put a range down for different circumstances, so please check them out yourselves to see if they’ll fit you.

When I say certified banks, I mean institutions that are banks that have an official banking license and are covered by the Financial Services Compensation Scheme (FSCS), this means your money is protected up to £85,000 per person, per financial institution should the bank go bust.

Best bank accounts

Best current account with interest - Chase

So there are other banks that offer a higher interest rate, but over-all when compared with other factors such as customer satisfaction and additional features, Chase came out on top.

With its current account, you can earn 1% interest on the balance in your current account, and up to 4.1% interest on savings when you open a linked savings account. It also offers 1% cash back on most debit spending for a year (capped at £15/month) and fee-free spending and withdrawals when you’re traveling abroad.

There is no minimum requirement to pay into the account, but after the first year you will need to pay in a minimum of £500 to continue to receive the cash back.

It’s highly rated by its customers, and also has a ‘round-up’ feature that could give 5% interest on small amounts.

Best current account for cash back - Santander Edge

Santander has been in the running with the best rewards for a while, and this particular account is more for bills than anything else. As this is the only account with monthly fees, it could be called a premium bank account, but with that comes more benefits. Remember I said above about organising your finances into separate bank accounts? Well this account could be great for your specified ‘bills’ account.

It offers 1% cash back on bills - council tax, water, mobile, broadband, energy, plus 1% on most supermarket and travel spending. Over-all you could earn up to £10 a month on bills, and £10 a month on travel and supermarket spending. The downside is there is a £3 monthly account fee.

There are additional perks such as fee-free spending abroad, and you’re also linked to 7% easy access savings account.

Things to note:

To get cash back on the bills you need to pay them by direct debit.

You need to pay at least £500 into the account every month.

Monthly fee of £3.

TIP: The Chase current account above is also a solid second here with 1% cash back and no obligations for the first year.

Best current account switch service - Nationwide

Chances are you already have a current account, but remember I said about those sneaky tactics being used? Well nationwide has some pretty nice benefits if you switch your current account over to them, thanks to the current account switch service. You get £200 bonus if you switch your account across (you must have two direct debits connected to this account), plus access to a regular savings account paying 8% interest on up to £200 a month.

On top of this, you may be eligible for a 0% overdraft on up to £1,500, good for those who sometimes go below their current account balance. Plus, you can earn interest on the current account itself if you pay in a minimum of £1,000 a month – 5% interest on up to £1,500 a year.

Things to note:

You must have a minimum of £1,000 going in monthly to earn the 5% interest.

You must be switching the account from another bank with two direct debits attached to it to get the £200 bonus.

The other bonuses such as the 0% overdraft and regular savers are fixed for a year, they then later go to variable so read the Ts and Cs before going for this one.

Best current account to travel with - Starling

Starling is a firm fav with the travellers among us, it was the first real bank to break down international borders when traveling. When traditional banks were charging ridiculous fees for spending abroad (lots still do), Starling designed a card that allowed you to spend abroad in local currencies with no mark up on doing so, and a close to market rate exchange rate.

Starling is a digital bank, operated only online. It has no cash withdrawal fees abroad, and no fees to spend in local currencies. It will exchange your money using the Mastercard exchange rate. It has features to separate money for savings, and offers virtual cards for better money management. You can open an account in GBP or EUR, it even offers a little interest on your balance.

There are other alternatives for traveling, particularly if you want to hold money in multiple currencies or are constantly sending and receiving money overseas, but these alternatives are not ‘banks’ per say, meaning they are not FSCS regulated. In terms of spending money abroad using a debit card, Starling is your best bet. I talk a little about the alternatives further down in this blog.

Traditional banks vs. digital banks

Now, let's explore the classic face-off between traditional and digital banks:

Traditional banks

High street branches

Traditional banks often have a physical presence with branches across the country, providing face-to-face customer support. While these have become less and less nowadays, they are still around, and we’ve all been there where we’re trying to talk to online chat, then we phone and can’t get through, so in a huff we finally take ourselves off to the branch to get some sense out of someone and are glad there's somewhere we can go to sort everything out. So if you’ve struggled with that before, you may be looking for a bank that has a physical presence to visit.

Longevity

Established banks have a long track record, which can instill trust and confidence. The more traditional banks such as Barclays or Lloyds have been around for hundreds of years, literally. They are massive corporations which means they are A, heavily regulated and monitored, meaning limited dodgy business, and B, although not 100% safe as nothing really is, they have a lesser chance of going bankrupt.

Product range

Traditional banks typically offer a wide range of financial products, such as mortgages, savings accounts, and loans. If you think back to when traditional banks first started, they were few and far between. The banks became a one stop shop for all your needs, meaning mortgages, loans, etc. So it’s only natural the scope here would be broader, they are also now competing with challenger banks and could even offer better rates and advantages due to their success.

Digital Banks

Convenience

Digital banks are accessible 24/7 through mobile apps and websites, making it easier for tech-savvy millennials. We’re glued to our phones and these banks know it, they put all their time, money and love into the development of banking apps, knowing it would sway us, and it worked. They’ve made on-boarding easy, introducing things like taking a video to confirm your identity, and there are no physical forms to wait for in the post, fill out and send back.

Lower fees

They often have lower fees and offer competitive exchange rates, making them budget-friendly options. These lower fees are possible due to their operational costs which will typically be lower than a traditional bank. For example, they don’t have physical branches, meaning no rent or fees and all the costs that come alongside that. They tend to invest in the development of technology and that’s about it, meaning less fees for us.

Innovation

This is one of the biggest differences in my opinion that exploded the digital banks onto the scene – innovation. Digital banks are known for innovative features and tools, such as budgeting and savings apps, which can help you manage your money effectively. When they first came about, they immediately did things differently to traditional banks. They focused on the needs and wants of the people, particularly the younger generation that were coming through to adulthood. Sure, the traditional banks are now starting to catch up with online banking and apps etc. but digital banking is now going to higher highs, so they will always be one step ahead on innovation.

Ultimately, the choice between traditional and digital banks depends on your personal preferences and financial needs. Many of us find digital banks more appealing due to their convenience and innovative features, like myself.

For example, as mentioned above the traditional banks are trying to catch up with the innovation, but it’s still not as smooth sailing as digital banks. When I had my Lloyds account, I had to request a new PIN to log onto mobile banking as I had been logged out and effectively blocked when I couldn't remember my details. I had to call the call centre, then wait for a new pin to come via post for 3 days. Even then, I had to re-register with online banking on the website, before re-downloading the app. So like I said, they are trying, but I feel they’ll take a while to be at the seamless level of digital banks. You’ll need to assess your specific requirements before making a decision on what works best for you.

FinTech alternatives

There are plenty of FinTech alternatives now available that offer financial solutions, many of whom are not technically classed as a bank so they are not protected by the FSCS, however, they will still regulated in the countries they operate in, such as by the FCA in the UK, or its counterpart in Europe or the USA, and take measures to safeguard money. Always check the fine print to know exactly who regulates these institutions and what it means for your money.

Particularly for travel, these accounts have become very popular.

Revolut

Revolut has burst into our lives like a sunrise and it is extremely popular with the younger generation of bankers, particularly across Europe. Technically, Revolut cannot call itself a bank, as to be a bank an institution needs to hold a banking license across all the regions it operates in, which Revolut does not. It does hold a license in Lithuania, and has been working on its FCA license in the UK since 2021, so there’s hope that it is coming. This also means your funds are not protected by the FSCS incase Revolut goes bankrupt, but they do have additional safety guards in place for your current accounts and savings.

Revolut is amazing for borderless spending. Following the movement of digital working thanks to Covid, we are now traveling more than we ever were before, with the option to also work online rather than be tied to an office in our hometown. So in comes Revolut.

With Revolut, you can hold up to 30 currencies in wallets to spend like a local when abroad. It also offers saving vaults, virtual one time cards to spend online, and it converts currency at the market rate. It also allows you to withdraw up to £200 per month for free on their standard account (higher if you have a paid subscription). The paid subscriptions also offer other perks such as cash back, travel insurance, higher interest rates on savings, etc. It’s a fantastic option if you travel a lot and spend abroad frequently, with low to minimum fees and the best conversion rates.

Wise

Wise is similar to Revolut, but more geared towards working abroad in my opinion. Wise, formerly TransferWise, gives market rate exchange rates with no additional markup when spending abroad, and allows you to hold up to 50 currencies in wallets. It also allows you to send money in 77 currencies and withdraw up to £200 per month in ATMs abroad for free.

The real game changer for me, is that it gives you ‘local’ bank account details for the UK, Europe, the USA, Australia, New Zealand, Singapore, Romania, Canada, Hungary and Turkey. This means, if you’re working with businesses in those countries, or businesses that use those currencies, they can pay you via these bank accounts in their local currency with no additional fees for you or them. It would be like you live in that country and they are paying a local employee. If you’re earning monthly and doing well, that’s a lot of money saved in fees.

Plus, to open a local bank account in those countries would require a lot of effort and paperwork, possibly even local citizenship, so this is a really good option if you’re a digital nomad.

It’s important to note again that Wise is not a bank, it’s an electronic money account, therefore it is not insured by the FSCS. However, Wise is still FCA regulated in the UK as an electronic money institution, and still needs to safeguard our money. Wise has stated that they do not lend out customers money like banks do, hence they are not required to have the insurance. They safeguard the money by keeping it segregated from their own operational costs and making it available to their clients whenever they need it.

So, to conclude, choosing the right current account is a pivotal step in managing your finances. I’ve given you quite a few options above depending on your wants and needs and lifestyle. Carefully weigh the pros and cons of traditional and digital banks, or you could even go for an alternative like an electronic money institution. Remember to consider your personal financial goals and needs when selecting the current account that's the perfect fit for you.

Remember, you can have more than one current account, so also bare this in mind if you are debating between multiple accounts on the best current account deals.

Any questions please drop me a comment below.

Happy current account hunting!

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