- The best bank accounts for overdrafts
- The best bank accounts to earn interest
- The best bank account for linked savings
- The best bank account to use overseas
- The best ethical current account
- The best packaged bank account
- The best bank account for cashback
- The best bank account switching bonus
- How to pick the best bank account
There’s a lot to think about when choosing a bank account, but the best bank account for you will depend on your needs and how you manage your money.
To help choose the right one, think about the features you use regularly. Do you want to make use of interest-free overdrafts, want to earn interest because you’re always in credit, or are you fed up of foreign transaction fees eating into your holiday spending money?
To help you pick the best bank account, we’ve broken down the different types of current accounts to help you pick the right one.
Here’s everything you need to know about what is available.
The best bank accounts for overdrafts
If you regularly dip into the red on your current account, it is a good idea to choose a bank account that specialises in low overdraft rates.
- First Direct (opens in new tab) - its current account comes with a £250 interest-free overdraft. Go over that amount though and you’ll be charged 39.9% EAR, so this is really only for you if you just need a little buffer.
- Nationwide’s FlexDirect (opens in new tab) - the current account offers an interest-free overdraft facility of up to £2,750 for the first year. How much you can get will depend on your credit score; to find out, use Nationwide’s eligibility check to see what you can get. After 12 months, there’s a hefty 39.9% overdraft rate to pay.
After the free or low rate offer expires, borrowing via an overdraft is an expensive way to borrow with most standard current accounts charging almost 39% EAR when you use your overdraft.
The best bank accounts to earn interest
If you keep a healthy balance in your current account, the interest rates available on these current accounts are decent compared to some of the best savings accounts on the market.
- Nationwide FlexDirect (opens in new tab) - New customers can earn 5% on cash balances up to £1,500 for the first 12 months, but after that the rate will drop to 0.25%. To earn that rate, you need to pay at least £1,000 per month into your account. If you’re new to Nationwide and are looking to close your existing account, you can also bag £100 for moving to Nationwide.
- Virgin Money M Plus account (opens in new tab) pays 2.02% on the first £1,000. If you have more to save, you can make use of it linked savings account, which pays 1.56% on balances up to £25,000. There is also a 20,000 Virgin Red points switching bonus. These can be used to buy experiences, flights or wine.
It is worth noting that the rates only apply to balances up to a certain limit and the deals may also only last for one year. If you have more to save, then it is worth considering an account with linked savings.
The best bank account for linked savings
There are several bank accounts available at the moment that come with a linked savings account with an attractive interest rate.
- First Direct (opens in new tab). Earn 3.50% with its linked regular saver saver account. You need to save between £25 and £300 per month to get the interest rate, which is paid after 12 months from opening the account. If you are new to First Direct, then you can also bag £125 if you close your existing account and switch to it. And if you’re not looking to close your existing account, then you can still open the First Direct account and receive a £20 welcome gift.
- Virgin Money M Plus account. The account pays 2.02% on up to £1,000 held in the current account, but you can then also earn 1.56% via its M Plus Saver on balances up to £25,000. You’ll also get 20,000 Virgin Red points when you switch.
- Chase (opens in new tab) - app-based bank Chase has a linked savings account that pays 1.5% on balances up to £250,000. It also has a ‘round-up’ feature paying 5% interest; this is where every time you spend money on the account the amount you spend is rounded up to the nearest £1 and the difference is put into a pot paying 5% interest.
The Chase current account also pays 1% cashback on most of your purchases for the first year.
The best bank account to use overseas
If you travel regularly, you may want a bank account that offers the best exchange rates and zero or low fees for foreign usage. Using the wrong card could mean you pay around 3% every time you use your card abroad. Here are the best bank accounts if you plan to use your bank card when travelling.
- Chase - does not charge a fee for using your card abroad or withdrawing cash from foreign ATMs. Add in all the benefits mentioned above including cashback on your spending for the first year and a linked savings account paying 1.5% , then this is a great bank account to consider.
- Starling Bank (opens in new tab). Although the digital bank does not offer much in terms of interest or linked savings, it does not charge you for using your card abroad - ATM withdrawals are free too (but note that ATM providers may charge you). It also comes with a number of tools to help you manage your money - this includes being able to create savings goals on the app, get categorised spending insights, split bills and you can even use the app to pay in cheques.
- Monzo (opens in new tab). The digital bank does not charge for using your card abroad. But while there are no fees for spending in shops, restaurants and online, there may be a charge for ATM withdrawals depending on where you use it.
- Monzo (opens in new tab) also comes with a number of tools that help you manage your money - this includes categorised spending, instant spending notifications and monthly spending summaries.
The best ethical current account
When you deposit money in bank, it can be used to fund all kinds of things, which includes investing in coal, oil and deforestation. Not happy? Pick a bank that uses your money ethically.
- Co-operative Bank (opens in new tab). The bank claims it won’t do business with any companies that conflict with its ethical policies which include promoting human rights, limiting climate change and promoting economic and social development.
Its current account also gives you up to £2.20 a month cashback – but you can choose to donate this directly to a charity.
- Triodos Bank (opens in new tab): The bank is known for its ‘green’ credentials and it only invests in renewable energy, sustainable farming, charities and education.
It refuses to do business with companies involved in fossil fuels, fast fashion, weapons or tobacco. Its bank card is also made using recyclable plant-based material. Its current account does however cost £3 a month, which Tridos says is a more honest and fair approach to charging banking customers than the way banks currently recoup their costs - which is to charge high interest rates and fees on overdrafts.
The ethical bank does charge 18% on overdrafts of up to £2,000. It only pays 0.65% on its online saver account.
Although green bank accounts make good sense for anyone looking to help the planet or support good causes, always have a look at the bank’s website to see what they are doing to ensure it aligns with your interests.
The best packaged bank account
A packaged bank account gives you a host of extra perks in return for a monthly fee. They can be good value as long as you need all the extras that you are paying for. here are the top ones:
Nationwide’s FlexPlus account (opens in new tab). For £13 a month you get:
- Family mobile phone insurance
- Worldwide family travel insurance (up to age 69, or 70+ if you pay a £65 a year upgrade)
- UK & European breakdown cover for account holders
At present you can also get up to £125 switching bonus from Nationwide.
Virgin Money (opens in new tab) - This account costs £14.50 a month, and may suit you if you are keen on gadget cover. For the fee you get:
- Family mobile phone, gadget cover
- World family travel insurance for anyone up to age 75
- Breakdown cover
You can earn 20,000 Virgin Red points if you switch to Virgin Money, plus benefit from 2.02% interest on balances up to £1,000.
Before you open a packaged bank account, we recommend pricing up what it would cost to pay for the benefits separately in order to make sure you are getting a good deal. You can find out more in our complete guide to packaged bank accounts.
The best bank account for cashback
There are some current accounts that will pay you cashback on your spending and direct debits. Here is the best available right now:
- Santander’s 123 Lite account (opens in new tab). For £2 a month you get varying rates of cashback on different household bills. Cashback is capped at £5 a month in each tier so you’ll earn a maximum of £15 a month.
|Cashback Rate||Household bills|
|1%||Council Tax; Mobile and home phone bills; Broadband; Paid-for TV packages; Santander mortgage payments|
|2%||Gas and electricity bills; Santander home insurance premiums; Santander life insurance premiums|
To get the cashback you have to pay in £500 a month, have at least two direct debits set up and use digital banking at least once every three months.
The best bank account switching bonus
If you are all about the free money, then you can grab up to £170 at the moment in switching bonuses.
HSBC (opens in new tab). HSBC is offering the most with £170 on the table to anyone switching to its HSBC Advance account who hasn’t held a HSBC current account, or one with First Direct since January 2019. To get the £170 you have to open an account and start a current account switch within 30 days. You must transfer at least two direct debits or standing orders and pay in £1,500 within 60 days.
Take a look at our article on the latest switching offers (opens in new tab) to find the best deals available now.
It’s a great time to get a new bank account. Banks are eager to attract new current account customers so there are plenty of tempting cashback deals available. But don’t just choose your current account based on the free cash. You want a bank account that works well for you, otherwise you’ll be switching again in a few months.
How to pick the best bank account
Before opening a new bank account, ask yourself what you want from it and choose one that ticks most of the boxes. Here are some things to consider:
- Do you need an overdraft facility?
- How often do you need to go into a branch?
- Would you like a linked savings account?
- Do you want to pay for extras such as travel insurance or breakdown cover?
- Would you like to earn cashback on your spending?
- Do you want to get paid to switch?
- Are you concerned about banking ethically?
Ruth is a personal finance journalist with 17 years’ experience writing about everything from pensions to pet insurance. Ruth started her career as a staff writer for MoneyWeek and she continues to edit their personal finance section. Ruth also writes for numerous national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping. Ruth is passionate about ethical investing and encouraging people to take control of their finances and not be put off by jargon.
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