There are several basic bank accounts for bank clients in the UK, among which current accounts and savings accounts. Before choosing an account, however, you should consider the charges you may incur. There are two cases in which banks will charge you, the first being if you go over the set limit on an arranged overdraft. The second case is when you overdraw and have not arranged an overdraft in advance. You should consider these charges because with some financial establishments, they can add up to a couple of hundreds of pounds.
When you are choosing from different types of accounts, you should obviously consider whether there is an overdraft facility and how much this is going to cost you. Another thing to ask about is the interest rate applicable to authorized overdrafts and if a different interest rate applies to unauthorized overdrafts. Banks can charge you for other services as well, so ask if there is a charge for using your card when travelling abroad, and if more than one rate applies. Naturally, you will want to know if there are non-financial benefits featured with your account of choice. Finally, ask if there is a minimum amount you should pay monthly as to qualify for some additional features, including preferential interest rates.
Most current accounts are offered with a check guarantee card and a check book. The former serves as a form of guarantee making checks widely acceptable. Direct debits and a debit card are also offered, along with an overdraft facility. In general, current accounts or transactional accounts are not intended for savings purposes and thus will not earn interest. They are offered for convenience of banks’ personal and business customers, and you can withdraw and deposit money as many times as you want. Withdrawal is subject to funds’ availability.
If you choose to go with a current account, you will benefit from Bankers’ automated clearing service or BACS, a facility accepting payments made to one’s account. Account holders are also allowed to make one-off payment to third parties from their account.
Another option of a basic bank account in the UK is the savings account. You can open an account in many financial establishments, among which ING Direct, Nationwide, Barclays, NatWest, TD Waterhouse, and many others. What benefits do clients get? You can put away money you would like to save for different purposes, for example, for a holiday, to buy furniture, or for emergencies. These accounts often pay higher interest rates compared to transactional accounts. So, you see your money growing. Naturally, banks offer a variety of savings accounts, with the main differences being the minimum amount you need to keep in the account and how quickly you can access the money you deposited. Another difference is in the rate and type of interest paid. Finally, many of the credit unions feature savings accounts, with members being allowed to take money out and put money in. Wages and benefits can also be deposited directly into the account.