What are the advantages of a current account?
A good current account should help you manage your money, grow it, and get more from your day-to-day spending. From debit cards to credit scores, this guide breaks down the key advantages of current accounts, as well as a few things to watch out for.
What is a current account?
A current account is simply a bank account you use for your everyday finances, such as buying groceries on your debit card, or paying for your bills via a Direct Debit. This makes it different from a savings account, where you let your money you don’t need day-to-day sit untouched for longer periods of time earning interest.
Benefits of a current account
The main benefit of a current account is that it makes managing your day-to-day finances so much easier. With a current account:
You have quick access to cash
With your current account, your money is kept securely with your bank, but you can easily withdraw cash when you need to. There’s normally a maximum amount you can withdraw at a cash point, and obviously you’ll be limited by the sum that is in your account. While most cash machines are free to use, especially those at high street banks, some may charge a withdrawal fee.
Explore different ways to budget
A big benefit of current accounts is that you have greater visibility over your spending, as you can see exactly what is going where. On top of this, many banking apps now have budgeting features that can help you stay in control of your finances.
You can receive payments
You can receive one-off and recurring payments into your current account. This makes it a safe and simple way to receive things like your monthly salary or pension payments.
You can make one-off payments
If you need to pay someone for a service, or even just pay back a friend for dinner, you can make a one-off payment from your current account. This might be easier than dealing with cash, especially for larger sums of money.
You can set up recurring payments
Setting up recurring payments can simplify paying your bills, while allowing you to track how much you are spending each month. For example, Direct Debits allow a third party, such as your energy company or broadband provider, to automatically take money from your account on a set date. Or you could create a standing order, where you pay a third party, such as your landlord, a set sum each month.
You can use a debit card
Every current account comes with a digital and/or physical debit card that allows you to spend money in-store and online. Not only does this give you an alternative to paying with cash, what you spend is recorded on your current account. This can make it both easier to budget, and easier to spot any fraudulent activity on your account.
You can bank online
With a current account, you’ll be able to track your finances, make payments, and transfer funds online or in-app. This gives you the freedom to manage your finances on the go, wherever you are in the world.
You can start to build your credit score
Using current account features, like a Direct Debit to repay any borrowing you have, can be a simple way to start building your credit history and improving your credit score. That’s because it helps show you can make payments on time and avoid spending more than you have. Over time, this can improve your chances of being approved for things like a mortgage, credit card or bank loan.
Your money is protected
Your eligible deposits, meaning the money you hold in a current account, are protected up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS), the UK's deposit guarantee scheme. It’s important to note, any money you hold above this limit is unlikely to be covered.
Please ask for further information or visit www.fscs.org.uk
How much does a current account cost?
It’s very easy to find a current account that doesn't cost you any money. For example, Biscuit from Zopa is free to open and there are no monthly fees.
However, there are also paid-for current accounts that come with a monthly fee. These normally include extra benefits, such as higher interest rates. These monthly fees can start as low as £5 and go up above £50 a month for some accounts.
There may be other costs associated with your current account, including overdraft fees, and charges for using your card abroad.
Open your free Biscuit current account
When you open a free Biscuit current account, you’re rewarded with:
2% AER* (1.98% gross**) interest on your balance.
An exclusive 7.1% AER* (6.87%**) variable savings rate.
2% cashback on up to £1,500 of eligible Direct Debits a year.
Fee-free spending on your card when you’re outside the UK.
Best of all, it takes as little as 5 minutes to open an account. So what are you waiting for? Tuck in today!
Learn more about Zopa's Biscuit bank account*AER stands for 'annual equivalent rate'. We pay you interest on a monthly basis, but AER shows you the rate you’d get if this monthly interest was compounded and paid once a year instead. We provide an AER to make it easier for you to compare our rates with other providers.
**We pay gross interest, which means nothing is deducted for tax.
FAQs
Why is a current account better than a savings account?
A current account is a better option for everyday banking than a savings account. This is because with a current account you can easily withdraw money, make payments, and spend using your debit card. A savings account is better for earning interest on your balance long-term.
Is it good to keep money in a current account?
It’s a good idea to keep enough money in your current account to cover bills, day-to-day spending and any other recurring payments. On top of this, it’s sensible to factor in an emergency fund if you can – just in case you need quick access to cash. It may then be better to keep larger sums of money in a savings account, so you can earn a higher rate of interest.
Can I withdraw money from my current account?
Yes, you can easily withdraw money from your current account. You can do so at cash machines, as well as over the counter if your bank has high street branches.
