Different Types of Bank Account

There are many types of bank account available, from instant access current accounts to high interest savings accounts.

Here, we shall discuss the various types in order to help you decide on the right bank account for you.

Current Accounts

These are the most common type of bank account, and most people would find it quite difficult to get through their lives without one. A current account is designed for day to day use, providing holders with the ability to withdraw money from ATMs, write and cash cheques, pay for things using a debit card, pay bills automatically using direct debits and standing orders, and make instant transfers to different accounts. Often, they will come with an overdraft facility as well. Usually, the interest rate for overdrawn balances will be relatively high, and the credit interest rate will be very low when compared to savings accounts. However, there are exceptions to this rule, such as the high credit interest rate offered with Santander’s Preferred In-Credit Rate Bank Account (see the website for Santander’s entire range of bank accounts).

Savings Accounts

These accounts are intended as secondary accounts for people who already have a current account. Usually, you do not get a chequebook or debit card with this type of account, there will be no overdraft facility and you cannot set up direct debits or standing orders. However, you will usually get a much higher rate of credit interest, especially if you go for an account that has a 30 to 90 day notice period for withdrawals.

Cash ISAs

These are essentially savings accounts that have a tax break, which means you get a higher rate of interest overall. The maximum amount that you can put into a Cash ISA in any one tax year (1st April- 31 March) is £5,100.

Student Accounts

These current accounts are intended for students, and offer the some of the best terms of any type of bank account. For example, you can expect a large, interest free overdraft with a limit that is guaranteed to rise the longer you study for, and some kind of free gift such as money or a railcard. However, you should be aware that the terms of the account are only valid while you are a student, and you will probably have to start paying interest on the overdraft once you graduate. See UKCISA for more helpful student advice.