How to choose which bank account to get –
What we're covering..
There are sooo many different bank accounts out there – but how do you pick which one to get? 🥴
Today we’re going to tell you 6 things you should consider when picking a bank account!
Disclaimer: This website provides information for guidance and educational purposes only. The Grown-Up School does not provide regulated financial advice. You can seek independent financial advice from a suitably qualified and regulated professional advisor. Check out our disclaimer policy for more information.
Top tip – The Money Saving Expert (UK) 🤓
Did you know?
The UK’s “Money Saving Expert” Martin Lewis keeps a close eye on all the bank accounts available. 🕵️♀️
He regularly posts a list of the best bank accounts here! –
What is a current account?
A current account is a type of bank account that you can use to manage day-to-day money.
You can use current accounts for things like:
- Keeping money safe
- Receiving money – e.g. getting paid from your job
- Transferring money somewhere else – e.g. paying for shopping, paying bills
Personal current accounts are some of the most common types of account in the United Kingdom.
These accounts allow you to use online banking services to deposit and withdraw money, pay in wages and make payments to other people.
Current accounts are called “current” accounts because they are set up to look after the money you’re “currently” using.
6 things you should consider when picking a bank account 🤔
1. Interest 📈
The first things you should consider when getting a bank account are:
- Do I get any free money with it?
- Will it cost me money at all?
Do you earn interest? 🤑
Who loves getting free money? 🙋♀️
When you get a bank account, the bank might regularly pay you free money called interest!
(Banks “borrow” your money off you, which is why they give you interest).
If banks offer you interest with an account, they’ll usually give it as a percentage e.g. “2% interest”.
They will then pay you that percentage based on how much money you put in the account! 💰
For example, if your interest rate was 2% –
- If you had £100 in the account, they might pay you £2 (2% of £100) in “interest” to say thank you.
- If you had £1,000 in the account, they might pay you £20 (2% of £1,000) in “interest” to say thank you.
The more money you keep in the account, the more interest you earn! 🤑
When you get a bank account that pays interest, a high interest rate is better! 📈
Do you pay interest? 😭
Some bank accounts let you borrow money, as well as giving you somewhere to stash your money! 💸
When you borrow money from a bank, you usually have to pay them interest (e.g. £100 in “extra money” to say thank you)
If you have to pay interest to say “thank you” when you get a bank an account, they’ll usually give it as a percentage e.g. “10% interest”.
You then have to pay that percentage, based on how much money you borrowed! 💰
For example, if your interest rate was 10% –
- If you borrowed £100, you might have to pay back an extra £10 to say thank you (10% of £100). You would have to pay back £110 in total.
- If you borrowed £1,000, you might have to pay back an extra £100 to say thank you (10% of £1,000). You would have to pay back £1,100 in total.
The more money you borrow, the more money you have to pay in interest. ☹️
When borrowing money, a low interest rate is better! (or sometimes you can even get 0% interest!) 📉
Do you have to pay fees? 💷
Some bank accounts come with fees that you have to pay every month or every year. 📆
You can get a lot of bank accounts for free – so it’s important to decide if paying fees are worth it! 🤷♀️
2. Card types 💳
Different bank accounts come with different cards to help you spend money.
It’s important to decide which cards you’d prefer to get, to help you spend money!
Debit cards 🛒
Debit cards are plastic cards that banks give you, to help you spend money from your own bank account.
You can usually use debit cards at cash machines, online, and inside shops to pay for things. 🛍️
Cash cards 💸
Cash cards are plastic cards that banks give you, to help you spend money from your own bank account.
Usually you can only use cash cards to take out paper cash notes from a cash machine. 💷🏧
Credit cards 💰
Credit cards are plastic cards that banks offer you, to help you borrow money to buy things.
When you use a credit card, you are borrowing money. Usually you have to repay this money regularly (every month) until the loan is paid off.
When you borrow money with a credit card, you could be asked to pay “interest“ (extra money) to say thank you for the loan. 💳
3. Withdrawal limits 🚧
Some bank accounts come with “withdrawal limits”, meaning you can only spend a certain amount each day.
For example, you might have a £1,000 withdrawal limit on your bank account, so you can’t spend more than £1,000 in a day.
It’s important to consider how much money you’d need to spend in an expensive emergency, before you agree to a withdrawal limit!
There are 2 main reasons why bank accounts have withdrawal limits:
1. Security 🔐
If you have a withdrawal limit on your bank account, criminals won’t be able to steal all your money in one go! 👮♀️🚓
2. Making things more predictable 🔮
When you put money into a bank account, you’re technically “lending” that money to the bank.
Withdrawal limits help to make it easier for banks to predict how much money they have. 🔮
4. Overdrafts 💰
Did you know that some bank accounts can go into minuses? 😬➖
(e.g. you have -£1,000 in your account)
An overdraft lets you borrow extra money through your bank account when it is empty. 🤷♀️
For example, if you have no money left in your account and you have a £150 overdraft:
- You could borrow/spend £150, so your bank balance would be -£150.
It is important to be very careful when using overdrafts to borrow money. – It’s money you have to pay back!
When you borrow money with an overdraft, you could be asked to pay “interest“ (extra money) to say thank you for the loan. 💳
It’s important to decide if you:
- Need an overdraft with your account e.g. would it help you to manage your money more easily?
- Are able to pay back overdrafts comfortably
- Can avoid getting into debt problems if you get an overdraft
5. Ways to bank 🏦
It’s really important to consider how you want to use your bank account. 💳
Do you want to talk to a human on the phone to help with your banking?
Or, would you prefer to do it all yourself online?
Different bank accounts, come with different ways to bank.
Some banks let you log into their website online to manage your bank account. 📶
Prefer to bank on your mobile phone?
Some bank accounts let you use an app to manage your money!💸
Do you like buying things quickly when you’re out shopping?
Contactless lets you pay for things by simply tapping your payment card on a card payment machine! (you don’t need to type in a security code or anything).
In the UK, you can buy up to £100 of shopping with contactless. 🛍️
On the other hand, some people don’t like contactless, because your card could get stolen and used to by things!
Mobile wallet 👛
If you’re really tech savvy, you might want to pay at shops using your mobile phone instead of a payment card!
Some bank accounts let you do this!📱
In-person branches 🏦
If you prefer dealing with real life humans when you need help with your bank account, it’s important to look for a bank account that is connected to “in-person branches”.
What bank branches are in your local area? 🗺️
This means that you can walk into a physical bank to get help with your account!
Over the phone 🤳
If you prefer dealing with people over the phone when you need help with your bank account, it’s important to look for a bank account that lets you bank via telephone. 📞
6. Extra perks🎉
Do you love entertainment?
Some bank accounts come with free tickets for things like:
- Theme parks
Text alerts 📲
Are you bad at remembering to check your bank account? 🤔
Some bank accounts will text you alerts to keep you up-to-date on your account.
You might get text alerts for things like:
- When you’ve spent money (and how much)
- How much money is left in your account
Did you know that some banks actually give you money for opening an account with them? 🤑
They either give you real money, or loyalty points as a reward for getting an account. This is called cashback!
Some people switch their bank accounts regularly to take advantage of the free money you can get for switching accounts! 💷
Vouchers and discounts 🎟️
Love a good discount? 💸
Lots of bank accounts will give you vouchers/discounts!
You might get vouchers/discounts for things like:
- Clothes 👕
- Food and drink 🍔
- Supermarket shopping 🛒
- Holidays 🏖️
- Transport 🚄
Charity donations 🌍
Do you love supporting charity?
Some bank accounts will help you to support charities by doing things like:
- Donating to charity on your behalf 💷
- Making it easier to donate to charity from your account🤗
So that’s it!
When getting a bank account you should consider:
- Interest 📈
- Card types 💳
- Withdrawal limits 🚧
- Overdrafts 💰
- Ways to bank 🏦
- Extra perks🎉
If you know any friends or family members who might benefit from learning about how to choose a bank account, share this post with them!
Finally, don’t forget to check out our similar articles below!
Similar articles to “How to choose which bank account to get” ⬇️
for free daily Grown-Up lessons 🙌🎉