The Bank account comparison website and the different types of UK Bank Accounts
Bank accounts are a vital part of everyday life and 90 per cent of people in the UK use their account on a regular basis. When you open a bank account it allows you to control your money on a day-to-day basis giving you the facility to withdraw money in cash on demand through the most popular automated services via ATM (automated teller machine) or over the counter.
Bank accounts enable us to organise their finances more efficiently through the use of direct debits and standing orders and gives us the ability to pay for products and services via debit card payments and cheques. Banks also provide a range of additional financial products and services such as savings accounts and bond investments, mortgages and personal loans, credit cards and insurance.
Bank Accounts with overdrafts
Overdrafts are either 'arranged' or 'unarranged'. The difference is the interest rate and charges that apply to each service.
With an arranged overdraft your bank has agreed in advance that you can accumulate a negative balance on your account up to an agreed level. If however you go beyond the agreed limit or, where there is no agreement in place and you go overdrawn this is considered as unarranged. With an unarranged overdraft you are expected to bring the account back within the limit that is agreed.
Online banking and Telephone Banking
Traditional banks always provided a front of house service through a network of branches. Due to cutting costs there has seen the introduction of online banking and telephone banking as they are instant and are not reliant on waiting around.
All banks tend to offer a standard package of a debit card and if requested a chequebook, and an arranged overdraft. Depending on which bank account you have chosen will depend on the set of interest rates and charges for the account.
Free Bank Accounts
The most used bank account in the UK is the free-if-in-credit or free banking account because if you are in credit then you do not pay any direct fees for using your account. The basic bank account offers services such as debit card and processing direct debits. Interest is usually charged on any money borrowed and usually significantly higher charges on borrowing beyond any arranged overdraft limit or if the bank refuses to make a payment that would take an account beyond such a limit. There may be little credit interest paid on credit balances. Some of the new free banking accounts offer special features, such as an interest free overdraft or £100 cash back or an opening a free bank account.
Although free bank accounts do not have any explicit charges for the account when you stay in credit, it does effectively have a cost, which may not always be apparent by way of interest forgone. This is the amount that consumers could earn by putting their positive balances in a higher interest rate account. Banks themselves earn revenues from credit balances by lending this money out at higher rates of interest.
The transaction-based model charges customers per transaction (or per block of transactions), for example, per direct debit, per cheque or per deposit. Sometimes referred to as the ‘pay-as-you-go' model, this was popular in the UK up to around 1985. And is the second best banking method used in Northern Ireland.
Monthly Subscription or Annual Subscription Bank Account
Consumers pay a regular fee monthly fee or an annual fee, which is taken directly from the account. Either there are no individual transaction charges or a certain number are provided free with a charge payable for any additional transactions. This bank account is generally not available in the UK
This bank account is a monthly fee where the subscription fee also covers additional benefits. These may range from travel insurance and road breakdown cover to discounts from a number of retailers and hotels. The packaged account is becoming a popular bank account due to the significant savings they can make especially on insurance.
For savings accounts, best bank accounts offer
High interest payout
No minimum balance account
Linking to checking accounts so that you can pay all your bills through that account
While scouting around for banks, you need to be sure about three main factors which are your purpose for opening the account and why you need this account and finally how many transaction you are likely to make in a year
Linking to savings account so that extra money can be deposited in it, thus earning you interest (check with credit union to find out which banks offer the best rates of interest).
Internet-only banks pay better rates on savings accounts since their overheads are low. Some banks offer a dedicated finance manager, so if there is a problem, you can call the bank and talk to them.
The only drawback to internet banking is depositing money. In case direct deposit is not possible, then you will have to mail the deposit to the bank, or deposit it in the Bank's ATM, or electronically transfer funds from another bank.
One excellent comparison features about all banking providers so that finding a bank is simple and quick. Their sites are easy-to-understand, and easy-to-navigate. They provide transaction reports and warn you in case of security threats.
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Compare Bank Accounts