You and your money
As part of your New Year review of your finances, you may be thinking about opening a bank account. This can be a handy way to manage your money, but it's worth taking care to get one that's right for you. Banks, building societies – and now your local credit union – offer bank accounts with different features.
A basic bank account lets you receive money, pay bills and use a cash card. But it won't usually allow you to go overdrawn.
A current account offers more features, such as:
- direct debits and standing orders;
- a debit card;
- a cheque book and guarantee card.
It may pay interest on your money, allow overdrafts and offer special services, such as sending money abroad. But you often have to pay a charge for these.
The big banks have been in the news recently for the charges they make when customers, direct debits "bounce". Sometimes this happens because we simply forget to leave enough money in the account to meet these regular payments. Charges of £30 or more are common, and the Office of Fair Trading is currently looking into whether they are reasonable.
To avoid being charged in the first place, take care to set up your direct debits and standing orders for the same day of the week or month as your income is paid in. Then your regular payments will be taken care of before you visit the cash machine.
Keep an eye on your account by getting regular statements or going on-line. Then you can transfer funds if there's a danger of going overdrawn.