A3 Current Accounts

Current account meaning

• An account with a bank or building society designed for frequent use, eg; regular deposits and withdrawals

Features of current account

• rate of interest paid on any positive balance

• rate of interest charged on s negative balance

• Overdraft limit

• charges on unauthorised overdrafts

• additional incentives

Overdraft meaning

• The ability to withdraw money that you do not have from a Current account

Types of Current accounts

• Standard

• Packaged/premium

• Basic

• Student

Standard account

• This is the normal account offered to customers with a reasonable credit rating. It includes standard features such as the ability to pay and withdraw money, cheque book, debit card, interest payments on positive balances and a pre-agreed overdraft limit

Standard account advantages

• No charges on credit balances

• Offers the holder a wide range of facilities including a cheque book, debit/cash card and possibly an overdraft facility

• Convenient for receiving regular payments, eg; wages and making regular withdrawls

Standard account disadvantages

• Potentially high charges on the use of an overdraft facility

• standard features only i.g; no additional perks

premium/packaged

• This account offers additional features to a standard account, for example; car and house insurance, credit card protection, breakdown cover and cash back on certain transactions.

• The bank may have additional charges for these accounts so it is important that you check whether you are being offered a good deal or not

Premium/packaged advantages

• No charges on credit balances

• Offers the holder a wide range of facilities including a cheque book, debit/cash card and possibly an overdraft facility

• Convenient for receiving regular payments, eg; wages and making regular withdrawals

• Offers the holder additional perks at a packaged price cheaper than anquiring them individually (standard additional features include thing such as; holiday,travel insurance, break down cover and phone protections

Premium/packaged disadvantages

• Additional monthly charge is frequently applied

• The package offered may not offer value for money or meet the needs of the individual account holder

Basic

• This account offers only limited features designed for those customers who may otherwise find it difficult to open a bank account due to poor credit ratings. A basic account will not offer an overdraft and will not pay interest on positive balances

Basic advantages

• Available to customers with a low credit rating

• Offers an easy first step for individuals to gain access ti basic banking facilities, i.e; the ability to pay in and withdraw cash

Basic disadvantages

• Limited facilities, eg; no debit card or overdraft facility

Student

• This account is designed specifically to meet the needs to learners. Common features include an agree overdraft limit and incentives to join the bank, for example free rail cards or cash. Banks are keen to attract learners because once a young person has joined a bank they trend to stay with that bank for life. However, this is less often the case now due to the availability of information on the internet and the ease with which banks can be changed.

Student advantages

• Course fees and student loans can be easily handled

• Bonuses offered are designed to meet the needs of learners, eg; discounts on travel or small lump sum cash payment

student disadvantages

• Overdraft facilities could encourage overspending

• Charges for overspending are high limited facilities