NimbleFins Best Bank Accounts Guide
In this guide
- What are the best bank accounts now?
- Types of bank accounts explained
- Bank accounts: 5 must-knows
- FAQs
What are the best bank accounts?
The current account market is fierce right now as banks fight with each another for new customers. This hot competition has greatly increased the number of top accounts, meaning now's a very good time to ditch your old bank.
So, whether you're looking for free cash to switch, an account with perks, or one that pays interest on cash, here's an overview of the best bank accounts.
Best bank accounts offering cash for switching
To attract new customers, many banks will pay you cold, hard cash in return for switching from another bank. Here’s a list of the bank accounts that reward switchers with a juicy bonus.
Note: If you go for one of the below offers, pay close attention to the qualifying criteria. For example, to bag a bonus you may have to move over a minimum number of direct debits, or deposit a set amount into the account.
| Account | Switch bonus | Qualifying criteria | Other stipulations | Other info |
|---|---|---|---|---|
| First Direct | £175 | Switch, and within 30 days pay in £1,000+ move over 2+ direct debits | New customers only, who haven’t previously held a first direct product | Not available to people who opened an HSBC current account on or after 1 January 2018. |
Best bank accounts for ongoing perks
If you're looking for a bank account with perks, consider one that pays cashback on bills or everyday spending. Alternatively, you may wish to explore a packaged bank account offering free insurance and other benefits. Here's a pick of the top accounts:
| Account | Perk(s) | Perk info | Monthly fee |
|---|---|---|---|
| Chase Bank | 1% cashback for 1 yr. 4.1% AER variable interest via linked savings account | Must open account via mobile app. Cashback must be activated | None |
| Santander Edge | Cashback on bills. 1% on water, energy, council tax, mobile & phone, broadband and TV | Cashback capped at £20/mth | £3 |
| Halifax Reward | £5/mth (or other perks) | You must stay in credit & spend £500+/month on your debit card, or keep £5,000 in your account | £3 (unless you pay in £1,500/mth) |
| NatWest Reward | £5/mth | Pay in £1,250+, pay out 2+ direct debits & log in to the NatWest mobile app every month | £2 |
| Nationwide FlexPlus | Family worldwide travel and mobile phone cover. European breakdown cover | Travel insurance includes winter sports, golf, weddings and business cover for you & family | £13 |
Best bank accounts for interest
If you've savings you may wish to explore the best savings accounts. However, if you're looking to earn interest in a current account, here's the top picks:
| Account | Savings interest rate (AER variable) | Interest rate info | Minimum deposit |
|---|---|---|---|
| Barclays Rainy Day Saver (Barclays current account custs only) | 5.12% AER on up to £5,000 | Rate falls to 1.16% on anything above £5,000 | £800 (to linked current account) |
| Kroo* | 4.35% | Interest rate applies on balances up to £85,000 | None |
| Chase Bank | 4.1% | Interest paid on Chase's linked savings account which you must open separately | None |
Best bank accounts for overdrafts
If you're regularly overdrawn or dip into the red from time to time, a bank account with a 0% overdraft could be for you. Here's the top picks:
| Account | Arranged overdraft rate (EAR) | Unarranged overdraft rate (EAR) | Other info |
|---|---|---|---|
| First Direct | 0% up to £250, 39% EAR variable above | 39% EAR variable (max £20/mth) | N/A |
| Nationwide FlexDirect | 0% for 1yr, 39.9% EAR from yr 2 | N/A |
Best bank accounts for overseas use
Many banks charge hefty fees when you use your debit card abroad, with overseas spending fees as high as 3% not uncommon. While a travel credit card is a straightforward solution, if you'd rather use a debit card, here's a pick of the best accounts that won't charge you for using your card abroad.
| Account | Overseas spending fees | Overseas ATM withdrawal fees (AER) | Other info |
|---|---|---|---|
| Chase Bank | None | None (£700/mth limit) | App-only account. 1% cashback on spending for 1yr, including overseas purchases |
| Starling Bank | None | None (£300/day limit) | App-only account |
| First Direct | None | None (£500/day limit) | N/A |
Best student bank accounts
If you're studying, you may qualify for a student bank account. These types of account typically offer student oriented perks, such as a decent 0% overdraft. Here's our picks:
| Account | Perk | Perk info | Other info |
|---|---|---|---|
| Santander 123 Student | 4-year 16-25 railcard & decent 0% overdraft. | Railcard saves 1/3 on rail fares in GB. £1,500 0% overdraft (years 1-3) | Must be a first-year uni student or a level 4-7 apprenticeship |
| HSBC | Decent 0% overdraft | Up to £1,000 in year 2, £2,000 in year 2, £3,000 in years 3+ | Must be 1st year (under/post)graduate, or studying certain BTEC courses. Can also get £100 cashback for making min 5 transactions on HSBC debit card within 30 days of account opening |
| NatWest | Decent 0% overdraft | Guaranteed £500 0% overdraft in term 1, then up to £2,000 until end of 2nd yr, and up to £3,250 for 3rd year | N/A |
| Nationwide | Decent 0% overdraft | Up to £1,000 in year 2, £2,000 in year 2, £3,000 in years 3+. | Open to students on UCAS-accredited course or apprenticeship (must apply within 2 mths of study) |
What is a bank account?
A bank account allows you to deposit funds, and to send or receive one-off payments. A bank account also allows you to make regular payments, such as through direct debits or standing orders.
As many bank accounts offer overdrafts, most require applicants to pass a credit check. These checks are usually far less stringent than those performed for other types of credit, such as a credit card or loan, though being rejected for a bank account is possible.
The majority of UK bank accounts are fee-free, though some specialist accounts charge a monthly fee in return for perks—such as ongoing cashback or monthly travel insurance. Despite this, you can still grab a decent account even if you don't have the appetite to pay a monthly fee.
To understand which bank account is right for you, it's worth understanding the different types of bank account out there.
What are the different types of bank account?
Bank accounts come in various shapes and sizes. Some may offer generous 0% overdrafts, while others may offer ongoing perks or a cash bonus for switching. To help you decide which type to open, let's explore the different types of bank accounts:
What is a bank account with a switching offer?
Banks love new customers. When a bank expands its customer base, it has more opportunities to sell its own products—such as insurance, personal loans, or even mortgages. However, it's fair to say that much of the UK population is reluctant to move banks.
To encourage customers to act, many banks shamelessly offer newbies cold, hard cash in return for switching.
Switching accounts is far easier than it sounds. Thanks to the 7-day switch guarantee, the process shouldn't take longer than 7 working days. Under this scheme, your old account will be automatically closed for you, and any payments coming out of your old account, including standing orders and direct debits, will be transferred over. If mistakes occur, the switch guarantee ensures you won't suffer any financial loss.
What is a reward bank account?
A reward bank account refers to current accounts that pay 'rewards' to account holders each month. To earn this reward, you may be required make a set number of debit card transactions, or perhaps pay in a set amount into your account each month.
Instead of rewards, some bank accounts may pay cashback instead. Cashback may apply to everyday spending, or bill payments.
While bank accounts paying rewards or cashback can be a nifty way to earn some free cash, they aren't for everyone. That's because these accounts usually come with a monthly fee. While any cashback or rewards you earn may exceed the monthly fee, this won't be for case for all. For example, if you have an account that pays cashback, you may not benefit if you're a low spender, or you've low monthly bills.
What is a packaged bank account?
Packaged bank accounts are accounts that offer perks. For example, free travel insurance, mobile phone and/or breakdown cover are typical perks on offer with these types of account.
Unsurprisingly, 'free' perks come at a price—usually in the form of a hefty monthly fee. Despite this, packaged bank accounts can be good value for some. However, if you're unlikely to use all of the included benefits, it's worth considering whether you'd be better off opting for a normal bank account instead. That's because if you need travel or breakdown cover, you can simply purchase these products separately.
When it comes to understanding the value of a packaged bank account, it really pays to do the maths before you apply.
What is an high interest bank account?
Some bank accounts pay a decent interest rate on cash balances. If the rate is particularly good, the account may be considered a 'high interest' account.
When looking at interest rates on bank accounts, always take headline rates with a pinch of salt. That's because high interest rates on these accounts usually only apply to small sums. Also, some bank accounts will only pay interest to account holders who fulfill certain criteria—such as paying in a set amount into the account each month.
While you shouldn't disregard high interest bank accounts, it's worth looking at the best savings accounts to compare options—especially if you have lots of savings.
What is a bank account for overseas use?
If you're a keen traveller, do consider a top travel credit card. These are specialist types of credit cards, and the top-rated deals won't charge you for using them abroad.
However, if you'd rather not apply for a new credit card, or you'd simply prefer a debit card, then a bank account for overseas use can be a good option. These bank accounts don't charge for overseas spending or cash withdrawals.
Bank accounts: Five must-knows.
1. Many bank accounts require a hard credit check. When you apply for a bank account, you'll usually have to pass a credit check. While these checks are usually less stringent than checks required for a credit card or loan, they're still recorded on your credit file.
While you shouldn't be overly worried about these checks, if you're planning to make a big application for credit in the near future — such as a mortgage — you may wish to prioritise your credit application over switching banks.
It's worth knowing that some bank accounts conduct 'soft' credit checks when you apply instead of 'hard' credit checks. Unlike hard credit checks, soft credit checks aren't recorded on your credit file. Chase Bank and Starling are two providers that perform soft checks.
2. Cash in a bank is protected, up to £85,000. FSCS savings safety is very important. That’s because if your bank goes bust, you’ll get your money back—up to the £85,000 limit (For joint accounts, the limit is £170,000). This protection applies as long as your provider has a UK banking licence.
Note: Some banks share FSCS protection with others, so this is something to keep in mind. For example, Halifax shares its FSCS savings safety protection with Bank of Scotland. As a result, savers shouldn’t stash more than £85,000 across these two providers. If you’re unsure if your bank shares its savings safety protection the FSCS has a handy tool on its website.
3. You can grab multiple switch bonuses. If you're tempted by free cash, don't be ashamed to switch banks solely for the incentive. It's perfectly acceptable to switch bank accounts, grab the incentive and then move on to another offer. Just be mindful that you may have to wait a while in order to fulfill any switching criteria as part of the deal.
Note: If you want free switching cash but are happy with your current bank, there's nothing stopping you opening another account and using that account solely for switching. In other words, you can consider your second account as a way to bag free cash, without losing access to your 'main' account.
4. Reward bank accounts can be decent (but do the maths). If you wish to consider a bank account with a monthly fee, do the maths to calculate whether it's worth the expense.
For example, if you go for a bank account that offers cashback on bills, it's really important to understand how much cashback you're likely to earn each month. If it's more than the monthly fee, then great! However if you've low bills, you may find that any cashback you earn will be dwarfed by the monthly fee.
5. You can often get round tricky bank switching criteria. Banks often attach stipulations to their switching offers. For example, you may have to pay in a set amount into your account each month, or pay out a set number of standing orders.
Stipulations like these are common because banks want to ensure they pick up customers who are switching their main account. However, it is often possible to overcome them, even if you don't want to switch your main account.
For example, if a switch bonus requires a minimum pay in to qualify, you may be able to transfer money from another current account in your name. Once the money hits your new account, there's nothing stopping you withdrawing it straight away. Likewise, if a bank switch offer requires you to pay out two standing orders each month, you may be able to get around this rule by setting up two standing orders to another one of your accounts.
When it comes to meeting bank switch criteria, it's important to pay close attention to the terms and conditions of any offer.
FAQs
How many bank accounts can I have?
In general, there are no limits to how many bank accounts you can have. However, some banks will put a limit on the number of their accounts you can hold at any one time.
What is a basic bank account?
Sadly, not everyone can be accepted for 'normal' bank accounts, especially those who've struggled financially in the past. If that's you, there are some basic bank accounts out there that will guarantee acceptance to everyone who passes a simple ID check. These accounts rarely offer any perks, but can be a lifeline for those unable to get any other account.
Can switching banks harm my credit score?
Many bank accounts require you to pass a 'hard' credit check. This is recorded on your credit file, and usually stays there for six months or so. While this isn't much to worry about, if you're seeking to apply for credit in the near future, it can be a good idea to avoid applying for multiple bank accounts over a short space of time. Instead, prioritise your credit application, and then think about switching banks.
What is an overdraft?
An overdraft is a form of credit. You go into your overdraft whenever your bank balance falls into the red. Overdrafts can be arranged or unarranged.
An 'arranged overdraft' is when your bank gives you some sort of interest-free buffer should you exceed your balance. As a result, agreed, arranged overdrafts can give you some respite if you dip into the red. An 'unarranged overdraft' is when you exceed your credit balance, and you haven't agreed a 0% interest-free overdraft with your bank. Dipping into an unarranged overdraft is often a bad idea, as hefty interest usually applies.
If you often find yourself exceeding your balance, it's worth looking at bank accounts that offer a decent 0% overdraft.
How can I open a bank account?
The process of opening a bank account can vary between providers. Some banks will allow you to open an account online, or by mobile app. Others may allow you open an account over the phone, in branch, or even by post. To open a bank account you often have to pass a credit check.
Is my money safe in a bank account?
If your bank has a UK banking licence your cash is safe in the (unlikely) event your provider goes bust. This is all thanks to the £85,000 FSCS savings safety protection backed by the UK Government.
For providers without a UK banking licence, the protection doesn't apply. However, if you have cash in a non-UK account, you may still be able to benefit from another form of savings safety protection. For example, if you have cash in a European bank, it’s possible your money will be covered under an alternative savings safety protection scheme. That’s because such protections are also common in Europe. However, if you do have money saved in a European bank and it goes bust, you’ll be reliant on an overseas Government to return your cash.
Do I need a bank account with a branch?
Online and app-only bank accounts have grown in popularity over recent years. This tells us that customers are seemingly becoming more comfortable with moving away from traditional banking. However, some customers may prefer to have access to a branch which they can visit in-person.
How do I deposit money if my bank has no branch?
Your local Post Office may allow you to deposit cash into an online or app-only bank account. That's because the Post Office has agreements with a number of UK banks allowing customers to complete basic banking transactions at their local branch.
What is a student bank account?
Student bank accounts are targeted towards students and are usually only available to those studying. Student accounts might offer perks attractive to students, such as 0% overdraft deals.
How can you close a bank account?
If you want to close a bank account, you may have to contact your provider directly. You might be able to do this online, though some banks might request that you visit a branch.
Alternatively, if you switch to another bank account using the 7-day switch service, your old account will be automatically closed for you. Given the fact that all payments will be automatically transferred over for you, switching accounts is probably the easiest way to close an old account.
How does a joint bank account work?
A joint bank account refers to a bank account in two names. Joint accounts are typically held between trusted partners, such as married couples.
What is a children's bank account?
A children's bank account is a current account aimed at under 18s. Interest rates on children's accounts can be quite generous, though are usually only offered on low amounts. Some children's bank accounts come with a 'cash card' which give young account holders the ability to withdraw cash at an ATM.
How easy is it to switch bank accounts?
The easiest way to switch bank accounts is to notify your new bank that you'd like to use the 7-day switch guarantee when you apply for your new account. Do this, and your new bank will move over your balance, plus any payments you have coming in and out of your account. Under the switch process, your old account will be automatically closed for you.
To switch account, you'll need to have the account number and sort code of the bank you wish to switch from.