What Is A Current Account?

We explain exactly how current accounts work, what features they offer and how to apply for one.

Updated: May 18, 2024
Rachel Wait

Written By

Rachel Wait

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A current account is a bank account designed to help you manage your finances. Your salary can be paid into your current account and you can use it to set up direct debits and standing orders to pay bills. You’ll usually have a debit card with the account too.

In this article, we explain exactly how current accounts work, what features they offer and how to apply for one.

How does a current account work?

When you open a current account, you’ll be given a sort code and account number that you can pass on to your employer, other people and businesses to enable them to pay money into your account. You’ll also be able to transfer money from your current account to other people and organisations. 

Your account will usually come with a contactless debit card that you can use at ATMs to withdraw funds from your account, or make payments in shops and online.

Some current accounts will also offer an overdraft, enabling you to spend more money than you have in your account. You’ll be able to borrow money up to an agreed limit, but interest is usually charged on the amount you use, so it’s best to pay back the funds as quickly as possible. 

Depending on the account you have, it might offer other benefits such as the opportunity to earn cashback on your debit card spending or earn interest on in-credit balances. 

Do you need a current account?

Current accounts are used for most day-to-day banking transactions. They enable your employer to transfer your wages electronically into your account and without one, you might find it harder to get a job. Having a current account also makes it easy for friends and family to transfer funds to you.

Additionally, it’s easy to set up standing orders and direct debits on your current account to pay regular household bills, such as energy, broadband and mobile phone bills. The funds are automatically taken from your account, so there’s no need to remember to make the payment each month. Some businesses even offer a discount for paying your bills by direct debit.

Having a debit card with your current account means you can easily pay for items instore and online, as well as make cash withdrawals from ATMs. The amount you’ve spent or withdrawn will be immediately deducted from your current account balance, but if you don’t have sufficient funds, the transaction will be declined. 

Many current accounts now offer online banking or banking apps to help you track what you’re spending where. Some include spending categorisation and budgeting tools to make your life even easier. 

How much does a current account cost?

A lot of current accounts are free to use. But some might charge a monthly fee. Those that do usually offer additional perks such as travel insurance, mobile phone insurance and breakdown cover.

If you want to take out one of these current accounts, known as packaged bank accounts, you’ll need to consider whether you’ll make full use of the perks on offer and whether the cost of buying the perks separately would be lower than the monthly account fee.

Spending and withdrawing cash on your debit card is usually free of charge, but be warned that if you use your card overseas, you might have to pay a foreign transaction charge. 

What’s the difference between a current account and a savings account?

A current account is essentially an account that helps you manage your day-to-day banking transactions. Money can be paid into your account and you can transfer funds out too. 

By contrast, a savings account is a safe home for you to store any extra cash you have and you’ll usually receive interest on those funds. Depending on the savings account, you might be able to access that money as and when you need it, but this will usually be done electronically — you won’t have a debit card.

If you leave your funds untouched, you’ll be able to build up a decent savings pot that could help you buy a home, pay for a holiday or help you cover the cost of essential home improvements, for example. 

Who can get a current account?

To open a standard current account you’ll typically need to be a UK resident and have a UK address. You’ll usually need to be at least 18 years old, particularly if the account has an overdraft (credit can’t be offered to those under the age of 18).

Some bank accounts (without an overdraft) are available from the age of 16, while some children’s bank accounts can be opened by children aged 11 and above. 

Depending on the account and the provider, you might also need a good credit rating to get accepted. If your credit score is poor, you can apply for a basic bank account. These offer most account features, but don’t offer an overdraft facility. 

How do I apply for a current account? 

Depending on the provider, you can usually apply for a current account online, by post, over the phone or in branch. Some digital-only banks also let you apply for an account via their app.

Applying online or via an app are generally the quickest methods as you’ll typically only need to fill in an application form and provide some personal details, such as your name and date of birth, as well as information about your employment status.

Once you’ve done this, you might have to undergo a credit check even if you haven’t applied for an overdraft. Banks use this to confirm your identity and are legally required to do this to meet UK money laundering regulations.

If your identity can’t be confirmed in this way, you might be asked to provide a proof of ID such as a passport or driving licence. If you’re applying with a digital-only bank, you might need to upload a photo of this document, along with a selfie video to prove you are who you say you are.

Once you’re approved for your account, you’ll be able to start using it and should receive your debit card and PIN in the post within a few days.

How safe is my money in a current account?

If your current account is held with an authorised and regulated bank in the UK, your money will be protected under the Financial Services Compensation Scheme (FSCS). This covers up to £85,000 per person per financial institution in the event the bank were to go bust.

How many current accounts can I have?

There’s no limit to the number of current accounts you can have, but you’ll need to be able to keep track of them all.

What’s more, a credit check will likely be carried out each time you apply, so if you apply for a lot of accounts in a short space of time, this can have a negative impact on your credit rating. 

Also keep in mind that some current accounts require you to pay in your salary each month or pay in a set amount on a monthly basis. This could be difficult if you have multiple accounts. 

Can I have a joint current account?

Yes, many banks will allow you to open a current account with someone else. This can be particularly useful if you share household bills. However, you should only do it if you trust the other person. That’s because you’ll both have access to the money in the account so either one of you could withdraw it without the other’s permission.

What’s more, if you’re overdrawn on the account, you’ll be jointly responsible for repaying the debt. This is the case even if only one of the account holders caused the account to be overdrawn.

Another point to note is that your credit files will be linked when opening a joint account. If the other person has a poor credit score, this can affect your ability to get credit in the future.

How do I close my current account?

It’s usually pretty easy to close a current account.

You might be able to do so by visiting your local bank branch, phoning the customer service team or submitting a written cancellation request. If the account is a joint account, both account holders typically need to agree and provide written consent to close it. 

If you’re planning to move to another current account, you might be able to use the Current Account Switch Service to make the switch and close your old account. Your new bank will do all the hard work for you, transferring all your direct debits and standing orders across to your new account within seven working days.

Your new bank will also give you a closure instruction to sign so it can start the switch process and you’ll be able to choose when you want your old account to close and your new one to open. 

Thanks to the Current Account Switch Guarantee, if there are any issues with payments due to the switching process, your new bank or building society will correct them and refund any fees charged as a result.

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