Almost every adult in the UK has a form of current account. It's a bank account that you can use to pay general household bills, set up standing orders or direct debits for recurring payments, receive money like your income or pension, withdraw cash from ATMs, and make debit card purchases.

When you go overdrawn on a current account, you may be able to utilise a scheduled overdraft facility to borrow a modest sum of money temporarily. It's crucial to consider this when creating an account because overdrafts may result in fines and interest. Often these current accounts can be managed online or through safe mobile applications. Current accounts are offered by regulated by banks such as Lloyds Bank, HSBC, and many other institutions. In the UK every bank offers £85,000 FSCS protection, anything thereafter isn’t necessarily covered and that’s why for some people it’s important to have more the one bank account. Many banks offer different types of current accounts and therefore it's important to consider what the costs and features are before opening an account.

Types of current accounts?

The best account for you will depend on your needs and circumstances. Below are the most typical types of accounts.

Standard Current account

An arranged overdraft option, a chequebook, and a debit card are all basic features of a current account. The interest rates are often small, and there shouldn't be any monthly account maintenance costs.

Basic current account 

In most cases, these accounts provide the same fundamental services as a normal account, minus the chequebook or prearranged overdraft facility. You can also be limited in how much cash you can withdraw from ATMs in a single day. Several banks give these to assist clients who have bad credit or are in unique situations when consumers are unable to present the required forms of identification and proof of residency.

Packaged current account

You might be able to make use of a number of additional features that are not included with a typical current account for a monthly cost. They can occasionally include planned interest-free overdraft facilities, mobile insurance coverage, retail discounts, and breakdown insurance.

The median monthly fee ranges from £2 to £20. It is important to think about whether these accounts will be cost-effective for you before starting one.

Student account

Student accounts are intended to make it easier for college students to handle their money. Some accounts come with benefits like free railcards, coupons, and store discounts. So don't let the freebies fool you; what matters most is that the account is suitable from a financial standpoint. Your student account could automatically convert to a graduate account once you have completed your studies.

How to apply for a bank account

The process to open a bank account is very straightforward, however, most banks will run a credit check on you and check your credit score and address details for fraud and money laundering purposes. Not having an address can make getting a bank account difficult however there are services available for people in such situations. Having adverse credit can also affect the eligibility for overdrafts and some current accounts too, so this also needs to be considered.

(Investopedia.com, HSBC.co.uk)