Online current accounts

A current account is a type of bank account designed for day to day use, such as paying bills or receiving wages, and they usually include a cheque book and card for making withdrawals from the cash machine network. Most people now have a current account, and more and more are using them online as they get the added benefits of being able to manage their accounts at any time of day or night and from any location that has a computer. There are lots to choose from, so if you are thinking of using an online current account, consider the following points before you choose a provider.

• Consider what features are important to you

  There is a lot of competition between online providers, and all offer a wide range of features in the hope of getting your business. If you keep a fairly large amount of money in your account and don’t spend it very often, then consider an account offering a higher interest rate. On the other hand, if you regularly use your overdraft look for an account that does not charge for this. There are also more specialised accounts that tie in with your personal views, from those that offer green and ethical guarantees to those that comply with religious rules.

• Don’t pay for what you don’t need

  In the UK, most current accounts are free to operate as long as you stay in credit or within your agreed overdraft limit. However, a few do have monthly charges just for having the account, and others charge for account upgrades that offer features such as ‘money off’ deals or ‘free’ travel insurance. If you don’t need these features, don’t pay for them.

• Understand the terms

  Make sure that you can meet the terms of the current account before you sign up. Some accounts can have conditions attached, such as paying in a certain amount of money every month or only giving an interest free overdraft for a short time. If you can’t deposit the required amount every month or you intend to use the overdraft for quite a while, then you may end up paying charges that you hadn’t bargained for.

• Security

  Online providers should all meet the industry standards of security for their sites. If you are concerned about the risks and you want additional security, look for a provider that offers this. Some take the approach of giving their customers devices that generate a new code every time you want to log in, while others might offer to send you an email or text message whenever there is activity on your online account. You just need to choose the one you will be most comfortable with.

• Word of mouth

  Ask friends and family who they use for their online banking, and what their experiences are. This is a good way to get honest opinions and can give you an idea of how well the account will suit your needs.

Choosing an online current account

Banking over the Internet has transformed the way many people deal with their personal finances. Online current accounts mean people have access to their cash 24 hours a day, seven days a week, 365 days a year. They can also move money around and pay bills however they choose. All this means people are potentially more in touch and in control with their money than ever before. But the virtual high street is now as competitive as the one in the real world, and it can be difficult to know which bank to choose.

Applying for online current accounts is done in much the same way as regular banking. If you have a current account with an offline bank the chances are they will already be able to offer you Internet banking free of charge. Some banks exist only on the internet, or are internet versions of big high street names.

Running an account online has posed security questions, and fraudsters have attempted to break into people’s accounts by sending them emails pretending to be from their bank. This is sometimes known as phishing - remember your bank will never send you and email asking you to confirm your security details. If you get one like this, the general advice is to ignore it, or contact your bank via phone if you are unsure about its authenticity. Banks also keep records of the various ways people try to commit fraud, so reporting phishing is important for prevention.

Banks will provide various ways of protecting online current accounts. Your security is also their security, so you will normally be provided with a unique serial number or user name and password. This is normally just one level of protection, and an account can also involve second passwords with drop down menus so you can select the characters rather than type them. Some providers even supply code generators to customers, which someone uses to get a digit based password, which must match up with the one active on the account at that time.

One of the main benefits of online accounts is that firms have found running a bank over the Internet can reduce costs. Its usability and smoothness means customers can do many things they would previously have had to go to a branch or ring a phone line for. This means banks have tried to tempt customers with attractive initial interest rates.

Not only can you see an up to date version of your bank statement, potentially eliminating the need for paperwork, online current accounts can offer many extras including text message updates and even SMS warnings when you are about to go over your overdraft limit. Some will issue a charge for this rather than providing it for free, and people who like to be as in touch as possible with their finances might want to check what is included with each potential package. Once it is set up however, a bank account online can reduce the need to join frustrating queues at the branch, and waiting on the end of the phone listening to a banal hold tone can also become a thing of the past.