Best current accounts: Today’s latest rates

A current account is what you probably think of as a normal bank account which, at its most basic level, allows you to send and receive money via bank transfer and pay in and withdraw cash.

You will usually be issued with a debit card to make purchases and you can also set up direct debits and standing orders.

There are extra features you might want to consider, such as overdrafts for extra borrowing, interest, cashback offers and overseas charges – along with switching bonuses that encourage you to move to a new provider.

In this guide, Telegraph Money explains what you need to know about current accounts.

• How we determine the best rates
• The best current accounts
• Expert opinion: Five things to consider when choosing a current account
• Current accounts FAQs

How we determine the best rates

The Best Buy tables show the best savings rates widely available in the market. This means certain accounts are excluded, including those that require minimum deposits of more than £25,000 or are available only to local or existing customers.

The data in these tables is provided by Savings Data Limited and is compiled using automated tracker tools and updates from savings providers. Savings Data Limited then manually checks the information and enters it into a database that feeds the live tables, which update daily.

The savings accounts shown are protected by the Financial Services Compensation Scheme. The information in this article is intended for information purposes and should not be taken as endorsement or advice.

Best current accounts

Use the table below to work out which current account could be right for you.

However, you might not want to keep all of your cash in a current account. For some alternatives, see our guide to the best easy-access accounts which will allow you to make withdrawals whenever you need them, and – for accounts that will keep your savings interest protected from tax – don’t miss our guide to the best cash Isas.

If you’re able to lock up your cash, you might be able to find a better rate from a fixed account, or if you’re keen to get into the savings habit, a regular savings account could be a great option, where you’ll be encouraged to save little and often.

Expert opinion: Five things to consider when choosing a current account

Sarah Coles, head of personal finance at Hargreaves Lansdown, highlights five things to consider when choosing which current account will work best for you:

1. One key question will be whether you need a branch. If so, you will significantly limit your options, so consider this carefully. However, if you know you will struggle without face-to-face service, then it may be worth the compromises you will need to make elsewhere.
2. If you tend to hold a reasonable amount in your account and stay well away from your overdraft, you might want to look at accounts offering decent interest rates. In some cases, you’ll need to open a linked savings account and keep switching money over. If that sounds like more work than you can face, you could pick something offering interest on your balance.
3. If you regularly dip into your overdraft by very small sums, look for an account with an overdraft buffer. If you have a bigger problem with your overdraft, look for an account offering a lower rate.
4. If you want to spend money overseas, look for an account offering spending free of fees. Some will let you withdraw from an overseas ATM free of charge too. Some people will open an account specifically for their holidays and run it alongside their main account. Others will switch.
5. There are accounts on offer with a monthly fee, which offer a number of insurance perks in return. The key here is to work out what this is genuinely worth to you. If you would not otherwise have bought the insurance, then it is not going to save you any money.

Current account FAQs

Do I need to declare interest on a current account?

You might need to declare and pay tax on interest earned in a current account, depending on the amount.

This will depend on whether the interest you earn, along with any other savings accounts you hold, exceeds your tax-free personal savings allowance.

Basic-rate taxpayers can earn up to £1,000 of interest without incurring a tax bill. For higher-rate taxpayers, this reduces to £500 and for those on the additional-rate, there is no allowance at all.

If you earn interest above your allowance, then your tax code may be adjusted. If you’re self-employed or earn more than £10,000 in savings interest, you will need to declare it as part of a self-assessment tax return.

Should I keep my money in a current account?

It’s a good idea to keep some money in a current account to manage your everyday finances – but not all of it.

You’ll probably want enough to cover regular expenditure, such as groceries and bills. But if you want to leave some money untouched and earn interest, then you should look into a savings account or Isa.

How does current account interest work?

Some current accounts pay interest on your current account balance – while some will pay interest up to a certain amount.

Your interest earning potential may diminish as you spend money until your next payday and therefore your money may not benefit from compounding in the same was as a savings account where the money remains untouched. However, it can still be a nice bonus – particularly if you can afford to maintain a decent balance in your current account.