Merseyside Home Improvements - Make the best of your savings with a current account
If you are saving up for a major home improvement such as a loft conversion or a conservatory, then it is usually a good idea to go for a savings account with a high interest rate. Unfortunately, most of the best deals carry restrictions such as minimum monthly deposits or withdrawal restrictions. These won't be a problem if you aren't hit with any financial bombshells while you are saving, such as losing your job or having to pay a large, unforeseen expense, but life doesn't always go like that. You could go for a more flexible savings account, but these usually offer lower interest rates. The best policy is to have two accounts - a savings account, and a current account to deal with day to day expenses and potential emergencies.
You probably already have a current account with which you do all your everyday transactions. Current accounts have lots of advantages over their savings equivalents - instant access to cash, debit cards and chequebooks, and in some cases overdraft facilities. However, there is one area in which they are almost always markedly inferior, and that is the amount of interest that they pay on credit balances. In fact, many current accounts do not pay any interest on credit balances at all, or if they do, it is usually a token amount that is lower than the rate of inflation.
However, this is not always the case. Some banks offer current accounts with reasonably attractive credit interest rates in order to lure customers from other banks. For example, Santander are currently offering current accounts with a 5% credit interest rate, fixed for 12 months, plus a £100 switching bonus and an interest-free overdraft for four months. You wouldn't need to be a mathematical genius to work out that this would leave you substantially better off, but many customers are put off switching their current accounts by the perceived amount of hassle that would be involved.
Actually, switching accounts is a lot easier than you might think. The bank that you are switching to will liase with your old bank to get all the details of your direct debits and standing orders, and will transfer them automatically. All you have to do is contact the bank that you wish to switch to, give them a few details, and inform your employer that you are switching so that they can change your payee details to the new account.
Check out the Santander website for more information on current accounts.