Banking & current accounts in the UK
Your current account is the engine room of your money. Choose well and switching is free, fast and protected by the Current Account Switch Service. Choose badly and you'll lose hundreds a year in avoidable fees and missed perks.
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- Money Guide editorial team
What a UK current account actually does
A current account is a transactional bank account regulated by the Financial Conduct Authority (FCA). It lets you receive a salary, pay bills by direct debit, send Faster Payments, use a debit card and — in most cases — go overdrawn within an agreed limit.
All UK current accounts from authorised banks and building societies are covered by the Financial Services Compensation Scheme (FSCS) up to £85,000 per person per banking group. That cover is what makes a current account fundamentally different from holding money in an unregulated app or e-money wallet.
The five types of current account
Almost every UK current account fits one of these five buckets. Decide which type you need first, then compare on price and features within that type.
- Standard fee-free
Day-to-day banking with no monthly fee. Most adults need nothing more than this.
- Reward / cashback
Pays interest on small balances, cashback on direct debits or a switching bonus. Worth it if you'll actually use the perks.
- Packaged
Pay £10–£20 a month for bundled insurance (travel, breakdown, mobile). Only good value if you'd buy those policies anyway.
- Basic
For people who can't pass a credit check. No overdraft and no cheque book, but full FSCS cover and a debit card.
- Student & graduate
Interest-free overdrafts up to ~£3,000 while studying. The overdraft — not the freebies — is what matters.
How switching works (it really is seven days)
The Current Account Switch Service (CASS) is a free, guaranteed scheme run by Pay.UK. Open your new account, tick the switch box, and within seven working days your direct debits, standing orders and incoming payments move across. Your old account is closed automatically.
If anything goes wrong — a missed direct debit, a duplicate charge, a misdirected payment — the Current Account Switch Guarantee refunds you. Over 9 million switches have completed under it since 2013.
What to compare
Once you know which type you need, ignore the marketing and compare on these five things:
- Arranged overdraft APR
Even 'free' accounts charge ~40% EAR if you dip into the red. If you ever use one, this is the number that matters.
- Switching bonus
Banks regularly pay £100–£200 to switch. Treat it as a one-off — not a reason to stay.
- In-credit interest
A handful of accounts pay 1–5% AER on balances up to £1,500–£3,000. Useful for a buffer; not a substitute for savings.
- Foreign-spending fees
Some banks charge 2.99% abroad; others (Chase, Monzo, Starling, First Direct) charge nothing. Big difference on a holiday.
- App and customer service
Check independent reviews and the FCA's published service-quality tables before opening.
Protecting your money
Spread balances over £85,000 across separate banking groups — not just separate brands. Lloyds, Halifax and Bank of Scotland share a single FSCS licence; HSBC and First Direct do not. The FSCS website lets you check which brands share a banking licence.
Turn on every fraud control your bank offers: card freezing, gambling blocks, geographic spend limits and instant transaction alerts. Most fraud loss now happens through authorised push payment scams, and almost every major UK bank is signed up to the mandatory reimbursement scheme introduced in October 2024.
Open Banking and account aggregation
Open Banking lets you securely share read-only access to your bank data with regulated third parties — budgeting apps, credit-builder services, savings round-up tools and accountancy software. Consent is granted for 90 days at a time and can be revoked instantly in your bank app.
It's also the technology behind 'pay by bank' checkouts that push money directly from your account without using a card. Cheaper for retailers but, crucially, payments made this way are not protected by Section 75 of the Consumer Credit Act.
The two-account budgeting strategy
A common, free way to control spending is to run two current accounts. Your salary lands in account A. A single standing order on payday moves your committed monthly spend (rent, bills, season ticket, debt repayments, subscriptions) to account B, which pays them all by direct debit. Whatever stays in account A is genuinely yours to spend or save.
Most challenger banks (Monzo, Starling, Chase, Revolut) make this easier with sub-accounts, pots and instant transfer notifications. The structure matters more than the brand.
When the bank gets it wrong: complaints and the Ombudsman
Complain to the bank first, in writing. It has 8 weeks to give you a final response. If you're unhappy, or if it misses the deadline, you can escalate to the Financial Ombudsman Service (FOS) within 6 months. The FOS is free for consumers, legally binding on the bank up to £430,000 (April 2025 award limit), and independent of both the bank and the regulator.
Go deeper on banking
FSCS deposit protection: how the £85,000 limit really works
The Financial Services Compensation Scheme protects up to £85,000 per person, per authorised bank or building society, if your provider fails. The trap is that several familiar brands often share one banking licence — so the limit covers the group, not each brand.
Read the explainer →How the Current Account Switch Service (CASS) works
The Current Account Switch Service moves your current account, including all your direct debits, standing orders and incoming payments, to a new bank in seven working days — and comes with a guarantee that covers you if anything goes wrong.
Read the explainer →Authorised push payment (APP) fraud: the new reimbursement rules
Since 7 October 2024 most victims of authorised push payment scams have a legal right to be reimbursed by their bank within five business days, up to a maximum of £85,000 per claim. The rules apply to faster payments and CHAPS within the UK and are enforced by the Payment Systems Regulator.
Read the explainer →
Common questions
- Can I have more than one current account?
- Yes. Most people benefit from at least two: a main account for salary and bills, and a secondary account used purely for budgeting, holiday spending or to keep a switching bonus going.
- Does switching hurt my credit score?
- Opening a new account leaves a hard search on your credit file, which can dip your score by a few points for three to six months. Closing your old account does not damage your score.
- What is the FSCS limit if I hold a joint account?
- FSCS protection is £85,000 per eligible person per banking group. A joint account is treated as £85,000 per holder — so up to £170,000 of joint funds are protected at a single bank.
- Are challenger banks like Monzo, Starling and Chase safe?
- If a bank is authorised by the PRA and FCA and shown on the FSCS register, your eligible deposits are protected to £85,000 in exactly the same way as at a traditional bank. Monzo, Starling, Chase UK and Atom Bank all hold full UK banking licences. Revolut UK gained its full UK banking licence in 2024 — money held with Revolut UK Limited is FSCS-protected; money held under its older EU e-money permissions is not.
- Can a bank close my account without telling me why?
- Yes. Banks can close personal accounts with at least 2 months' notice without giving a reason, under the Payment Services Regulations 2017. Immediate closure (without notice) is only allowed if the bank reasonably suspects fraud, money laundering or sanctions breaches. You can complain to the Financial Ombudsman if you think the closure was unfair.
- What's the difference between a debit card and a credit card?
- A debit card spends money you already have in your current account — no borrowing, no interest. A credit card borrows from the card issuer up to an agreed limit, charges interest if you don't clear it in full each month, and gives you Section 75 protection on purchases between £100 and £30,000. The two complement each other; most adults benefit from holding both.