How to Make the Most of Your Current Account

Many of us will never have given much thought to how our current account works. However, spending just a little bit of time understanding what it can do for you and your money could pay off in the long run. There are many different types out there, all which offer various features and benefits in order to help make your money work to your best advantage. For example, it is now possible to opt for a current account that - for a small monthly fee - will provide you with a range of benefits such as travel insurance, special offers and discounts, or breakdown cover. You may also qualify for preferential deals on loans and/or savings accounts from the same financial institution. Not only that, but many packaged current accounts will now offer you an interest-free overdraft, which might come in handy from time to time. And it’s not just the suite of additional benefits on offer that’s important. Nowadays many current accounts will pay you interest on your in-credit balance, meaning that when you deposit any cash into your account, you will earn a percentage of interest on that cash. Check the terms and conditions of your account to see what interest you’re earning and then compare with other providers to ensure you’re getting the best deal. Generally speaking, the interest you earn with a current account is calculated on any cleared funds at the end of each working day, and paid at the end of each month. There’s no limit to the amount of interest you can earn, but you will have to pay income tax on it as standard. Always check the terms and conditions to see how the interest on your account is being calculated. The AER (Annual Equivalent Rate), which is usually displayed alongside details of the account, will be a good indicator of what you can potentially earn, since it demonstrates what the total amount of interest would be if it were paid and compounded annually. It should be noted however, that the AER is only an estimate and may not necessarily represent what you will actually receive. So, if you want to make the most of the money you have, it might be worthwhile spending the time to further understand what a current account can do for you. In doing so, you could earn current account interest on the cash you have, as well as be open to receiving a wide number of additional benefits.