Personal Accounts - Choosing Your Bank

While many people are with their bank because they are used to them or simply because it seems like an undesirable hassle to alter accounts, there can be benefits to shopping about. And just because you maintain your main account in one bank, there's no need to keep all your accounts or credit cards with one firm.

If you have a poor credit rating or a large overdraft, you might find it harder to change banks, but some banks will 'buy' your overdraft from you, or provide to convert it into a loan. For a small fee you can request details of your credit rating from Equifax or Experian - the two top credit reference agencies.

Comfort

Based on your situations, you may find you'd be better off with one of the new internet banks, like Smile or Cahoot. These can give much better interest prices, simply because they have lower overheads than high street banks that have to run branches in 'real time'. On the other hand, you might rather stick with a large bank you know and trust - perhaps you have a great relationship with your branch manager and can expect additional support when you require it. The larger banks also have plentiful local branches, which could be a plus point if you require to, say, pay in cheques frequently.

Terms

While interest rates are an important consideration, there are other factors to take into account when choosing a bank, such as bank charges. Some banks will charge more than other people, for example, if you exceed your overdraft limit or if a cheque bounces. Other people will charge extra to provide you with copies of statements. Check that the bank complies with the Banking Code, a UK body that promotes best practise in the financial sector.

Bear in mind as well, that some banks will offer superb terms for new clients in order to attract your business, so it may be worthwhile swapping just to take advantage of these. You might find a lower-interest loan, for example, with a new bank.

Bank policy and corporate ethos

Some institutions provide 'ethical' banking, so that you can be certain your money is not being used to fund companies who do not conform to certain criteria. The Co-operative Bank led the way in ethical banking, but there are other banks and investment companies to choose from.

As well as the bigger high street banks, there are smaller banks, building societies and friendly societies to think about. While normally associated with savings, some offer current accounts with attractive prices, and many of the new building societies are in fact indistinguishable from banks.

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