Looking for a better bank? This is Money’s five of the best current accounts

How hard does your bank account work for you? Hard enough to give you cashback on your household bills, interest on your balance or simply standout customer service?

Although it is only natural to have reservations over switching from a well-worn account that has seen you through your financial life – possibly since you were a teenager – this is no reason to stay put if you could be getting a better deal elsewhere.

Here we look at some of the best options available to help you to make your money work harder, cut down on fees, or get free stuff.

This is not an exhaustive list of all current accounts around, but as with our Five of the best Cash Isas round-up, we have chosen accounts that we feel stand out for some reason.

Free insurance: Nationwide is offering European travel coverage with its current account


Account Perks Conditions Santander 123
Santander will pay 1.5 per cent on balances up to £20,000 plus up to 3 per cent cashback on bills
£5 a month fee. You must pay in £500 a month and two active direct debits
Santander 123 Lite Up to 3 per cent cashback on your household bills £1 a month fee, £500 a month and two active direct debits First Direct 1st Account
£125 for joining via switch service and £250 interest-free overdraft
Pay in £1,000 a month or maintain a £1,000 balance

Nationwide FlexDirect
5 per cent interest on up to £2,500 and fee-free overdraft, both for the first year only Pay in £1,000 a month

Halifax Reward
£100 for joining via switch service (before March 1) and a £3 monthly bonus

Pay in £750 a month, stay in credit and two active direct debits. Tesco Bank Current Account
3 per cent on balances up to £3,000 (guaranteed until 2019) and extra Clubcard points for spending on debit card (Not accepting new customers temporarily) No fee or rules

TSB Classic Plus

£125 to sign up, 3 per cent on up to £1,500 plus 5 per cent cashback on first £100 of contactless spending each month with debit card or Apple Pay
Pay in £500 a month.

M&S Bank Current Account
£50 gift card for joining via switch service, plus collect an extra £5 a month for the first two years in vouchers. Loyalty points for spending on debit card in store and £100 interest-free overdraft
No fee or rules

Metro Bank Current Account

Free debit card transactions in Europe and longer opening hours

No fee or rules

Club Lloyds Pays 2 per cent on up to £5,000, plus a choice of one lifestyle benefit such as six cinema tickets or magazine subscription £3 monthly fee or deposit £1,500 a month Nationwide FlexAccount Three months’ interest-free overdraftNo fee or rules

HSBC Advance£150 cash to switch and £50 extra after first 12 months Current Account Switch Service and move over two or more direct debits or standing orders to their new account within the first 30 days. Requires £1,750 minimum monthly deposit Classic Account with Vantage 3 per cent on £3,000-£5,000, 2 per cent on £1000-£2,999 and 1.5 per cent on £1-£1,999. Remain in credit, two active direct debits, and pay in £1,000 a month. Co operative Bank with Everyday Rewards £110 to sign up and up to £5.50 in monthly rewards including 5p (up to £1.50) each time you use your debit cardCooperative Bank has put itself up for sale, but it says its business as usual for accountholders. Current Account Switch Service and maintain 4 direct debits , pay in £800 a month, stay in credit.

First Direct is lording it over other account providers in the popularity stakes and has the trophies to show for it – thanks to a growing collection of customer service awards.

Not only that, for a limited time First Direct will give you £125

People skills

The bank heavily backs its customer service department, to the extent that it offers usually offers at least £100 to any new customers opening a First Account.

Not only that, if you wish to switch to another bank after six months, but before you have been a customer for 12 months, it will give you another £100 and help you to move.

Interest-free overdraft

Another bonus is the £250 interest-free overdraft. After that, interest is charged at 15.9 per cent – still a fairly competitive rate – up to your agreed formal overdraft limit.

Watch out

Before getting too carried away daydreaming of ways to spend the free cash, it is worth bearing in mind that unless you credit your account with £1,000 in the first three months you will not be eligible for the £125 sweetener.

You will also have to pay a monthly £10 fee unless you pay in at least £1,000 per month. However, if you are likely to pay in less than this amount each month, you can avoid the fee by taking out another First Direct product, like a credit card.

It is worth bearing in mind that First Direct will not consider anyone with ‘adverse credit’ for this account.

This is Money verdict

First Direct boasts many satisfied customers and it will give you money to join and money to leave if you don’t like it. However, it doesn’t have any branches so if you are the sort of person who likes to do their banking face-to-face, this account may not be for you – although you will be able to use HSBC or Post Office counter services.

Also, if your balance is always firmly in credit, it may be a better option in the longer-term to find an interest-paying current account.

Shop around to see how interest rates compare with the £125 bonus.

Interest: Rates on specialist accounts beat most savings accounts

There are a few banks offering in-credit interest, including Nationwide, TSB, Santander and Lloyds Bank.

Some offer come without a time limit or interest on larger balances so which deal is best for you will depend on individual circumstances, but Nationwide is offering the highest available interest rate on a current account.

Best interest rate

Nationwide’s FlexDirect account pays out 5 per cent in-credit interest on balances up to £2,500 for the first year – not bad considering most easy-access savings rates have slid in recent years.

Accountholders are also eligible for a 0 per cent overdraft for the first 12 months, and reduced fees of 50p per day for arranged overdrafts after that.

You must pay in a minimum monthly income of £1,000. On the last day of every month Nationwide will calculate the interest you’ve earned each day and then pay you this interest on the first day of the next month.

Watch out

If your income drops and you can’t pay in £1,000, you won’t receive any interest that month.

The 5 per cent interest deal ends after a year, when it drops to just 1 per cent. So it may be worth looking elsewhere after the 12 months for a better return on your money.

You get an interest-free arranged overdraft for that 12 months, but after that a flat rate charge of 50p per day applies, this will be costly for those who regularly go overdrawn compared to a typical interest-charging overdraft.

Unarranged overdrafts cost 50p per day for balances under £10 and £5 per day after that, capped at £60 per month.

If you like to carry out your banking face-to-face, this account might not be good for you because you can only access internet or telephone services as a FlexDirect customer.

This is Money verdict

Accounts that are good for both in-credit and overdrawn customers are few and far between so this could be a good bet for those who have smaller balances – but can afford to pay in £1,000 each month.

Existing customers can boost their earnings by recommending Nationwide current accounts to their friends. For every person that switches on your recommendation you will both be rewarded with £100 in your account.

Every little helps: Co-operative offers £110 to switch

Account for free money… Co-operative Bank

Co-operative Bank recently announced that it was putting itself up for sale.

According to the bank it is business as usual for its 1.4 million existing current account customers and any new customers signing up.

It says its offer of £110 to switch plus a monthly bonus of up to £5.50 via its Everyday Rewards scheme will continue as normal.

Customer funds are still covered up to £85,000 by the Financial Services Compensation Scheme, and if any changes were to be made to the account and your contract the bank must contact you in advance and let you leave penalty free if you want to.

For more rewards

Co-operative Bank will pay you £110 to switch as long as you move over four direct debits.

New and existing customers can also opt for Everyday Rewards to boost their balance by up to £5.50 each month.

To earn the first £4 per month you must pay in at least £800 with at least four direct debits out of the account.

Account holders will also need to stay in credit, log in to their online or mobile banking once a month and and receive paperless statements.

You will need to swipe your debit card 110 times throughout the month to earn the extra £1.50, as Co-operative will pay an extra 5p per debit card transaction.

Watch out

If you go overdrawn you will be charged 18.9 per cent interest on the amount.

If your borrowing is unplanned you will be charged an additional £10 monthly fee on top of the 18.9 per cent interest when you stray beyond a £20 free buffer, capped at £60 over three months.

If you have not used your informal overdraft in the past 12 months the bank will waive the monthly fee if you spend less than six days overdrawn but you will still have to pay interest

We will not charge you any informal overdraft service charges for informal overdrafts that last six consecutive Business Days or less, provided that you have not requested an informal overdraft in the previous 12 months, but you will incur debit interest.

This is Money verdict:

If you are thinking of signing up it is worth reading our news story on the sale here first.

The Co-operative account is a great way to get a little extra from your bank but only if you are sure you will fulfill the everyday banking requirements needed to earn the cash.

It also won’t be a good option for anyone likely to slip into their overdraft by accident.

While the interest-only structure of the formal overdraft is cheaper than many accounts out there borrowing via an informal overdraft quickly clocks up hefty charges, plus every time you borrow you will lose out on your monthly rewards.

Santander: offers the best current account for cashback

At the start of November 2016 the interest paid by Santander was halved to 1.5 per cent. Nevertheless, this could still be the best in-credit interest account for those with a large balance.

Interest on savings and cashback on bills

The 123 account will pay an AER of 1.5 per cent on up to 20,000 – earning a maximum yearly income of around £302.

Previously accountholders would have earned up to £604 a year. However the 1.5 per cent rate is still high enough to beat the best easy access savings accounts.

Interest is clocked up on a daily basis and will depend on what you have in your account that day.

The 123 account could be a smart choice because it really makes your money work hard, thanks to up to 3 per cent monthly cashback on key services such as mortgage payments, council tax bills, electricity, gas, mobile and home phone, broadband and TV packages.

Household bills exclude your TV licence, maintenance/ insurance contracts, commercial use or commercial mortgages.

Both the interest and cashback you earn is paid directly back into your 123 account on a monthly basis.

Watch out

The £60 annual cost will negate some of the benefits of its cashback and interest payments.

Also, if your balance falls bellow £1,000 on any day of the month – even by £1 – you will earn no interest at all on the entire balance for that day.

To be eligible for cashback services you must set up a minimum of two direct debits and pay in at least £500 every month.

This account is really not for you if you often find yourself in the red. Arranged overdrafts are charged at £1 a day. Unarranged overdrafts shoot up to £6 a day with no cap on unauthorised borrowing.

Santander says that you will not be charged more than £95 in fees for any one month.

At the moment they are also offering a free arranged overdraft for four months if you switch to the 123 account using their switcher service. The size of the overdraft will depend on your circumstances.

This is Money verdict

In reality the cut to the 123 account interest rate, combined with the monthly fee, means this is no longer the great deal it once was for many.

That said, for those with considerable savings, the 123 current account will remain a good deal despite the fee hike.

If there is any chance of you slipping into your overdraft, there is little point applying for the account as the combined charges and monthly fee are likely to cancel cash benefits.

Santander says the average balance held in the account is £12,500, which equates to £126.25 profit – excluding cashback – even after fees have been taken in to account.

However those with a smaller balance may be best off switching to a free option.

Shopping rewards: M&S Bank gives switchers a £100 welcome voucher to spend in stores

Account for a cheap overdraft and £170 to switch and stay… M&S Bank

M&S Bank slashed the switching bonus on its current account at the start of 2017 from £220 to £170 – and extended the time it will take to earn. However, the card is still worth a look if you are a regular M&S shopper.

New customers get £50 in M&S vouchers when they sign up plus a £5-a-month gift card top up for the first 24 months.

On top of this you can earn an extra 5 per cent in interest if you make use of the attached regular saver account and deposit the maximum £250 each month.

Fans of M&S can earn extra reward points for swiping their debit card in stores and have access to a simple and generous overdraft when opening the free M&S Bank Current Account.

To get their hands on the giftcard, switchers must move their everyday banking to the account within six months of opening, using the bank’s dedicated switching service. This includes switching over direct debits and standing orders.

The current account also rewards shoppers with M&S points when paying using their debit card in stores. It pays 1 point per £1 spent in store and online.

500 M&S points are worth £5, so they may take a while to rack up, but can be used to buy most things in store. Points will be converted to vouchers and sent to customers four times a year automatically.

£100 interest-free overdraft

If that wasn’t enough, The account also comes with a decent automatic £500 overdraft. It comes with an interest-free buffer of £100 where many standard accounts only offer £10.

There are no extra overdraft usage charges and flat rate 15.9 per cent interest applies to both authorised and unauthorised borrowing.

Another major perk for borrowers, the bank does not apply any extra usage fees for spending beyond the agreed limit, bounced payments and paid items unlike most other current accounts.

The extra cherry on top of the M&S account is customer access to a 5 per cent regular savings account deal. This allows you to put away between £25 and £250 a month for 12 months.

Watch out for

Interest beyond the first £100 of your overdraft costs 15.9 per cent, which although lower than most, will still mount up if you do not clear the debt.

When using your debit card abroad there is a non-sterling transaction fee of 2.75 per cent for purchases and withdrawals, however the bank does not apply an additional cash withdrawal fee, saving around 3 per cent compared to most of its competitors.

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