Don't pay for your current account

For the first time, fee-charging accounts now outnumber free ones on the high street. Fifteen million of us are now paying an average of £15 a month for our current accounts. But are they worth it?

If you are usually in credit, and are looking for an account that rewards you for it, fee-paying accounts are to be avoided. Yes, you can get a better interest rate, but once you offset it against the fees you may well end up out of pocket. For example, Santander's Reward account pays 5% on balances up to £2,500 for the first year, then 1% after that. But you'll pay £10 a month for the privilege. So in the first year you would earn £125 in gross interest on £2,500. That drops to £100 net for basic-rate taxpayers and £75 for higher-rate taxpayers. And you'll have coughed up £120 in fees. After the first year, you would be even worse off.

A better option would be Santander's fee-free Preferred account. As long as you pay in £1,000 a month you'll earn 5% interest on £2,500 for the first year without having to pay any fees but be aware that the rate drops to 1% after 12 months.

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Other attractions include annual multi-trip travel insurance (with winter sports cover for a family of four). That's fine, but if you go for the account purely for that reason you are paying £120 for travel insurance that you could get for more like £65 via a price comparison website.

Anyone considering paying a monthly fee in order to get a better overdraft rate should look elsewhere. The lowest interest rate on a fee-paying overdraft comes from the Barclays Premier account. It charges £10 a month in return for a £1,000 interest-free overdraft, but offers no other significant benefits. With Citibank, on the other hand, you could get a £500 interest-free overdraft, plus a rate of 16.9% on overdrafts over that amount. All you have to do is pay in £1,250 a month. With the Barclays account you'd pay £120 over the year for your overdraft. But a £1,000 overdraft at Citibank would only cost you around £85 in interest. So do your sums carefully before choosing.

For motorists there is one fee-paying deal that just about earns its keep. It's the Halifax Ultimate Reward account. This charges £12.50 a month. However, if you deposit £1,000 a month into the account you get £5 a month back. The account also comes with a 15% discount on Halifax's motor insurance and further car-related discounts, such as 15% off a Kwik-Fit service and MOT.

But before you plump for this offer, you should check whether you could get cheaper car insurance elsewhere. If you find that you can't, then it's certainly one of the better deals around.

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.