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? Ruth Jackson investigates.

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.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Ruth Jackson-Kirby

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.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.