How to choose the best current account for you

Your current account is the bank account you use the most. And yet it's the one most of us spend the least time selecting. Odds are your parents took you into their local bank to open an account when you were a child and you haven't given it a second thought since.

It is time you did. The banks know that most of us are entirely apathetic about our accounts and they use that knowledge to rip us off. If you are usually in credit the chances are you are getting an absolutely paltry rate of interest think 0.1%. And if you are usually in the red, then in all likelihood you are paying an extortionate rate of interest on your debt of up to around 20%.

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If your current account is usually in credit, then your choice is between Halifax and Alliance & Leicester. If you're always in the black by a large margin you're probably best off with the Premier Direct Current Account from Alliance & Leicester. It pays 5% annual equivalent rate (AER) for the first year on balances up to £2,500.

However, if you pay at least £1,000 a month into your account but then the balance steadily drops as bills are paid, you might want to opt for the Halifax Reward Current Account. This account pays you £5 a month regardless of your balance throughout the month, as long as you pay in £1,000 a month. You also get the £5 indefinitely, so this might be a better option if you don't want to have to switch accounts again in a year.

That said, if you use your overdraft, avoid the Halifax Reward Account like the plague. Even an arranged overdraft will be charged £1 a day so borrow for five days and you've wiped out the £5 you got for your £1,000 in the first place.

A better bet would be Alliance & Leicester Premier Current Account which is subtly different to the Premier Direct Current Account. This account only pays 0.5% in credit interest, but offers a 0% interest overdraft of up to £2,000 for the first year. And at the moment they'll also give you £100 when you open the account and use their switching service.

But whoever you bank with, make sure never to go beyond your authorised overdraft. All the banks will punish you if you do. The worst offender is Alliance & Leicester, who will charge you £25 every time you go beyond your overdraft and £5 a day for as long as you stay over your limit. That could get very expensive.

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.