How to find a current account that looks after you

Did you realise you're in love with your bank manager?

This news might come as a shock. But the statistics prove it.

According to a survey by Age Concern, only 16% of people switch their main bank account, whereas 45% of marriages end in divorce. So you are almost three times more likely to break up with your other half thanwith your bank manager.

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And yet banks treat their customers far worse than most ex-spouses. The average interest rate paid on current accounts is a miserly 0.75% at the moment, while the complaints and legal wranglings over extortionate overdrafts rumble on (see: Dont lose out on bank charge rebates). So the chances are that if you haven't switched bank accounts since decimalisation came in, or you were lured in by a free rail card, then you are not getting the best deal.

And given that switching accounts is a lot less time consuming than you might think, it's time to break up with your bank and find a current account that looks after you.

What to look for when hunting for the best bank deal

Before you decide which bank account is best for you, think about your banking habits. And be honest with yourself. There's no point getting an account with a great interest rate if you spend most of your time in the red, especially as these accounts usually have the most punishing overdraft policies.

So if you live life in the black, then look for the best interest rate. If you regularly go into your overdraft, then find an account with the lowest overdraft charges.

Read the small print

But deciphering the interest rate on an account is easier said than done. Two banks are currently advertising seemingly attractive deals, offering fixed payments which make a big difference to the return on your money at these times of miserly interest rates.

Alliance & Leicester will give you £100 if you switch your current account to them. Meanwhile, Halifax will give you £5 a month (after tax) to bank with them. But are these deals any good? And if so, which should you go for?

Halifax's £5-a-month deal

Let's take the Halifax account first. To receive the £5 monthly payment you have to pay £1,000 into your Reward current account each month. Over 12 months that's a payment of £60. But remember that's net of tax the gross payment is £75. So if you maintain an average balance of £1,000 in the account, you're getting a whopping 7.5% annual interest rate. That looks good but it's worth taking a look at the Alliance & Leicester account below before you make a decision.

The Halifax account is definitely not for those who are continually in the red, however. You get the £5 a month, even if you are overdrawn, but this means little once you've seen the hefty overdraft fees. Those in the red are charged £1 a day on authorised overdrafts up to £2,500, rising to £2 a day on larger overdrafts and £5 a day on unauthorised overdrafts.

Alliance & Leicester's £100 offer

Alliance and Leicester's offer is a little more complicated. Switch to its Premier current account (not to be confused with its 'Premier Direct' current account) using their 'Premier Switching Service' and you'll receive £100. The account itself only pays 0.5% AER on balances of up to £2,500, and you have to fund the account with £500 a month. It's also not open to customers who have had an A&L or Abbey account in the past three months.

Even if your average balance is £2,500, the £100 bonus beats the return currently available on other best-buy accounts. For a basic-rate taxpayer, the £100 bonus is equivalent to getting a gross payment of £125 (and for a higher-rate taxpayer, it's even more). So on a balance of £2,500, the effective interest rate for a basic-rate payer is 5.5% (£125 plus £12.50 interest payment, divided by £2,500 and multiplied by 100). That compares to the 5% best-buy rate available from Abbey.

Bear in mind that the £100 is a one-off bonus, whereas the Halifax £5 a month deal goes on indefinitely, "making it a good long-term bet," says Martin Lewis on Moneysavingexpert.com. So if you think you're too lazy to think about switching again in a year's time, then consider going for the Halifax.

The A&L account is best if you're often in the red

However, if you are regularly in the red, the A&L account is definitely the one to go for. It has an interest-free overdraft for the first 12 months; after that you're charged a competitive 50p a day for your overdraft with a cap on charges of £5 a month - although real bargain hunters should shop around again after 12 months to see if you can get another interest-free overdraft elsewhere.

Get a reward for switching

Once you've picked a bank account, check whether you can apply for it via a cashback site to earn yourself even more money. Topcashback.co.uk, Wepromiseto.co.uk and Greasypalm.co.uk all have cashback deals involving current accounts. Quidco.com are offering £50 cashback if you apply for an Alliance & Leicester Premier current account through them, for example.

The cashback is tax-free and is a rebate of commission received by the website. With interest rates so low, it's well worth the slight effort of signing up to a cashback site in order to get the extra money.

With some good deals around, it's time to adopt the same love 'em and leave 'em attitude to your bank as you have to your energy supplier. Swap, and then keep an eye out for better deals once the introductory offers are over.

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