What is a Current Account? The 2024 guide for UK immigrants

Moving to a new country can be both exciting and challenging, and one of the fundamental aspects of settling down in the UK is managing your finances effectively. One key financial tool you’ll need to understand is a type of bank account known as a current account. 

But what is a current account? In this guide, tailored to the needs of immigrants in the UK, we’ll explore what a current account is, how it works, its different types, and much more.

What is a current account?

A current account, also known as a checking account in some countries, is a banking account that allows you to manage your day-to-day financial transactions. It serves as a hub for your everyday banking activities, such as receiving your salary, paying bills and making purchases. 

Essentially, a current account is not just a financial tool; it’s a lifeline for your everyday financial activities. Here’s why it matters:

• Convenience: With a current account, you have a central hub for all your financial transactions. It simplifies the process of receiving income, paying bills and making purchases.
• Safety: Keeping your money in a bank account is safer than storing it at home. Banks have robust security measures in place to protect your funds from theft or loss.
• Record keeping: Your bank provides you with detailed statements, making it easy to track your spending and income. This is invaluable for budgeting and financial planning.
• Access to credit: Building a positive banking history through your current account can open doors to other financial products like credit cards or loans in the future.
• Integration: Many current accounts offer features like contactless payments, mobile wallet integration and compatibility with financial apps, making it easier to adapt to the UK’s modern financial ecosystem.

Who can open a current account in the UK?

The good news is that current accounts in the UK are generally accessible to a wide range of individuals, including:

• UK residents: If you reside in the UK, whether you are a British citizen, a permanent resident, or on a valid visa, you are typically eligible to open a current account.
• EU/EEA nationals: European Union (EU) and European Economic Area (EEA) nationals usually have the same rights as UK residents when it comes to opening a current account. However, Brexit has introduced some changes, so it’s essential to check with the bank or a financial advisor for the most up-to-date information.
• Non-EU/EEA nationals: Non-EU/EEA nationals may also open a current account in the UK, but the process can be more complex, depending on your immigration status. Some banks may have specific requirements or restrictions, so it’s advisable to research different banks’ policies or seek advice from immigration experts.

Documents to open a current account

When you apply to open a current account in the UK, you will typically be required to provide specific documents to verify your identity and address. Commonly requested documents include:

Proof of identity

You will need to provide one or more of the following:

• Passport
• UK residence card or permit
• Biometric residence permit (BRP)
• Identity card (for EU/EEA nationals)
• UK driving license (in some cases)

Proof of address

To confirm your UK address, you may need to provide:

• Utility bills (e.g. gas, electricity, water)
• Council tax statement
• Tenancy agreement or mortgage statement
• Bank or credit card statement (from another UK bank)
• HM Revenue and Customs (HMRC) tax notification

Proof of income

Some banks may request proof of your income, which can include pay stubs, employment contracts, or a letter from your employer. The specific documents and eligibility criteria required may vary from one bank to another. 

Therefore, it’s a good practice to contact the provider you wish to open an account with or visit their website to find out their exact requirements.

How does a current account work?

In the UK, a current account provides you with a range of features and services, including:

Debit card

After opening a current account, you will be issued a debit card linked to your account. This small piece of plastic plays a significant role in your financial life. It allows you to:

• Make purchases: You can use your debit card to buy goods and services at physical stores or online. It’s a convenient and secure way to pay.
• Withdraw cash: Your debit card also serves as an ATM card, enabling you to make withdrawals from cash machines. This is especially handy when you need physical currency for transactions or emergencies.
• Contactless payments: Many debit cards support contactless payments, which allow you to make quick and easy transactions by simply tapping your card on a payment terminal. This payment method is extremely popular in the UK and speeds up your shopping experience. 

Online and mobile banking

Modern banking is all about convenience, and that’s where online and mobile banking comes into play:

• 24/7 access: You can access your account at any time, day or night, via your bank’s online or mobile app. This means you can check your balance, review recent transactions and even make transfers whenever it suits you.
• Bill payments: Online banking enables you to set up and manage direct debits or standing orders for regular bills. This eliminates the need to remember due dates and ensures your financial obligations are met on time.
• Transfers: You can transfer money between your accounts (if you have multiple), pay friends and family, or move money to other accounts, both within and outside the bank.

Arranged overdraft 

Many current accounts offer arranged overdraft facilities as an optional feature. 

This allows you to spend more money than you have in your account, up to a predetermined limit set by your bank. Here’s how it works:

• Pre-approved limit: Your bank will specify a maximum overdraft amount, often based on your credit history and income. It’s essential to use this feature responsibly, as you’ll be charged interest and potentially fees on the overdrawn amount.
• Safety net: Overdrafts can act as a safety net for unexpected expenses or temporary shortfalls in your budget. However, it’s crucial to manage your overdraft wisely to avoid accruing unnecessary debt.

Security

Security is a top priority when it comes to bank accounts, and current accounts are no exception. The Financial Conduct Authority (FCA) is the primary regulatory authority overseeing financial services in the UK, monitoring financial products and services to protect consumers’ interests.

The Financial Services Compensation Scheme (FSCS) is another vital component of the UK’s financial security framework, which provides protection for your deposits of up to £85,000 in case your bank or financial institution encounters financial difficulties.

Overall, banks in the UK have to employ various measures to protect your money and personal information:

• PIN and passwords: Your debit card has a Personal Identification Number (PIN), which you must enter to authorise transactions. Additionally, online and mobile banking require secure passwords and, in some cases, two-factor authentication for added protection.
• Fraud monitoring: Banks employ sophisticated fraud detection systems to monitor transactions and detect unusual activity. If they suspect fraudulent activity on your account number, they may contact you to verify the transactions.
• Lost or stolen cards: If your debit card is lost or stolen, contact your bank immediately to have it blocked. This ensures that no one can access your funds without your permission.
• Data encryption: Online and mobile banking use encryption to protect your data during transmission. This encryption makes it extremely difficult for hackers to intercept and decipher your information.

By providing all these features, a current account allows you to handle your finances efficiently and adapt to the fast-paced, digital-driven financial landscape of the UK.

Types of current accounts

In your journey as an immigrant in the UK, you’ll discover that current accounts are not one-size-fits-all. Banks offer various types of current accounts, each tailored to different financial needs and circumstances.

There are various types of current accounts to choose from, depending on your financial needs and circumstances.

Basic current account

A basic current account, also known as a standard current account, is an excellent starting point, particularly if you have a limited credit history or a less-than-perfect credit score. 

Here’s what you can expect from this type of basic bank account:

• No overdraft: Basic current accounts typically do not come with an overdraft facility, which means you can only spend the money you have in the account. This can be a helpful way to avoid accumulating debt.
• No or low fees: Banks that offer basic accounts often keep fees to a minimum, making them an accessible option for those who want to avoid monthly charges.
• Limited features: While basic accounts provide essential banking services like chequebooks, direct debits and access to online banking apps, they may lack some of the perks and functionalities of other account types.

Packaged current account

A packaged current account is designed to provide you with additional benefits and services, usually for a monthly fee. These accounts can be a good choice if you’re looking for extra features. Here’s what you can expect:

• Added perks: Packaged accounts often include benefits like travel insurance, mobile phone insurance, breakdown cover, or access to premium features like higher interest rates on savings.
• Monthly fee: You’ll pay a monthly fee for these extra benefits, so it’s essential to assess whether the value you receive from the perks justifies the cost.
• Higher overdraft limits: Some packaged accounts may offer more generous arranged and unarranged overdraft limits compared to basic accounts.

Student current account

If you’re a student, a student current account is tailored to your unique needs. This type of student bank accounts comes with benefits designed to support you during your academic journey:

• Interest-free overdraft: One of the most significant advantages of a student account is the interest-free overdraft, which can be a financial lifeline during your studies.
• Low or no fees: Many student accounts offer low or no fees, recognising that students often have limited financial resources.
• Freebies and discounts: Some student accounts provide freebies such as railcards or discounts on shopping, which can help you save money.

Joint current account

A joint current account is shared by two or more individuals, often used by couples, friends, or family members who share financial responsibilities:

• Shared expenses: Joint accounts are useful for managing shared expenses like rent, bills, or groceries. This simplifies the process of tracking and splitting costs.
• Equal access: All account holders have equal access to the account, and each can make transactions independently.
• Joint responsibility: Bear in mind that all account holders share responsibility for the account’s finances, including any debts or overdrafts.

When choosing a current account in the UK, consider your specific financial situation and requirements. While the types mentioned here cover the most common options, banks may offer variations or additional account features. 

Carefully compare the benefits, fees and terms of each type to find the current account that best aligns with your financial goals and lifestyle as an immigrant in the UK.

Compare the best UK current accounts

When it comes to choosing the right current account in the UK, it’s worth comparing different banks’ offerings to find the one that suits your needs.

Having access to comprehensive information is essential. Luckily, there are several websites and tools that can help you compare current account offerings from different banks. 

Here are some of the best websites you can use to make an informed decision:

Money Super Market

Moneysupermarket is a popular comparison website that allows you to compare current accounts based on various criteria such as interest rates, fees, overdraft options and customer reviews. They provide detailed information on each account, making it easy to find one that suits your needs.

Money Saving Expert

Founded by personal finance expert Martin Lewis, MoneySavingExpert offers a comprehensive current account comparison tool. It provides up-to-date information on the best current account deals, including cashback offers and incentives.

Compare the Market

Compare the Market offers a user-friendly comparison platform for current accounts. They present a clear overview of account features, fees and benefits, helping you make an informed choice.

uSwitch

uSwitch is another well-known comparison website that lets you compare current accounts in the UK. They provide detailed information on account fees, interest rates and perks, helping you find the best match for your financial preferences.

Which?

Which? is a trusted consumer-focused organisation that offers unbiased reviews and comparisons of current accounts. They assess accounts based on various factors, including customer satisfaction, to help you make an informed decision.

Finder

Finder provides a handy comparison tool for current accounts, allowing you to filter and sort accounts based on your preferences. They also offer insights into account features and benefits.

BBC Money Box

The BBC Money Box programme periodically reviews and discusses current account offerings in the UK. You can find valuable insights and updates on current banking trends by tuning in or visiting their website.

Before making a decision, it’s essential to consider your individual financial needs and priorities. Compare factors such as interest rates, fees, overdraft options and additional perks offered by different banks. Additionally, read customer reviews and seek advice from financial experts to ensure that the current account you choose aligns with your goals as an immigrant in the UK. 

Remember that your current account is a central part of your financial life, so taking the time to research and compare your options is a wise investment in your financial future.

What is the difference between a current account and a savings account?

While both current and savings accounts are offered by banks, they serve different purposes. A savings account is a bank account designed for saving and earning interest, often with restrictions on withdrawals, while a current account is meant for daily transactions, with easy access to your funds for regular spending.

Below we have summarised the key differences between these two types of bank accounts, helping you choose the right one to meet your financial goals.

Current account

A current account, also known as a checking account, is primarily designed for everyday financial transactions. It serves as a versatile tool for managing your day-to-day expenses, receiving income and paying household bills. Key features of a current account include:

• Transaction hub: A current account is your go-to account for handling regular payments, including debit card purchases, ATM withdrawals and electronic transfers.
• Immediate access: You have quick and easy access to your funds in a current account, making it ideal for covering regular expenses.
• No or low Interest: Current accounts typically offer little to no interest on the money you hold in the account. While your money is safe and accessible, it won’t earn much in the way of interest.
• No withdrawal restrictions: There are usually no limits on the number of withdrawals or transfers you can make from a current account.

Savings account

A savings account, on the other hand, is explicitly designed for saving and earning interest on your deposits. Here are the key characteristics of a savings account:

• Interest-earning: Savings accounts offer an interest rate on the money you keep in the account. While the interest may seem small, it can add up over time, helping your savings grow.
• Limited transactions: Unlike current accounts, savings accounts may have restrictions on the number of withdrawals or transfers you can make within a given period. This encourages you to save rather than spend.
• Emergency fund: Many people use savings accounts to build an emergency fund, a financial safety net for unexpected expenses like medical bills or car repairs.
• Long-term savings: Savings accounts are suitable for goals that require saving over an extended period, such as a down payment for a home or a dream vacation.

Choosing the right bank account for you

The choice between a current account and a savings account depends on your financial needs and goals.

• Use a current account if:
  • You need a central account for daily transactions.
  • You want quick and easy access to your money.
  • Earning interest on your balance is not a priority.
• Use a savings account if:
  • You’re looking to save and grow your money.
  • You want to build an emergency fund.
  • You have specific savings goals and can limit your withdrawals.

For more information about savings accounts, see our comprehensive guide: How do savings accounts work? The 2023 guide for UK immigrants. 

How do I switch current accounts?

Switching your current account in the UK has never been easier, thanks to the Current Account Switch Service (CASS), a free and straightforward service offered by most UK banks and building societies. 

Its primary purpose is to simplify the process of switching your current account from one bank to another. Whether you’re looking for better features, lower fees, or improved customer service, CASS makes the transition hassle-free.

Why should I consider switching?

There are several reasons why you might want to switch your current account:

• Better deals: You may find a bank offering higher interest rates, lower fees, or cash incentives for switching.
• Improved services: If you’re unhappy with your current bank’s customer service or online banking experience, you might find a better fit elsewhere.
• Specialised features: Different banks offer various features, such as overdraft facilities, rewards programmes, or mobile banking apps. Switching allows you to find an account that aligns with your needs.
• Geographic convenience: If you’ve moved to a new area or your current bank doesn’t have a branch nearby, switching to a more accessible bank can be beneficial.

How does the Current Account Switch Service work?

The Current Account Switch Service (CASS) is designed to minimise the inconvenience associated with switching banks. Here’s how it works:

1. Choose your new bank: Start by researching and selecting the bank or building society you want to switch to. Ensure that they participate in the CASS.
2. Open your new account: Once you’ve decided on a new account, open it with the chosen bank. They will provide you with a Switching Pack.
3. Inform your new bank: In the Switching Pack, you’ll find a Current Account Switch Agreement form. Complete and sign this form, then return it to your new bank.
4. Choose a switching date: You’ll need to agree on a date for the switch to take place. This can be as soon as seven working days after your new account is opened or a later date that suits you.
5. Authorise the switch: Your new bank will take care of the entire switching process. This includes transferring your direct debits, standing orders and your balance from your old account to your new account.
6. Use your new account: Once the switch is complete, you can start using your new account for all your banking needs. Your old account will be closed automatically.

What about payments to my old account?

During the switching process, the CASS ensures that any payments made to your old account are redirected to your new account for at least 36 months. This includes incoming payments like your salary and outgoing payments like bills. You don’t have to worry about missing any payments during the transition.

Are there any risks or concerns?

Switching your current account using the CASS is highly secure and reliable because the service is covered by the Payment Services Regulations, which provide you with protection in case anything goes wrong during the switch. However, there are a few things to consider:

• Overdraft: If you have an overdraft with your old account, it’s essential to discuss it with your new bank. They may not offer the same overdraft terms, so you need to agree on how to manage it.
• Credit checks: Your new bank may perform a credit check when you open a new account. This is standard practice and helps them determine your credit rating.
• Account closure: Once the switch is complete, your old account will be closed. Make sure to update any account information with companies that make direct debits or credits to your account.

Switching your current account using the Current Account Switch Service can be a straightforward and beneficial process. It allows you to find a bank or building society that better suits your financial needs while ensuring a smooth transition of your banking activities.

Alternatively, you may want to consider holding multiple current accounts at once.

Can I hold multiple current accounts?

As an immigrant in the UK, you may wonder whether it’s possible and advisable to hold multiple current accounts. The short answer is yes, you can indeed have more than one current account, and there are various reasons why you might consider doing so: 

Financial organisation

Having separate accounts for different financial purposes can help you stay organised. You can allocate specific accounts for bills, savings and discretionary spending, making it easier to manage your money effectively.

Access to different features

Different banks offer various features and perks with their current accounts. By having multiple accounts, you can take advantage of the best features from different institutions. For example, one bank may offer a competitive interest rate, while another provides excellent mobile banking features.

Improved budgeting

Multiple accounts can aid in budgeting. You can set up automatic transfers to allocate money for specific purposes, such as rent, groceries, or entertainment, ensuring you stick to your financial goals.

Financial flexibility

Some immigrants use multiple accounts to separate their finances based on currency. If you receive income in multiple currencies, having separate accounts can help you manage and exchange money efficiently.

Backup and redundancy

Having a backup current account can be beneficial in case of issues with your primary account. It provides financial redundancy, ensuring that you can access funds even if one account encounters problems.

Considerations when holding multiple current accounts

While having multiple current accounts can offer advantages, it’s essential to be mindful of some considerations:

• Fees: Different accounts may come with various fees, including monthly maintenance fees, overdraft charges and transaction fees. Be aware of the cost of maintaining multiple accounts and ensure it aligns with your budget.
• Management: Managing multiple accounts requires diligence and organisation. You’ll need to monitor balances, track transactions and ensure that each account serves its intended purpose.
• Credit impact: Opening multiple accounts within a short period can impact your credit score, as it may appear that you’re seeking additional credit. While the impact is usually temporary, it’s worth considering if you plan to apply for credit in the near future.
• Overdraft risk: If you have overdraft facilities on multiple accounts, it’s crucial to manage them responsibly. Overdraft fees and interest charges can add up quickly if not carefully monitored.

How to open multiple current accounts

Opening additional current accounts in the UK is relatively straightforward. Here’s a general process to follow:

1. Choose the bank: Research different banks and their current account offerings to find the ones that align with your financial needs and goals.
2. Complete the application: Visit the bank’s website or branch and complete the application process for the new current account. You may need to provide identification and proof of address, similar to when you opened your first account.
3. Manage your accounts: Once approved, you can manage your multiple accounts online or through mobile banking apps. Set up direct debits, standing orders and automatic transfers to allocate funds as needed.
4. Monitor and review: Regularly review your accounts to ensure they are serving their intended purposes. Adjust your financial strategy as needed to make the most of your multiple accounts.

In conclusion, holding multiple current accounts in the UK can provide you with financial flexibility and organisation. However, it’s essential to carefully consider the costs, manage your accounts diligently and be mindful of their impact on your credit. 

By doing so, you can leverage the advantages of multiple accounts while maintaining control over your financial well-being as an immigrant in the UK.

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