Current account suggestions please?

dag_2

I'm looking for a new current account, with the cheapest possible authorised overdraft rate, and who are likely to authorise an overdraft of at least £200 on an ongoing basis.

I plan to keep the balance as close to zero as possible, yet still be able to get cash in a hurry. Whenever I incur an overdraft, I plan to pay it off as soon as possible out of my cahoot flexible loan - unless the overdraft interest rate is less than 6.9% (unlikely).

I looked at the moneyfacts best buy comparisons - but they only listed accounts that require a deposit of at least £1000 a month. I probably won't be able deposit £1000 every month, but I'm very likely to deposit at least £500 every month.

The account absolutely must support:

• direct debits
• internet banking
• automatic telling machine card
• monthly paper statements

Paper statements are important because I'm likely to need to claim housing benefit, and prove that I don't have any savings. It's probably possible to do this without paper statements, but I guess it might cause delays.

Other things that would be nice, but are not essential:

• branches
• cheque book
• credit interest
• debit card

Any suggestions? Thanks.

dag_2

In other threads, people have suggested that if your net salary is less than £1000 a month, you can make it up by transferring money in and back out again.

Failing that, why not just transfer £100 (or whatever will take you to the £1000 requirement) out into another account and back in again each month? I think people have found out before that this is acceptable (but please correct me if I'm wrong).

I could realistically do this using my cahoot flexible loan - but what about the interest charges? It takes two or three working days to go through each way. So if I'm going to withdraw £500 every month from my cahoot flexible loan, then pay it back again as soon as it hits my current account, it will take about a week to go both ways - and the extra interest on my cahoot flexible loan will be about 70p per month. If I don't wait for the money to credit my current account before sending it back to the loan account, then the combined flexible loan and overdraft interest will be even higher. Any overdraft interest charged for ATM withdrawals will be in addition to this.

But if my current account balance is zero, and I draw £40-ish out of a cash machine, then pay it off from the cahoot flexible loan at the earliest possible opportunity, it will take three to five days to go through, and for my current account to go back to zero. So even if my overdraft rate is 18% APR, I will still incur only about 9p or 10p in overdraft interest for those few days - and after that, it's at 6.9% APR.

Therefore, the cost of interest during clearing time for the extra transactions needed to qualify for lower rates, is often unjustifiable.

(have I explained that properly?)

My point is, I'm quite prepared for interest rates well in excess of 10% APR, even up to 15% APR - as long as it's the cheapest overdraft that doesn't require a credit of £1000 per month.

That said - if there's a bank account which doesn't require a £1000-monthly deposit, but which drops your overdraft rate automatically if you do deposit over £1000 a month - that would be even better.

Any suggestions?

quietheart

I've stuck with nationwide's flexaccount for many years, £800 overdraft authorised with low rates, most of all they've been great when I had numerous fraudulent transactions, really helpful. Not sure about minimum monthly credit though....

Darryl

Take a look at the Alliance & Leicester Premier Current Account.

The account must be credited with a minimum of £500 per month. Credit transfers to the Account from other Alliance & Leicester accounts held by you will not count towards the minimum monthly credit.

It has 0% interest on overdrafts up to £2500, just like the Premier Plus account...

Here's Martin's link to the Alliance & Leicester website: Alliance & Leicester* (this link is an affiliated link which helps keep this site free to use)

But, remember to choose the Premier account, not the Premier Plus one.

Darryl.