Recent events in the world economy have forced many people to take stock of their finances and realise just how reliant they are on credit. While mortgages, loans and credit cards may be grabbing all the headlines, it is important to remember that overdrafts can cause just as many problems.
And with people being advised to make sure the money they do have is working for them as well as it can, it could be that a customer should consider finding the best current account rate to be just as crucial as comparing the likes of credit cards.
Last week Santander was attracting attention to new savings rates being offered by its three brands - Abbey, Alliance & Leicester (A&L) and Bradford & Bingley - but now it has turned its attention to current accounts.
This week the interest rate being offered for Abbey's preferred in-credit rate product, as well as two A&L accounts, rose from five per cent to six per cent - the level being fixed for a period of one year.
Gillian Almond, speaking on behalf of the banks, noted that other lenders are offering rates as low as zero per cent, while nearly nine out of ten customers are benefiting from less than a 0.5 per cent return.
"With the Bank of England base rate being at an all-time low, we know consumers are increasingly shopping around to make the most of their money. By switching to a current account customers could earn 60 times more than the interest they can get from other high street banks," she added.
This was a point also made by
Moneyfacts.co.uk finance expert Michelle Slade, who described the six per cent rate as being "streets ahead of the rest of the market". She urged customers to recognise the importance of current accounts and consider switching, something a current account comparison could help achieve.
But one crucial thing to bear in mind could well be overdrafts, as those who find themselves in financial difficulty may have to rely on them and a high rate could just add to problems.
Tom Howard, spokesperson for the Consumer Credit Counselling Service, observed that overdrafts can provide a useful cushion when managing finances, but warned against relying on them too heavily.
He explained that anyone who needs to do so may have a "fairly serious problem" with debt and should seek advice. But for those who use an overdraft only occasionally, he also pointed to the advantages that comparisons can bring.
"If your bank is looking to increase its overdraft rates, switching may be something to consider," said Mr Howard, adding: "Unfortunately keeping a loyalty to one bank counts for little these days."
