The short version
General information, not advice
- Current accounts are for daily spending.
- Savings accounts are for storing money separately.
- Some accounts charge fees, others are free.
- You can switch bank accounts easily under UK rules.
- Banks are regulated by the FCA and PRA.
A bank account is the foundation of modern money management. It allows you to receive income, pay bills, store savings, and make everyday transactions securely.
This guide explains the different types of UK bank accounts, how they work, fees to watch for, and how to choose the right one for your needs.
This guide is educational and does not provide personalised financial advice.
What Is a Current Account?
A current account is used for everyday transactions:
- Receiving salary
- Paying bills
- Direct debits
- Debit card purchases
Most UK current accounts are free, but some "packaged accounts" charge a monthly fee.
What Is a Savings Account?
Savings accounts are designed for storing money separately from spending.
Types include:
- Easy access savings
- Fixed-term savings
- Cash ISAs
Interest rates vary depending on access restrictions.
Overdrafts
An overdraft allows you to spend more than you have in your account.
There are:
- Arranged overdrafts (agreed limit)
- Unarranged overdrafts (more expensive)
Overdrafts now use standardised interest pricing under FCA rules.
Switching Bank Accounts
The Current Account Switch Service guarantees:
- Switch completed within 7 working days
- Payments redirected
- Balance transferred
This reduces risk when moving banks.
FSCS Protection
UK bank deposits are protected up to £120,000 per eligible person per authorised firm under the Financial Services Compensation Scheme (FSCS). The limit rose from £85,000 on 1 December 2025 and applies where a firm fails after 30 November 2025.
How the limit is written matters more than the number:
- It is per person, so a joint account held by two people is protected up to £240,000
- It is per banking licence, not per brand and not per account. Several high-street names share a licence, so two accounts that look like two banks can share one £120,000 limit
- A temporary high balance from a major life event, such as selling a home or receiving an inheritance, is protected up to £1.4 million for six months from the day it arrives
You do not apply for any of this and it costs nothing. It applies automatically to eligible deposits.
Key takeaways
- Choose the right account for your needs.
- Check fees carefully.
- Overdrafts are borrowing, not free money.
- Savings should ideally be kept separate.
- Your deposits are protected up to £120,000 per person, per banking licence.
Common questions
Are all current accounts free?
No. Some charge monthly fees.
Is my money safe in a UK bank?
Yes, up to £120,000 per eligible person per authorised firm under the FSCS, and up to £240,000 on a joint account held by two people. The limit is per banking licence rather than per brand, so accounts held with two brands sharing one licence share one limit.
Can I switch accounts easily?
Yes, under the Current Account Switch Service.
Switch and support
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