Picking a credit card that fits your situation, and choosing the right bank account for your needs, can make a big difference to your financial wellbeing. There are loads of financial products out there, with many providers trying to dazzle you with perks and rewards. But how can you cut through the noise to find what’s right for you?

Lots of banks, both high street and online, try to convince you that their account is the one you need. And the process can leave you drowning in financial jargon. Fear not, we’ve boiled down some of the most important things to look out for. Here are our tips for finding a new bank account and choosing a credit card:

How to pick a bank account

Choosing a bank account that’s right for you is important because it will likely become the main hub for all of your financial activity. It can be the home for your money, so it makes sense to spend a bit of time choosing an account that ticks all your boxes. Let’s look at some of the boxes you might want ticked.

Convenience is often at the top of most people’s requirements. Consider how your bank account might fit into your lifestyle: can you get your hands on your money when you need it? Is your bank online or located nearby? Do you have good access to cash machines and contactless payments? Think about your day-to-day usage and find an account that fits.

Fees and interest are also things to consider when choosing a bank account. Are you required to pay a monthly fee to hold your account? Do you get charged for using your money at home or abroad? What are the interest rates for your overdraft? Banks might hide some of these details in the small print, but they’re important to know.

Types of bank accounts: current and savings

‍There are two main types of bank accounts: current and savings. Current accounts are often used to conveniently manage your daily financial activity, while savings normally offer higher interest rates to hold your money and grow it over longer periods.

If you’re wondering how to choose a bank for savings accounts and current accounts, it’s useful to understand how they work. Current accounts provide debit cards for easy shopping, Direct Debits for automating bill payments, and overdrafts as financial safety nets in case your funds dry up when money is owed. 

Savings accounts typically offer higher interest rates on the money that you hold with them. The trade-off is normally how much access you have to your money. Savings accounts can still provide instant access, but generally, the highest returns come from accounts where your money is locked away for longer periods.

Online or in-person

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It’s worth considering whether you’ll be running your bank account mostly online, or if it is important to have brick-and-mortar branches nearby. Some people like the convenience of managing finances from a smartphone, whereas others prefer face-to-face interactions when dealing with their money.

Fees and charges

It's important to keep an eye on the small print when you’re looking at different savings and current accounts. Some bank accounts will need a minimum deposit to be activated, others may require a monthly fee for access to certain features. There can also be charges for using your overdraft or for going over your agreed limits.

Overdrafts and interest rates

‍Many bank accounts will offer overdrafts, which are financial buffers that allow you to go below £0 in your account. This can be useful if you have Direct Debits leaving your account but you don’t have enough money to cover them. However, you will normally have to pay interest on the money that you borrow and it can be quite high.

Keep an eye on any interest rates and charges for overdrafts. Remember to check both for using an agreed overdraft, but also for going over agreed limits, as that can have an even higher cost.

Savings accounts will normally offer interest that is paid to you. This can be a small percentage of the money that you hold in the account, and will often be higher than standard current accounts. Shop around and check the eligibility criteria as you may have to lock your money away for a longer length  of time to get the best rates.

Choosing a credit card

Choosing the right credit card for you and your needs is important. Credit cards can be powerful tools that help to balance and manage your finances, but with a temptation to spend, and often high interest rates, it’s easy to misuse them if you’re not careful. So, how can you go about choosing the right credit card for you?

There are lots of credit cards out there. Many offer you different perks and rewards, but it's important to cut through all the noise and understand what’s being offered. This is especially important when choosing your first credit card. So, what’s the best thing to look out for when shopping around?

First, work out what you actually need a credit card for. Do you want to manage your daily spending? Are you looking to make a large purchase? Or are you making a balance transfer?  This decision often depends on whether you plan to pay off your balance each month or spread the repayments over time.

Using a credit card for daily spending and paying off the balance in full and on time each month may mean that interest rates aren’t as important, but you could benefit from rewards like cash back and store points. If you think you‘ll be paying off large balances over longer periods, lower interest rates can be important. Here are some things to look out for when choosing a credit card:

1. Annual Percentage Rate (APR)

It can be sensible to choose your credit card based on its Annual Percentage Rate (APR). There can be a lot of confusion about APR, but simply put it’s how much it costs to borrow on the credit card, including all interest and fees.  You can compare credit cards using their APR, which can help you find the best deals. Lower APRs mean that the credit card will cost you less over time.

2. Interest free periods

‍Some credit cards offer interest-free periods, normally as an introductory six months to 12 months. This means you will pay no interest on the money you borrow during that time. This can be really useful if you’re looking to borrow a large amount and pay it off within the interest-free period or if you are making a balance transfer.

But it’s important to check when the interest-free periods end, and what rates will be charged afterwards. It is often the case that the interest rates will then become very high so you don’t want to get caught out if you still owe money on the card. Or you may be able to find a new card with a new interest-free period. 

3. Minimum repayments and fees

‍If you will be using your credit card for daily spending, it’s a good idea to check what your minimum repayments will be and whether you can afford them. Some cards will require that you pay off a minimum amount every month (often around £5 or 3% of your balance, whichever is more). 

There can also be fees for using credit cards. These may be for standard maintenance but also for going over any agreed limits. So, remember to check the small print if you think you might have an issue managing your payments, and make sure that you can afford them.

4. Cashback and rewards

‍If you intend to use your credit card for day-to-day spending, you may benefit from loyalty points and cashback rewards. Some shops will reward you with points when you spend with them so that you can get money off in the future. If there are a few retailers you regularly use, this could be a useful saving. 

Cashback quite literally gives you cash back for spending on your card. Check the details and criteria of credit cards to find the ones that offer the biggest rewards for using the card in ways that you expect you will be doing anyway. You might be able to get some of the money you spend on the card refunded.

Grow credit score

Picking the right credit card and opening the most useful bank account is about finding the right features for your circumstances. And when it comes to choosing a good credit card, a strong credit score can help you land the best deal. So, it’s a great idea to give your credit score a health check before you shop around.

Your credit score is a numerical value that lets you know how creditworthy you appear to potential lenders. A higher credit score can mean that you will be eligible for the best deals when it comes to borrowing money, and the best interest rates for paying it back. Give yourself the best chance by growing your credit score.

If you want a fast and proven way to build your credit score, why not get started with Loqbox? For £2.50 per week, we can help you raise your credit score now, and potentially save you thousands on interest payments for mortgages, credit cards and loans in the future.

Improvements to your credit score are not guaranteed.