Rather than heading into your local bank and applying for the first current or savings account you see, take a little time to compare bank accounts and find one that is best suited to your financial needs.

You can compare bank accounts easily online, as there are several reputable websites that offer you this service.

But what should you look for when you do compare bank accounts?

When comparing bank accounts, it’s important that you don’t just focus on the ‘tangible’ benefits with the account (free money if you pay a certain amount in each month, for example), but focus on the underlying features, too.

This basically means to look at all the ‘ins and outs’ of the bank accounts you are comparing. Look at how much you will be charged for going overdrawn, look at the account’s interest rate, and look at any charges you may have to cover.

These sorts of features are often overlooked by people when opening a bank account, but it is often these features that make a bank account ‘right for you’. So – make sure you fully understand all a bank account has to offer before discarding it/applying for it.

Finally, if you’re unsure about which bank account may be the best one for you, you could ask for some advice from someone at your bank – they should be happy to help you… after all, you’re their customer, so they’ll be determined to offer you the best possible service.

However there are small number of instances when debts are cheaper then your savings, or they cost so much to pay off that there is no point

Case 1: Interest free – For those who manage their debt properly by switching debt to interest free accounts should follow the opposite logic. The best way to explain this is for example, if the interest rate on your debt is less then the amount that your savings earn after tax, you can benefit from building your savings and keeping your debts. This will result in you making a profit on money borrowed to you by the banks.
Case 2: Penalties – If paying off your debt incurs a penalty, similar to many loans and mortgages then it is best to leave the cash in a savings account until the penalty amount is small enough that it does not matter.
Case 3: Emergency reasons – For anyone without debt an emergency cash fund is an easy and responsible thing to do. On the other hand, for those with outstanding debt, particularly on credit cards, it does not make much sense. When you are in deep credit card debt the best thing to do is use your savings, including any emergency funds you may have saved up.

You may not want to cut up your credit cards just yet, it is a good idea to keep them around incase of a true emergency such as necessary car or home repairs, and only use your cards if you have no other means of paying for it.

To avoid accruing these charges in the first place here are three simple steps to follow:
1. Know your minimum payment. Each credit card has a minimum payment which is in most cases based on a percentage of your overall balance on that card. Make sure you Keep track of your minimum payment for each card.

2. Set up an automated payment system – Set up a Direct Debit to pay off your card each month. This will allow you to be on time for your monthly payments. However, do keep in mind that paying only the minimum each month will take a considerable amount of time to pay off. For this reason whenever it is possible you should continue to mail in monthly payments, this will double your monthly payments lowering your debt that much more each year.

3. Don’t go over your credit limit.
It may be that your debts are simply from overspending. There are a number of ways to tackle this, shift to better value products. If you are getting credit card fines, this is a good way to deal with them.

Step 1: Before you begin the budgeting process, you should gather all your credit card and bank statements, bills, pay slips, invoices, etc.

Step 2: Group expenses into categories such as Home, Car, insurance, Travel, Entertainment, etc

Step 3: Use an excel file with two columns: Category and Monthly Expense.

Step 4: Based on your statements calculate your monthly expenses for each category and sum them up.

Now that you know how much you are currently spending money on, it is now time to look at how much is the right amount on each category to spend. This will allow you to keep your finances in control and put a little extra in your savings.

If you currently spend more than you earn, you will eventually have to dig into your savings, ending in you having to borrow resulting in more debt. Your health and mental stability will suffer as well, being in debt effects more then your pocket.

Now, before any purchases, ask yourself if you can afford it. The most vital thing is to understand that your finances lead your lifestyle, not your lifestyle leading your finances. One big problem many people do is search for the cheapest price on something they are looking for instead of looking to see if they can afford even that.

One of the problems with APR is that It only includes compulsory charges. When getting a new loan many lenders will include payment protection insurance without informing you. This insurance is voluntary and is not included in the APR.
In addition, The APR is intended to specify the amount you will pay each year over the entire term of the debt. In spite of that when the rates change it can become extremely difficult to understand.

The AER or Annual Equivalent Rate is the official rate for savings accounts, and is intended to permit easy comparisons as it is destined to level out the difference between accounts.

It is important to understand the concept of Compound interest when speaking about savings. Compound interest is the process of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on. To put it simpler your money will build faster because you will earn interest on your original deposit but eventually you will also be earning interest on the interest the bank has already paid you. The longer you save the greater effect the compound interest will have on your savings.

If the interest is rewarded yearly then the Gross rate and AER should be the same, as there is no ‘interest compounding’.

Payment Protection Insurance
Payment Protection Insurance also known as PPI, is an insurance offered through the lender that will cover your repayments in case you are injured and can not work to make payment on the loan, this insurance is generally only 12 months. Before taking the Payment Protection Plan from the lender check your benefits from work and any other insurance policies you may have to see if they will cover any repayments if you are unable to. Many lenders offer this coverage however, it can be extremely spending and only add to the total you will have to repay.

1. Get on the electoral roll: If you are not on the roll, it is doubtful you will get any credit. For those who are not qualified to vote, primarily foreign nationals, send all the credit reference agencies proof of residency and ask them to add a note to verify this.
2. Building a good credit history and repairing past problems: Credit scoring attempts to foretell your behavior. If you have no credit history, it is even more difficult for lenders to do this, so you are more likely to be declined. Therefore building a history is the best method.
3. Keep payments current and never be late: Always try to pay at least the minimum on your financial products. Even if you are finding it hard to make ends meet, do not evade or miss payments. Doing this once or twice will cause problems that can cost you for years.
4. Time applications correctly: Credit applications leave notes on your file when you apply for numerous loans in a time, it hurts your score. Space out applications, not just for credit but also for car insurance, mobile phones and others.

What Do the Banks Know About You?

There are three main sources of information used for scores.

1. Your application form is how lenders get their vital information such as how much you make, your family size, even if you own your own home. It is critical that you fill in this information correctly, it can determine if the lender will even look any farther into you credit history and can determine if you receive the loan or not.

2. Your history with the company plays an important part of the decision process as well. They can look at your pervious and current accounts to see how well you have managed them to determine your likely hood of paying your debt in a timely manner.

3. Credit reference agency Experian, Equifax and Callcredit collect information, permitting them to send records on any person to potential lenders. All lenders use at least one agency when reviewing your file. This data comes from three sources…
• Electoral roll information. This is openly available and includes addresses and who lives with who information.
• Court Records. County Court Judgments (CCJs) and Bankruptcies indicate if you have a history of debt problems.
• Financial Data. Banks, building societies and other financial organizations assemble details of all your payments and transactions

What the Banks Do Not Know About You?

The following things are not on your credit report:
• Fines: Any fines you have acquired, such as parking or driving fines. Although they are issued by the courts, they are not ‘credit’ issues so they are not listed.
• Savings Accounts: As savings are not a credit issue, they do not appear on credit files.
• Medical History: Medical problems you may have had in the past are not published.
• Criminal Record: No criminal convictions are listed.
• Child Support Agency: Information from the Child Support Agency is barred.
• Information on relatives: Given that you do not have any joint financial products, there is no information about members of your family who live, or have lived, with you or any other third parties.
• Student Loans: This information is not supplied to credit reference agencies. The only exclusion is if you have a County Court Judgment against you for lack of payment, then that can be included.
• Debts more then six years old: The time span of credit files is more often than not six years, so if something happened more than six years ago it will not be on your file.

Moving your Debts from One Card to Another
Before transferring your debt from a high interest rate card to a lower one call your current card provider and ask them these three questions:
• Can you move debts from other cards to theirs? If so, what is their interest rate?
• What is your current outstanding debt?
• What is your current credit limit? If the balance transfer rate is good, ask to increase it.
Once you have acquired all this information from all of your credit lenders, it is imperative to take inventory and note down all your debts in one list. Make certain you have included any overdrafts as well; it could be more expensive than your credit card debt.

Now Move the Debt to Where It Is Cheaper
The goal is to take advantage of the new and existing customer balance transfer offers. If you cannot find or obtain a card with low special rates, transfer the money to cards with the cheapest average rate.

Focus on Repaying your Most Expensive Debts First
Once you get your balance transfers complete pay the most expensive card off first. When making your monthly payments pay the minimum on the others and pay as much extra as you can on the most expensive one. Once this one is paid off work on the next highest card and do the same. This will allow your higher interest rate cards to lower faster then paying the minimum on each card.