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Choosing your banking partner

Choosing the right banking partner can help you achieve financial independence by getting the products and services you need to help you to meet your goals.

Here are 7 factors to consider

1. Account types

Do they offer the type of account, or accounts, you need? For example, you might be looking for an everyday bank account to manage your day-to-day income and spending. Or perhaps you're looking for a regular savings account so you can keep your savings separate from your everyday spending.

2. Basic or advanced

Do they provide the account features you're looking for? For example, you might simply want a basic bank account to deposit your income, make payments, and withdraw money from cash machines. Or perhaps one that comes with a range of added benefits such as breakdown cover or travel insurance and may charge a monthly fee.

If you have savings, an ordinary savings account that provides instant access to your money might be ideal. Or perhaps you're looking for one that pays a higher rate of interest in return for a longer notice period.

3. Digital banking

What is their digital banking experience like? These days, digital banking allows you to do most of your everyday banking without needing either to visit a branch, or even to pick up the phone. For example, many banking providers offer mobile apps for their accounts, which you can use to:

  • View statements or recent transactions
  • Send or transfer money from one account to another, for example, from a regular bank account to a savings account
  • Set up Direct Debits and standing orders
  • Open additional accounts
  • Apply for an arranged overdraft

Some banks offer online and mobile banking as well as a network of branches, while others are 100% digital and have no physical branches at all.

4. Services offered

Do they provide the services you know you will need, like using cheques, sending international payments or setting up automated payments? Depending on your situation, there may be features you're looking for, such as a fee-free overdraft if you're a student.

5. Interest rates and fees

Depending on your situation, the rate of interest offered on your savings or charged on your overdraft will be key to your choice of account and banking provider. As a student, you might prefer to opt for an account with an overdraft with low (or no) fees, or a savings account that offers instant access. Once you're working, you may be happy to pay a monthly fee in return for extra services that would benefit you.

6. Values

You might choose to trust your finances to a provider that shares your personal values. For example, you might prefer a bank that has strong ethical credentials, is committed to reducing its carbon footprint or invests in environmental causes, like renewable energy companies or community projects.

You might wish to take time to research your banking partner's impact on the planet, and choose one that funds initiatives with a positive impact on society.

7. Competition and choice

When choosing a bank, there's plenty of choice, with strong competition between providers. These days, it’s perfectly normal to use different providers for bank accounts, savings accounts, credit cards and loans. You should review your banking needs regularly and shop around for the options that best suit your needs.

Choosing the right banking partner is a personal decision, and everyone’s situation is different. At first, you might simply be looking for a convenient and secure place to manage your income or salary. However, you should also consider any features that might help you manage your finances more effectively, as well as other services you might need in the future, such as a mortgage, insurance, savings and investments. It’s about deciding the features and benefits that mean the most to you.

Understanding common banking terms

As you become more financially independent, you might come across some new banking and borrowing terms that are unfamiliar to you. This jargon buster will help with some of the most common ones.

Glossary of common banking terms

Having a greater understanding of common banking terms may help you:

  • Demystify your bank statement and feel comfortable making everyday financial decisions
  • Make it easier to compare savings, loans and credit offers from a range of providers

Your bank account and bank statement

Term Meaning
Account number Your bank account's unique number.
Available balance Your available balance is the money you have available to spend, taking into account any pending payments and excluding any cheques that haven't yet cleared, as well as any arranged overdraft limit you may have agreed with your banking provider.
Deposit This is money paid into your account.
Pending transactions These are payments or deposits you've made – for example, with your debit card – that haven't yet cleared or been debited from your account.
Statement Your bank statement shows all the transactions that have taken place over a set period of time. It also shows any interest and fees that have been added to, or deducted from, your account.
Transfer This is when you send money between two accounts. You might make a transfer between two of your own accounts, for example, from an everyday bank account to a savings account. Or you might make a transfer from your account to someone else’s.
Withdrawal This means money taken out of your account.

Your bank account and bank statement

Term Account number Account number
Meaning Your bank account's unique number. Your bank account's unique number.
Term Available balance Available balance
Meaning Your available balance is the money you have available to spend, taking into account any pending payments and excluding any cheques that haven't yet cleared, as well as any arranged overdraft limit you may have agreed with your banking provider. Your available balance is the money you have available to spend, taking into account any pending payments and excluding any cheques that haven't yet cleared, as well as any arranged overdraft limit you may have agreed with your banking provider.
Term Deposit Deposit
Meaning This is money paid into your account. This is money paid into your account.
Term Pending transactions Pending transactions
Meaning These are payments or deposits you've made – for example, with your debit card – that haven't yet cleared or been debited from your account. These are payments or deposits you've made – for example, with your debit card – that haven't yet cleared or been debited from your account.
Term Statement Statement
Meaning Your bank statement shows all the transactions that have taken place over a set period of time. It also shows any interest and fees that have been added to, or deducted from, your account. Your bank statement shows all the transactions that have taken place over a set period of time. It also shows any interest and fees that have been added to, or deducted from, your account.
Term Transfer Transfer
Meaning This is when you send money between two accounts. You might make a transfer between two of your own accounts, for example, from an everyday bank account to a savings account. Or you might make a transfer from your account to someone else’s. This is when you send money between two accounts. You might make a transfer between two of your own accounts, for example, from an everyday bank account to a savings account. Or you might make a transfer from your account to someone else’s.
Term Withdrawal Withdrawal
Meaning This means money taken out of your account. This means money taken out of your account.

Accessing your money

Term Meaning
Arranged and unarranged overdrafts

An arranged overdraft is when you agree with your account provider in advance that you may borrow money when there is no money left in your account. You will agree an arranged overdraft limit – which is the maximum amount that can be borrowed.  You will usually pay interest on your overdraft, although sometimes you will have an initial, interest-free overdraft limit.
    

An unarranged overdraft is when you borrow money when there is no money left in your account (or when you have exceeded your limit) and this has not been agreed with the account provider in advance.

Debit card This is a card you can use to make cash withdrawals from cash machines, and may also be used to pay for goods and services in person, online or over the phone. When you use your debit card, the amount of the transaction is debited from your account.
Sort code / Branch code / BSB/ routing number This is a unique code that identifies your bank branch.

Accessing your money

Term Arranged and unarranged overdrafts Arranged and unarranged overdrafts
Meaning

An arranged overdraft is when you agree with your account provider in advance that you may borrow money when there is no money left in your account. You will agree an arranged overdraft limit – which is the maximum amount that can be borrowed.  You will usually pay interest on your overdraft, although sometimes you will have an initial, interest-free overdraft limit.
    

An unarranged overdraft is when you borrow money when there is no money left in your account (or when you have exceeded your limit) and this has not been agreed with the account provider in advance.

An arranged overdraft is when you agree with your account provider in advance that you may borrow money when there is no money left in your account. You will agree an arranged overdraft limit – which is the maximum amount that can be borrowed.  You will usually pay interest on your overdraft, although sometimes you will have an initial, interest-free overdraft limit.
    

An unarranged overdraft is when you borrow money when there is no money left in your account (or when you have exceeded your limit) and this has not been agreed with the account provider in advance.

Term Debit card Debit card
Meaning This is a card you can use to make cash withdrawals from cash machines, and may also be used to pay for goods and services in person, online or over the phone. When you use your debit card, the amount of the transaction is debited from your account. This is a card you can use to make cash withdrawals from cash machines, and may also be used to pay for goods and services in person, online or over the phone. When you use your debit card, the amount of the transaction is debited from your account.
Term Sort code / Branch code / BSB/ routing number Sort code / Branch code / BSB/ routing number
Meaning This is a unique code that identifies your bank branch. This is a unique code that identifies your bank branch.

Common debit/credit terms

Term Meaning
Credit and debit

Credit is the amount of money you have available in your bank account. Your account is credited when money is paid into it.

Credit is also a term that refers to your borrowing, loans and debt.

A debit is money withdrawn from your bank account. It could be as a result of a payment you have made, or cash withdrawn at a cash machine.

When your account is 'in debit', it means it is overdrawn.

Your bank statement may refer to 'credits' and 'debits', which refer to the individual 'money in' and 'money out' transactions that have occurred.

Credit rating / score A credit rating tells a lender about your credit history and helps them assess how much of a risk lending to you would be. This is also sometimes referred to as a credit score.
APR/comparison rate

APR (annual percentage rate) or 'comparison rate' refers to the combination of interest charged and any additional charges that you will pay on a loan or offer of credit. Lenders must tell you the APR before you sign a credit agreement with them.

You can use the APR to compare the real costs of loans from a number of providers.

PA PA (per annum) is the annual interest rate and is generally used for savings and credit accounts.

Common debit/credit terms

Term Credit and debit Credit and debit
Meaning

Credit is the amount of money you have available in your bank account. Your account is credited when money is paid into it.

Credit is also a term that refers to your borrowing, loans and debt.

A debit is money withdrawn from your bank account. It could be as a result of a payment you have made, or cash withdrawn at a cash machine.

When your account is 'in debit', it means it is overdrawn.

Your bank statement may refer to 'credits' and 'debits', which refer to the individual 'money in' and 'money out' transactions that have occurred.

Credit is the amount of money you have available in your bank account. Your account is credited when money is paid into it.

Credit is also a term that refers to your borrowing, loans and debt.

A debit is money withdrawn from your bank account. It could be as a result of a payment you have made, or cash withdrawn at a cash machine.

When your account is 'in debit', it means it is overdrawn.

Your bank statement may refer to 'credits' and 'debits', which refer to the individual 'money in' and 'money out' transactions that have occurred.

Term Credit rating / score Credit rating / score
Meaning A credit rating tells a lender about your credit history and helps them assess how much of a risk lending to you would be. This is also sometimes referred to as a credit score. A credit rating tells a lender about your credit history and helps them assess how much of a risk lending to you would be. This is also sometimes referred to as a credit score.
Term APR/comparison rate APR/comparison rate
Meaning

APR (annual percentage rate) or 'comparison rate' refers to the combination of interest charged and any additional charges that you will pay on a loan or offer of credit. Lenders must tell you the APR before you sign a credit agreement with them.

You can use the APR to compare the real costs of loans from a number of providers.

APR (annual percentage rate) or 'comparison rate' refers to the combination of interest charged and any additional charges that you will pay on a loan or offer of credit. Lenders must tell you the APR before you sign a credit agreement with them.

You can use the APR to compare the real costs of loans from a number of providers.

Term PA PA
Meaning PA (per annum) is the annual interest rate and is generally used for savings and credit accounts. PA (per annum) is the annual interest rate and is generally used for savings and credit accounts.

Payments

Term Meaning
Direct Debit

This is when you give a company permission to take money from your bank account on an agreed date. The company can change the amount or date, but they must notify you of the change first. Direct Debits are often used to pay household utility bills like your gas or electricity.

Payee This is a company, or person, that you're paying.
Recurring transactions

These are also known as recurring transactions, and are payments you've agreed that a business can take from your debit or credit card when needed.

These transactions can be difficult to keep track of, because they may vary in both amount and frequency. You have a right to cancel, however, so you may prefer to switch them to a payment method that’s easier to manage, like a Direct Debit.

Standing order This is an instruction you give to your bank to make a regular, fixed payment from your bank account. For example, you might set up a standing order to pay your monthly rent. Unlike a Direct Debit, the amount paid by a standing order is fixed and the only person who can change it is you.

Payments

Term Direct Debit Direct Debit
Meaning

This is when you give a company permission to take money from your bank account on an agreed date. The company can change the amount or date, but they must notify you of the change first. Direct Debits are often used to pay household utility bills like your gas or electricity.

This is when you give a company permission to take money from your bank account on an agreed date. The company can change the amount or date, but they must notify you of the change first. Direct Debits are often used to pay household utility bills like your gas or electricity.

Term Payee Payee
Meaning This is a company, or person, that you're paying. This is a company, or person, that you're paying.
Term Recurring transactions Recurring transactions
Meaning

These are also known as recurring transactions, and are payments you've agreed that a business can take from your debit or credit card when needed.

These transactions can be difficult to keep track of, because they may vary in both amount and frequency. You have a right to cancel, however, so you may prefer to switch them to a payment method that’s easier to manage, like a Direct Debit.

These are also known as recurring transactions, and are payments you've agreed that a business can take from your debit or credit card when needed.

These transactions can be difficult to keep track of, because they may vary in both amount and frequency. You have a right to cancel, however, so you may prefer to switch them to a payment method that’s easier to manage, like a Direct Debit.

Term Standing order Standing order
Meaning This is an instruction you give to your bank to make a regular, fixed payment from your bank account. For example, you might set up a standing order to pay your monthly rent. Unlike a Direct Debit, the amount paid by a standing order is fixed and the only person who can change it is you. This is an instruction you give to your bank to make a regular, fixed payment from your bank account. For example, you might set up a standing order to pay your monthly rent. Unlike a Direct Debit, the amount paid by a standing order is fixed and the only person who can change it is you.

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