Would you be better off with a new current account?

Most current accounts pay a pitiful rate of credit interest, but renewed competition between banks and building societies means that there are some excellent deals available if you are prepared to switch.

Leading the pack is Alliance & Leicester with current accounts that pay 10% credit interest if you are between the ages of 16 and 21 and 6.50% for everybody else. However, if you're not in the 16 to 21 age bracket, you'll be better off with Abbey who are paying 8%. Other places to look include Lloyds TSB with their 6.4% Current Plus account and Coventry Building Society with their Coventry First account (this account paying the interest rates on balances up to £250,000 rather than the usual £2,500 limit).

Switching accounts takes time, but once you've filled out a couple of forms, your new bank should take care of all the arrangements, including switching your all important direct debits and standing orders to make sure you don't miss any payments.

Before switching make sure that:

1. You will be able to pay in the minimum required amount each month to benefit from the high interest rates
2. You will not be using an overdraft and, if you plan to, make sure that the interest rate on this is competitive (some of these accounts rely on people going overdrawn and then stinging them with high debit interest rates)
3. You have a separate high-interest savings account to put any extra money in - any amount over the maximum will receive a very low and uncompetitive rate of interest

By switching from a bank account paying just 0.1% interest to Abbey's 8% rate, you could make an extra £200 a year before tax.