"There is of course no such thing as free banking," said Andrew Bailey, Director of Banking at the Financial Services Authority (FSA). "What it really stands for is that charges are levied inconsistently across products supplied by banks, with the consequence that some appear to be free."
To someone looking for a bank account, that might sound like a depressing account of what's out there. Obviously, no-one would want to pay for something if they could get it free elsewhere!
If that 'free' option isn't what it seems, what counts is figuring out how much something is likely to cost you, rather than 'the typical customer'. Different people can expect very different things from their bank accounts, whether that's high interest on their balance, low charges on their overdrafts, access to expert advice…
One thing we're seeing a lot of these days is the 'packaged account' - the kind of account that 'bundles' various services together and charges customers a fee. Services could include travel insurance, for example, breakdown cover, or discounts on home insurance.
Some of those things, of course, could be purchased elsewhere - possibly for less. And others may look useful but offer little real value to many account holders. Someone who can't afford foreign holidays, for instance, isn't likely to benefit from getting a good deal on travellers cheques!
In other words, it's well worth taking the time to understand what a bank account really provides - what features it offers and how much you'd probably have to pay for those features.
If you're looking into accounts that provide 'extras', the thinkbanking account is an example of this type of current account. Alongside SMS, phone and internet banking, the account provides a 'Money Manager' service, which complements the two-account structure. (Basically, there's one account for essential bills and another for 'spending money' - when a customer's income arrives, the Money Managers are there to make sure enough money stays in the former before the rest is transferred to the latter.)
For someone who's never had an issue getting their bills paid on time, the account's other features might be a lot more useful than the two-account structure. Someone who's used to being hit with late-payment charges, on the other hand, might find the Money Managers' help saves them money as well as time - even after they've paid the fees (£25 set-up fee + monthly fee of £14.50).
In banking, as in any kind of financial service, there's no 'one size fits all' approach. On the downside, the sheer number (and variety) of accounts out there can be confusing; on the plus side, it does mean there's plenty of choice! Just make sure you understand the pros and cons of an account before you sign up to it.