The Alliance & Leicester Commercial Bank has relaunched its charity service with an offer of a completely free current account.
The bank's Community Current Account includes a cheque book and users can make cash withdrawals and deposits at more than 16,000 Post Office branches across the country. Transactions can also be carried out by post, telephone and the internet.
Stephen Burgess, chief executive of Life Education and charity adviser at accountants Saffery Champness, said the free current account marked out Alliance & Leicester from its high street rivals.
"Every bank I've been to for a current account required a minimum of £10,000 in the account or I'd face charges of £100 a month to run it.
Based on discussions with Natwest, RBS and Lloyds over the past year, an absolutely free current account is ahead of the game and most welcome."
The revamped offer includes two other charity-specific accounts. These are the Community Instant Reserve Account, which offers instant access and 3.6 per cent gross interest, and the Community 30-day Notice Account, with a minimum balance of £10,000, which pays 3.8 per cent gross interest.
Previously, the bank only offered tiered interest rates that were less generous for charities with small balances. The bank says it will also negotiate "tailored packages" for charities with a turnover of more than £1m or £2m to deposit.
Paul Breckell, chairman of the Charity Finance Directors' Group and finance director of the Church Mission Society, said: "High Street banks setting up tailored accounts for non-profit organisations gives new options to the sector and should be warmly welcomed. Having access to 'off-the-peg' banking options is particularly useful for smaller charities."