Ever wondered if you should switch bank accounts and—if so—how? Andy Webb offers a handy mini-guide on how to choose what’s best for you
Like most of the country, you’re probably still with the same bank you joined when you got your first current account. And no doubt you’ve got a few frustrations about the service you get. If that’s the case there’s a good chance you could be getting a better deal by opening up a new account elsewhere. Here’s why you shouldn’t stick, and how to switch.
1. Your local branch has closed
A growing annoyance is how many banks are closing the doors of local branches. It’s all part of the move to online banking which can make most things a lot easier. But not everything. And if you still want to go into a branch, then it might be time to move your business.
Obviously, if there’s a rival bank that you can easily access, it makes it much easier to decide where to move.
2. You’re not earning any interest on savings
It’s been difficult to find decent interest rates on cash savings for a long time. Most ISAs and savings accounts have been around 1% at best, with many only offering a tenth of that rate, if not less. But, there’s a number of current accounts which comfortably beat all of these, with Nationwide and TSB both offering 5% AER and Tesco offering 3% AER.
There are restrictions on how much you can earn the interest on, for example £2,500 with Nationwide, but this still beats your other options. You don’t even need to switch bank to get these rates, you can just open up one or more new bank accounts.
3. You can get paid to do it
Another incentive the banks are using to get you to move is a switching bonus. Deals change most months, but this year we’ve seen £150 from HSBC and £125 from Natwest. The money is deposited into your account after the switch is complete. It’s not always cash, with some banks offering vouchers and gifts. At the time of writing you can get £125 in M&S vouchers and a further £5 in vouchers each month for a year by switching to Marks & Spencer Bank.
An alternative is to move to a bank which offers cashback on your bills, including Council Tax and energy. Both Santander and Natwest have these accounts. Although you do pay a monthly fee, you should cover this and more by the money you earn—though do check the online calculators to work out how much you could make.
4. How to switch bank It’s very easy to change bank
Though you can open more than one bank account, a full switch closes down your old account and moves your money over within seven working days. It also transfers any Direct Debits, standing orders and payments in for at least three years. Most high street banks and building societies have signed up to the Current Account Switch Service Guarantee which protects you if anything goes wrong and refunds any interest or charges incurred as a result of the switch.