5 Common banking myths you need to stop believing
2nd Dec 2022 Managing your Money
Whether it's switching bank accounts or feeling trapped, there are some bank myths that need to die. We expose them!
MYTH 1: You can’t have more than one current account
Many banks are trying to tempt you to switch to their current account, meaning you’d close your existing one as part of the process. However, you can have as many current accounts across as many different financial institutions as you like.
Why would you want more than one? Well, some bank accounts may pay you more interest than others—even beating the top savings accounts. Other accounts offer bonuses such as free travel insurance or cashback on spending.
"Remember to look beyond short-term offers to make sure the account suits you once the deal is over"
Bear in mind some incentives are dependent on switching bank, and remember to look beyond short-term offers to make sure the account suits you once the deal is over.
MYTH 2: You can’t switch bank accounts if you are overdrawn
All banks and building societies now offer a free seven-day current account switch service.
If you do switch your bank account, your balance will be transferred over to your new account—including your overdraft. This is subject to passing a credit check. Remember the overdraft limit you’re offered and fees charged may vary between banks, so do check first.
MYTH 3: All current accounts are the same
In a competitive market, it's in a bank's interest to offer you something which differentiates itself from all the others. Whether this is a cheap overdraft or offering you cash back on your council tax there are plenty of reasons to look around.
MYTH 4: My credit record could suffer
It can affect your credit rating if you are constantly moving accounts, within reason.
"It should be fine as long as you don’t chop and change too much or shift everything at once," says Experian credit expert James Jones. "Try not to move home, change credit cards or apply for several different new current accounts at the same time."
Err on the side of caution if you are planning on applying for a mortgage in the near future, where showing a steady relationship with your bank will work in your favour.
MYTH 5: You need Photo ID to open a bank account
By law, all banks must ask you to provide proof of your identity and address. But that doesn’t need to be photo ID—it could be a tenancy agreement with a recent utility bill instead, for example.
"By law, all banks must ask you to provide proof of your identity and address"
Talk to the bank you wish to open an account with as they should be able to provide you with a list of alternative documents you can give instead.
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