Generally speaking, people are getting better at switching financial products and shopping around for a better deal but changing current accounts provider is something that many don't get around to doing. Many have never switched their current account and say they have no plans in doing so over the next twelve months.
There are over 50 million current accounts in the UK, making them big business for the banks: the banks know that once they’ve got your custom, you aren’t likely to move elsewhere which means they can get away with offering uncompetitive deals.
The big four banks – Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland, which owns NatWest – control more than 70% of the market even though their standard current accounts pay little or no, interest. The common perception is that switching current account is a lot of hassle for little gain but this isn’t necessarily the case. Many banks now have dedicated switching teams who ensure the transfer process runs smoothly and there are some great current account deals to be had. So it’s time to stop being loyal to your bank and get more from your current account.
Once you’ve decided which bank you want to open an account with you will need to provide them with your existing bank details, and two forms of identification, one with a photograph and the other with proof of address. You will also be asked to sign a switching mandate which effectively gives your new provider, permission to contact your existing bank for details of all your direct debits and standing orders.
When the new bank has collated that information you will receive a letter including a list of all the direct debits and standing orders so can state which mandates you want transferring over to the new account. You will also be asked for your employer’s details so your salary can be paid into the new account and whether or not you want your existing account closed and all funds within it transferred over to the new account. It usually takes between four and six weeks for everything to be transferred over. Because direct debits often go out throughout the month and some may leave your account before your salary is paid in, most banks will either set up an overdraft facility to ensure all payments are honoured or guarantee that you won’t be hit by penalty charges.
With so many great deals to choose from there’s no excuse to stick with an uncompetitive account for any longer.
The assumption many people make is that current accounts are all pretty similar and that is doesn’t really matter who you bank with, but that is far from the truth.
Some of the major banks are battling to attract new current account business and as such are offering some fantastic deals. However, the product that is best for you will depend on how you use your current account.
Charges: Think about how you will use your current account. Although most UK consumers still enjoy free banking, in that they don’t have to pay a monthly fee for their current account, there are charges associated with certain transactions. For example, if you travel overseas regularly, how much will you be charged for using your debit card abroad?
Cheque books: Cheques are becoming an increasingly outdated method of payment and as such they are not provided as part of all current accounts. However, some people still use them regularly so it is worth checking whether or not you will be given a chequebook before applying for a new current account.
Comparision websites: Compareandsave, GoCompare, MoneySupermarket, Comparethemarket.
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