The introduction of seven day switching has seen over 600,000 account holders switch bank accounts in the last six months. However there are still significant numbers of bank customers yet to switch who may be missing out.
Which? executive director Richard Lloyd said: ‘Despite an increase in public awareness and confidence, switching levels are still low, suggesting that the new seven-day service is not the game-changer that can significantly increase competition in banking.’
With so many people yet to benefit from switching account, here is a round-up of the top 5 reasons to switch.
Go further: Switching explained – find out how to switch current account with our step by step guide
1. Credit interest rates
Increased competition in banking has seen a gradual rise in the number of current accounts allowing you to earn interest on your deposits – sometimes beating the rates offered in the savings account market. Those with a pot of £20,000 could earn up to £600 a year with Santander’s 123 account for example, which offers up to 3% interest on balances over £3,000 provided a minimum of £500 is deposited monthly.
Go further: Credit interest – see our comparison of the best bank accounts if you always stay in credit.
2. Overdraft charges
Overdraft charges can be a cause of current account chagrin, particularly to those who use their unauthorised overdraft regularly. Recent research has shown that many banks charge a higher rate of interest on overdraft repayments than payday lenders.
For example, Halifax Reward Current Account holders borrowing an unauthorised £100 for a month incur an additional £100 charge, whereas the cost of borrowing the same amount from Wonga for a month is around £37.
Go further: Overdraft charges – see our comparison of the best accounts if you often use your unauthorised overdraft.
3. Package account add-ons
Package accounts look to offer something unique to a given type of customer – with products bundling in car insurance very common. Banks will charge a monthly fee for these add-ons, so it’s worth thinking carefully before committing to this type of product.
In addition to add-ons, some current account providers will offer preferential mortgage and savings terms to those who bank with them so it’s worth keeping an eye on such opportunities if you’re looking to make your cash go further.
Go further: Current account benefits – see our comparison of the best fee-charging accounts
Many current accounts now offer attractive cashback features – meaning that in the right circumstances a switch could see you making some serious savings at the shops.
Several banks currently offer cashback schemes that are free to join for most current account customers. However these schemes offer a limited selection of retailers where you can earn cashback so in most cases people would be best off with a best rate cashback credit card which does not restrict where you earn cashback. Cashback can also be earned on your regular direct debits – Santander’s 123 account offers up to 3% cashback on household bills paid by Direct Debit, though the account has a £2 monthly fee.
Go further: Cashback credit cards – how to get the best rates
5. Customer Satisfaction
Banks are often accused of providing poor customer service – switching to a bank with better customer satisfaction should help ensure you get the help you need while sending a message to your current provider that improvements need to be made. Our own current account customer satisfaction table features two recommended providers, First Direct and Norwich and Peterborough Building Society.
Go further: Customer satisfaction – how does your bank’s customer service match up?
- Find the best bank account – by following these five steps
- How safe is my bank account? – how to make the necessary checks
- Where do I go if I have a complaint about my bank? – what to do