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Nationwide is winning the current account switching war

Which? Recommended Provider scoops 30,000 new customers

Nationwide Building Society has gained over 30,000 new current account customers, according to the latest switching figures published by Bacs, while disgruntled Santander customers voted with their feet after the bank halved the interest rate on its popular ‘123’ account last year.

The figures – which are published six months in arrears – show how many people are joining or leaving major banks and building societies.

Nationwide is sitting pretty after the last quarter of 2016 (between 1 October and 31 December 2016) with a net gain of 30,510 accounts.

Halifax lost 26,752 customers over the same period. It did, however, attract 40,869 switchers, leaving it with a net balance of 14,117 new customers. Meanwhile, Barclays saw overall numbers drop by 16,779, having lost 23,087 customers and gained just 6,308.

This comes amid new plans, announced by the Financial Conduct Authority, to force banks to details of the quality of their services and the number of security incidents they’ve faced to help consumers compare accounts.

The chart shows the latest current account switching results.

Santander and HSBC customers jump ship

Santander and HSBC faced an exodus of more than 28,000 customers each, although both banks gained more switchers than Barclays.

The number of customers switching to Santander’s flagship 123 account has plummeted since the bank cut the top interest rate from 3% to 1.5% in November 2016 (having already increased the monthly fee from £2 to £5 in January 2016).

It didn’t take long for some of the big banks to follow suit and make their own cuts:

  • TSB – which split from Lloyds in 2013 – reduced the rate on Classic Plus accounts from 5% on balances up to £2,000 to 3% on balances up to £1,500.
  • Lloyds Bank halved the top tier interest rate on Club Lloyds accounts from 4% to a flat-rate of 2% on balances between £1 and £5,000.
  • Halifax dropped its £5 monthly reward payment on its Reward current account to £3.

Two banks that bucked this trend were Nationwide – which continues to pay 5% on up to £2,500 to new FlexDirect customers in the first year of switching – and Tesco Bank which has promised to pay 3% on balances up to £3,000 until 1 April 2019.

Should I switch bank accounts?

Switching banks now takes just seven days, but only around 4% of consumers have used the Current Account Switch Service (CASS) since it was launched in September 2013.

The simple truth is that many customers are satisfied with their current account, but Bacs says two key groups aren’t getting the best deal and could benefit from switching.

Account holders who frequently use an overdraft

Which? has repeatedly found that the big high street banks can charge more than payday loan companies. You can avoid expensive bank account charges by switching to one of the current accounts in our best-buy tables for authorised overdrafts. We show the best based on a scenario of running a £500 authorised overdraft for two weeks a month.

Account holders with high credit balances

A handful of banks reward customers who stay in credit so if you know you can maintain a positive balance, you may want to switch to a bank account that pays interest on balances or cashback for staying in credit or paying household bills.

Current accounts: switching incentives

Here is a quick round-up of the best deals around if you’re looking to switch:

Better information to compare accounts

On 25 July, the Financial Conduct Authority announced plans to help bank account customers better compare current accounts. Its proposals include forcing banks to publish:

  • how long it takes to open an account and have features of the account working, including overdraft facilities
  • how long it takes to replace a lost, stolen or stopped debit card
  • how long it takes to give someone access to a personal current account under a power of attorney
  • how and when customers can carry out various transactions, including making payments or cancelling a cheque, and whether 24-hour help is available, and
  • the number and type of major operational or security incidents.
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