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30 Jul 2021

Revealed: the banks thousands are switching to

Find out which banks and building societies are proving popular in 2021

Starling, Virgin Money and Monzo gained the most current account customers during the first three months of 2021, according to the latest data from Pay UK.

Once again, challenger banks are managing to keep more customers than they lose - a trend we also saw during 2020.

The biggest customer losses were seen from big high street banks, namely NatWest, Santander and TSB.

Here, Which? looks into what factors might have caused people to switch accounts, and explains how easy it is to move to a new current account.

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Which banks and building societies are we switching to?

The most recent data from Pay UK shows the number of full account switches between 1 January and 31 March 2021.

The graph below shows how banks and building societies' figures changed during this time - click on the tabs to see gain, losses and combined net gains.

Starling Bank had the biggest net gain of customers during this time, at 17,769. This was closely followed by Virgin Money, which had a net gain of 17,495. Monzo achieved a net gain of 7,744.

Starling Bank attracted 18,874 new customers during January and March, and only 1,105 left.

HSBC actually managed to attract far more new customers - 23,892 joined the bank at the start of this year, likely to be due to the fact that it reintroduced its £125 switching bonus in February. However, 26,743 customers left, which ultimately left the provider in negative numbers.

Virgin Money was the only other provider offering a switching offer - but rather than cash, it was giving away a 15-bottle case of wine worth £180 (or non-alcoholic wine worth £75) if you make a full switch with at least two direct debits and register for the mobile banking app. This offer finished on 14 February.

Santander saw the biggest net losses at the start of the year, with -10,965. The provider also had the biggest net losses during 2020. This could be due to its plans to close 111 UK bank branches.

NatWest finished the first three months of 2021 with a net loss of -10,605, and TSB had a net loss of -8,502.

Could the switching trends be about to change?

As the UK economy continues to open up, banks seem to be coming up with a range of new ways to recoup money lost as a result of Covid-19 lockdowns. For some, that's coming up with offers to attract new customers, while others are shaking up their fees and charges - both of which could impact future switching figures.

New Barclays reward scheme

Some Barclays current account customers can sign up to Barclays Avios Rewards to earn 1,500 Avios points per month to be spent on British Airways flights, and also get one free flight upgrade per year.

New customers that switch to the eligible Barclays accounts using the Current Account Switch Service (CASS) can get an introductory bonus of 25,000 Avios points if they sign up to Barclays Avios Rewards in the first three months; those who have held the Barclays current account for four months or more can get an introductory bonus of 2,500 Avios points.

This is only available to those with Barclays Premier or Wealth current accounts, which come with several caveats - such as requiring an annual income of £75,000. What's more, the Barclays Avios Rewards costs £12 a month, so you'll need to make sure you earn back enough from the points to make the expense worth it.

Lloyds Bank shakes up its packaged accounts

Lloyds Bank is set to introduce charges for existing customers who have a free Lloyds Gold, Platinum or Premier packaged account.

Affected customers include those who opened these accounts before 2005 and who have benefitted from an offer that had the monthly fee waived as long as the account balance was kept above a certain level.

From 1 September, customers will either be downgraded to a Lloyds Classic account - which is free, but doesn't have any insurance add-ons offered by the packaged accounts. Alternatively, to keep the same account they currently hold, customers will have to start paying between £15 and £28 from October. For some customers, accounts will be charged a fee automatically.

Lloyds has written to all affected customers, who should have been told whether or not their account is due to be downgraded or charged a fee; if you want to change these plans you'll have to get in touch with Lloyds Bank before 1 September 2021.

How to choose a current account

People who are happy with their current account provider often stick with the same account for years, but switching to a new one can be really beneficial when things like switching bonuses or linked savings accounts are on offer.

But you shouldn't switch for the perks alone - before you make the leap, make sure the new account will suit your circumstances.

For instance, if you like to bank in-branch, make sure there's one nearby; if you prefer to use a banking app, check to see if it offers the services you want.

Each year, we survey thousands of current account customers and undertake detailed product analysis to find the best and worst banks.

Our other guides also reveal the best accounts that offer extras such as interest and cashback:

Once you've found an account you want to switch to, you can apply to open it online, over the phone or in-branch (some providers might not offer all three options). If the providers are part of CASS, it should be opened and ready to use in seven days.