Most of us can’t be bothered to switch bank accounts, despite the cash incentives on offer, and the fact that there’s a switching service which does everything for us in just seven days.
Cash payments of £100 or more are not enough to make us budge. And we even put up with poor service rather than go through the hassle of trying to find a better option.
But what if your bank had a TSB-style IT meltdown and you lost all confidence in it? Which would you switch to and how would you go about it?
Switching guaranteed to work
One of the biggest problems is that even with the faster switching rules and the official Current Account Switching Service (CASS) guarantee in place that it will all be sorted within seven days, people remain confused.
There is such a complex array of accounts, fees and charges to consider that most of us just don’t even attempt it out of fear they may end up with a product that isn’t any better than the one they already have.
Although each bank and building society has its own tariff and rate details listed on its website and marketing literature, working out which account is best is far from straightforward.
The dilemma is that no two accounts are the same and it’s impossible to compare the different rates and charging structures.
The only way you can switch to a better option is to choose an account that mirrors the way you manage your money. There is not one account that works out as the best for everybody – it’s more about weighing up the individual elements that are most important to you.
For some people a low-cost overdraft will be the priority, while for others interest payable on credit balances, or a debit card offering low-cost transactions abroad could be key.
Maybe it’s a branch close to where you live or work that’s a big factor, or perhaps you’re happy to bank with one of the new “online only” providers.
Here are our hints and tips to help you pick the most suitable current account…
Get a better bank account
Best account if you use an overdraft
There’s nothing wrong with using an agreed overdraft to help you manage your monthly budget, but the cost of borrowing varies widely from bank to bank, so check the charges.
Unfortunately, it’s not that easy as the banks use different charging tariffs – some charge interest at a set rate, others have a daily fee, while some charge a combination of a monthly fee and interest – so it’s no wonder people get confused.
The most competitive accounts for overdrafts are First Direct , M&S Bank , Post Office , Metro Bank and Starling Bank .
To put it in to perspective, if you had an agreed overdraft balance of £600 for four days, the five banks above would charge you less than £1.
However, bank with Santander and you’d pay £4 and with TSB, NatWest and RBS, your bill would be over £7 for the same overdraft.
Where to get a return on your money
Maybe you always keep your balance in the black, so overdraft charges aren’t an issue and instead you’re looking for an account that pays interest in return for you remaining in credit.
The rates offered on current accounts are far less competitive than a couple of years ago, but there are still a few that are worth a look. The best deals are:
- Nationwide Building Society Flex Direct – pays 5% on balances up to £2,500 (for the first 12 months only, then the rate drops to 1%).
- Tesco Bank – pays 3% on balances up to £3,000.
- Halifax – pays a reward of £3 per month if your account remains in credit for the whole month.
TSB – pays 3% on the first £1,500.
Cheapest to use abroad
For some people, a low-cost card to use abroad could be the decider when picking a new bank account, especially if they holiday abroad a couple of times or more each year.
Starling Bank, Metro Bank and Monzo are the cheapest for debit transactions and cash withdrawals outside the UK, compared to some of the biggest names, such as Lloyds Bank, Halifax, Santander and TSB which are the most expensive.
If service matters most
For some people, it’s not the nuts and bolts of the account that concerns them. All they desire is the ability to talk to a human being at a UK call centre 24/7 and to receive a good level of customer service day in, day out.
If this sounds like you, then the consistent top performers for service continue to be First Direct and The Co-operative Bank .
If we’ve inspired you to give your bank the elbow, make sure you check out the rates and fees before jumping ship.
And pick an account that works for the way you manage your money – and please try not to be swayed by the offer of short-term cash bribes as the account may not be the best fit for your finances in the long run.
How to switch current account
Once you’ve found a new bank that offers an account you think will be suitable, contact it to arrange to transfer your account from your existing bank.
You’ll need to sign an authority enabling your new bank to do this, but from then on, they will manage the process for you.
Under the terms of the switching service, the move across should take no longer than seven working days. However, the scheme is flexible and you can choose your own switching date if you prefer.
Your old bank will send over details of all your standing orders and direct debits, and these will be set up on your new account.
Your new bank will sort out your debit card, statements and online banking for you too.
The switch tends to be quite painless these days as most banks have dedicated teams managing the process. If anything does go awry and you end up out of pocket, there is an official guarantee in place for any interest or fees incurred to be refunded.
Good luck with your switch – you’ll wish you’d done it years ago.
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