It’s become quite common nowadays to switch credit cards in order to get 0% purchase deals or balance transfers, but less so to change the current accounts we bank with.
Many of us are still with the banks we joined as students or even children.
There’s been a 19% increase in current account switching since the new seven-day switching initiative was launched in 2013, with 1.1 million customers changing banks compared with 926,000 the previous 12 months. However, this represents only around 2.2% of current account holders, a figure the head of the Financial Conduct Authority said was ‘relatively low’.
If you haven’t switched for a few years there’s a chance you don’t have the best account for your needs. People can choose to switch banks for a wide variety of reasons:
– They might get a better deal with interest and charges, whether your account is usually in credit or overdrawn
– Another bank may offer a bigger overdraft facility
– There may be a local branch that offers a more personal service
– The new account may offer some specific benefits that suit you, such as car breakdown cover, or a fee-free credit card for overseas spending
– Customer-service ratings can be a major factor
– Special offers that offer an immediate financial benefit, such as vouchers or ‘cashback’
Should you decide to switch bank accounts, it’s worth bearing a few things in mind.
All the outgoing payments, standing orders and direct debits you have set up need to be updated to your new account within seven working days, and a redirect should be put in place for about a year (just so as to cover you in case of annual payments you may have forgotten about).
The bank you are transferring to should handle this without you having to do it manually. Simpler World has some useful information about how to switch banks.
It’s also very likely that your new bank will do a credit check on you, through one of the major credit reference agencies such as Experian.
Initially, taking out a new account might see your score reduce a little, but managing it well can help your score and build your history. Just don’t go on a shopping spree and go over your overdraft limit, if you have one, and try to keep an eye on what you are spending!
So it’s a good idea to ensure that the information on your credit report is accurate, up to date, and reflects your present circumstances. If you do spot any discrepancies you can raise the alarm and get them quickly rectified.
Should you find anything that isn’t right, you can either tell us or contact the relevant lenders direct. Watch out too for unfamiliar or suspicious entries there that could indicate identity fraud, and financial associations which are no longer relevant, for example a link to an ex-partner.
It’s also worth taking the opportunity to look at your outgoings before you switch them over to your new account, especially direct debits that you may have forgotten you had that you no longer need or realise you could live without – maybe an unused gym membership, out-of-date warranties and so on. So switching bank accounts could reap financial rewards on several fronts.