Should I switch current accounts?

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By Paul Davies
Know Your Money Editor

Money-savvy consumers may already be aware they can sometimes get themselves a better deal by switching to a new bank.

However, recent findings have found that most people are remaining loyal to a single account for a number of years, which could see them missing out on a better deal elsewhere.

Are Brits more loyal to their bank than their partner?

Consumers may wish to battle through tough times with a partner to make a relationship work, but there may be little financial benefits in showing such loyalty to their bank.

Despite this a number of Britons keep their current accounts longer than their personal relationships, it has been revealed.

Research by Santander has indicated that on average people in the UK keep their current account for 16.5 years.

In comparison to this, the longest relationship a Briton has with a partner lasts - on average - for 14.1 years.

It revealed that more than half of all adults - 57 per cent - who took part in the survey have stayed loyal to one bank for more than a decade, while one in five - 18 per cent - have not switched for over 30 years.

There is seemingly a lack of so-called 'serial switchers' in the UK, with just seven per cent admitting they had changed account three times or more in the past ten years.

Banking is not free

Some people may be interested to hear about the latest research from Which?.

The consumer watchdog has stated factors such as low credit interest, high overdraft charges and large fees when spending abroad, means that although a monthly sum in not paid for current accounts they not free for the user.

Its research found that customers could be spending as much as £1,140 a year on unauthorised overdraft charges if they bank with Santander

It found that inconsistency with charges does not end there, as while First Trust Bank charges customers £185 a year for using a £200 authorised overdraft six days a month, Coventry Building Society has no charge for a £250 authorised overdraft.

Furthermore, each bank has very different ways of charging for overdrafts, making it difficult for consumers to compare accounts.

Which? chief executive, Peter Vicary-Smith, says: "Contrary to popular belief, banking is not free. Whether it's through low interest rates or high charges, we all end up paying for our current account in the end."

He added the complicated ways banks present charges makes it difficult for people to work out whether they are getting a good deal.

However, for those regularly going into the red or wanting a better return on their money "it's worth making the switch to a more suitable account," he advised.

What the experts say

Another financial expert has also urged people to think about the potential for financial benefits elsewhere rather than committing to a long-term relationship with a bank that should be shown the door.

Ed Bowsher, head of consumer finance at lovemoney.com, gave an explanation of why some people remain loyal to their long-term bank.

He said: "I think a lot of people stick to the same current account because they're too busy. Or lazy. There's also an understandable concern that the transfer process may go wrong and end up costing the customer money as bills are unpaid or salaries don't arrive on time in the new account.

"Banks claim that the switching process has been improved but I still hear stories of mistakes. People should seriously consider switching accounts. They might be able to improve the customer service they receive or get a better interest rate on their cash."

He added it is also worth reading articles about the best accounts available, as well as reading comments from customers on user forums.

To compare the latest UK current accounts visit the Know Your Money current account comparison section here

Important Notice
This guide is intended for general information only and is not intended as, and does not constitute, any form of advice, recommendation or endorsement by us of any particular product(s) or services and you should rely on your own further research and professional advice in relation to your specific requirements and circumstances before purchasing any products or services. Use of this guide is subject to the Terms of Use of the KnowYourMoney site.