Brits have managed to catch up with our foreign counterparts when it comes to switching mortgages, credit cards and loans but we have historically been sluggish at swapping our current accounts.
Following the crises amongst the financial sector and the subsequent economic downturn, however, more people are taking a fresh look at the banking markets and are now less trusting of the powers that hold our purse-strings.
Why change accounts?
We are starting to realise that we need to move away from our poor paying bank account to a more hard-working account simply because every single penny counts right now. Swapping account can be easy-money (and not as tricky as we imagine). Of course, it's not all about money - you may simply want to change because of bad service but when you set out on the road to a new account do:
- Always shop around for the best rates of interest
- Look out for high charges on overdrafts (particularly if you are a consistent user of one)
- Check the small print - your new bank may offer a high rate of interest but it might only be on the first £2,500 or similar
- Likewise they may offer 0% overdraft fee but only for the first 'x' number of months
How to do it...
Once you have decided on the account you want it should be straightforward. Apply to your new bank - typically you'll need to fill in two forms - an application form and a transfer form. If your bank offers a switching service they will:
- Set up your standing orders and Direct Debits
- Ask your existing bank to cancel all payments
- Give you letters for your employer, pension and other payment providers so that they can credit your salary to your new account
- Ask your existing bank to close your account and transfer the balance to them
Voila! New account setup and ready to go.
There are strict guidelines that the banks and building societies must follow to ensure the transition is as efficient as possible. Your old bank will have three working days to pass the information across to your new bank. This includes all your direct debits, standing orders and your credit history. Once your application has been approved your new bank has just ten days to open your account. The hard work of swapping direct debits and standing orders over is done for you if your new bank offers a switching service. However even if you do have to do this yourself - the utility and credit card companies (typically the main bulk of your standing orders & direct debits) have improved their transfer time.
Tip: If it doesn't work out, you can always switch again - the Banking Code dictates that financial institutions should allow their customers to switch to a different account at any time, without penalty. To view the latest current account rates including £100 cashback offers for switching click here.
To compare current accounts from the UK's leading providers click here.
Author: KYM Editor
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