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Should you switch current account?

Should you switch current account?

Category: Banking

Updated: 03/05/2017
First Published: 30/01/2017

Switching your current account – is probably not high on your list of things to do. The big banks may be tripping over themselves to offer a deal that will make you switch, but is it really worth the effort?

The answer is yes, if a bank or building society can offer:

  • A higher interest rate
  • Better service
  • Lower overdraft charges

or

  • Additional services, such as travel insurance or roadside breakdown assistance, which make it more economical to switch

Switching current accounts is easy

Banks and building societies want to build a lasting relationship with you. So it's in their interests to get your current account transferred quickly and hassle-free.

Most of the bigger banks and building societies offer a dedicated switching service to transfer all your regular standing orders and direct debits across, and now, thanks to the Current Account Switch Service, it's quicker and easier than ever before.

Banks and building societies that are part of the scheme (which is most of them these days!) have an obligation to switch your current account within seven working days. If it takes longer or things go wrong and you suffer financial loss as a result – for instance if a direct debit ends up not being paid and you're charged a fee – they have to refund you. Find out more about the switch service here.

Cashback for opening a current account

Still not convinced? No worries – here's £100 for your trouble! That's what some banks are offering at the moment if you switch your current account to them.

It's not all about the cashback though...

Cashback is great – but it's not how you should choose your current account.

Think about how you use your current account:

  • Are you always in your overdraft? If so, you'll want an account with low fees and charges.
  • Do you always keep your account in credit? Then you'll want an account that pays a high interest rate.
  • Would you like extras such as travel insurance, mobile phone cover, etc.? Look for packaged accounts that can accommodate.

Current accounts with benefits

Increasingly, we're being steered away from free banking and towards 'packaged' current accounts. These accounts offer 'free' services such as travel insurance, offers, even preferential loan or mortgage rates, in return for a monthly fee.

When looking at the fee, you need to weigh up the personal value of all these extra benefits to see if the current account is worthwhile. For instance, if breakdown cover is offered and you don't have a car, it's not worth anything to you, is it? Or if multi-trip travel insurance is offered but you only go away once a year, it may be more economical to have an account that doesn't charge a fee and just buy travel insurance for when you need it.

However, current account benefits can save you money. If you pay separately for travel insurance, mobile phone cover and roadside breakdown assistance, for instance, you might save money by using the products offered with your current account.

It all depends on your personal circumstances and desires. So, take a browse through our current accounts section and see if there's an account that could save you money.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

 
 
 

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