The possibility of switching bank accounts has come under the spotlight over the last year, as the Current Account Switch Service has made it easier than ever to do just that. Now, you can change accounts in seven working days or less – a far cry from the 18-30 days that switchers had to contend with previously – but just what would tempt you to switch?
Current account providers are now fully aware of the ease with which their customers can switch, and that's why many are upping their game. The last few months have seen a wealth of new perks gracing the current account landscape, and here are just a few things that may encourage you to jump ship to another provider…
Interest rates are arguably the key battleground of the moment. In fact, according to research from TSB, the number one driver that influenced Brits to switch bank accounts in the past year was better benefits offered elsewhere, while higher interest rates were enough to tempt 33% to ditch their old accounts.
It's perhaps no surprise, then, that several providers offer high interest current accounts that pay impressive rates on in-credit balances – up to 5% in some cases. Understandably, considering rates on traditional savings accounts are so low, this has got a lot of people talking.
The possibility to use these accounts as an alternative, or even a complement, to a savings account is perhaps the key motivator for many consumers. However, they usually come with several restrictions – most come with a minimum monthly funding requirement and/or a fee, they may require you to link direct debits to the account and they'll usually only offer the headline rate on balances up to a certain amount.
Essentially, most ask you to use the account as your main bank account, but if you go about it the right way – i.e. keep your savings balance topped up and simply pay in your income for day-to-day spending – you can meet the requirements, benefit from a high rate of interest on your savings and have a usable current account in the process.
Of course, while high interest accounts may sound appealing, they're only really suitable for those that stay out of their overdraft. For those that regularly dip into it, it could be a far better idea to concentrate their current account search on those that offer low overdraft rates instead.
Overdraft rates have been another focus of competition recently, and several providers have changed their charging structures by switching to a daily fee arrangement rather than a set rate. While this may sound a lot more transparent, it's important to remember that these daily charges can quickly add up, so it's important to stay on top of things.
If you'd rather go for an account which simply offers a low rate, you can find ones from as low as 9.90% EAR. And, if you think you'll be heading into an overdraft, always make sure you arrange it beforehand, as unauthorised charges can be particularly high.
Quite simply, service is key, and if you're not happy with the service offered by your current provider, there's never been a better time to switch. The TSB research also found that 26% of people were influenced to switched bank accounts because of dissatisfaction with their old bank, showing how important service can be.
What was once reserved for credit cards is creeping into the current account market. Cashback is becoming another widely-offered perk used to tempt customers, with a lot of debit card providers now including it in their offerings. The majority only offer this kind of deal at selected retailers, sometimes for limited periods, but it's worth taking a look at the offers available – after all, what could be better than getting money back from your everyday spending?!
If you want more than a basic bank account, it could be time to look at packaged options. There are a lot of accounts that offer things like gadget insurance, travel insurance, even breakdown assistance and DVD rental, so if you think you could benefit from these added extras, it could be time to consider a switch.
Of course, the trade-off here is that you'll be charged for the privilege. A lot of these packaged accounts charge a monthly fee, so you'll need to do a few calculations – first you'll want to decide whether or not you'll actually use the perks offered and, if so, you should work out how much it would cost to get them elsewhere. If the overall cost would be more than the monthly fee, then a package account might be worth considering.
So, would any of these tempt you to switch? If so, get searching! There's never been a better time to consider your options, so start seeing what's out there – you never know what you could benefit from.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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