Should you switch current account?

Category: Banking
Date: 11/17/2011

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

The answer's 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 and roadside breakdown assistance that makes it more economical to switch

Switching current account 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.

All you need to do is inform anyone who pays into your account (your employer, pension provider, etc.) of your new bank account number and sort code.

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? (so you'll want an account with low fees and charges)
• Do you always keep your account in credit? (so you'll want an account that pays a high interest rate)
• Would you like extras such as travel insurance, mobile cover, etc.?

Current accounts with benefits

Increasingly, we're being steered away from free banking, towards 'packaged' current accounts. These accounts offer 'free' services such as travel insurance, offers or 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?

Alternatively, 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.

So head on down to our packaged current accounts section and find out if there's a current account that could save you money.

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 anytime.