Should you switch current account? - Banking - Money Tips - Moneyfacts.co.uk

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Should you switch current account?

Should you switch current account?

Category: Banking

Updated: 02/02/2016
First Published: 17/11/2011

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 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 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, 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 (that's most of them these days!) have an obligation to switch your current account with seven working days. If it takes longer or things go wrong and you suffer financial loss as a result – such as a direct debit 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, 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?

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, take a browse through our current accounts section and see if there's an 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 any time.

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