What You Need to Know
- Switching bank accounts has never been easier. Since 2013, consumers have a right to be able to switch within seven working days, with the new bank taking care of most of the paperwork
- Under the rules of the Current Account Switch Service, your new bank also has to ensure any direct debits you may have set up are also moved within the time limit
- Should a bank fail to meet its legal obligation to make switching as seamless as possible, you may be entitled to compensation
- It’s up to you to choose the date you want to be able to use your new account from. All you need to do is fill in a few forms, and then carry on using your existing account until this day comes
- Note that the Bank Account Switch Guarantee does not cover overdrafts. So, while most banks will happily accept you as a customer with an overdraft, especially if you have a good credit history, they don’t have to accept you debts
- There are plenty of reasons to switch accounts. Most consumers switch to get better interest rates, though many also move as they are unhappy with the standard of customer service they are getting
- Always take the time to shop around for the best bank account for you. After all, there’s no point in switching if you get more interest but end up paying more in additional fees
Why Switch Bank Accounts?
Just as you wouldn’t stick with a bad builder or with a supermarket you felt wasn’t offering you good value for money, neither should you stick with one single bank if you are unhappy with their service, or if you realise you can get a better deal elsewhere.
Despite the fact it’s never been easier to switch accounts, millions of UK consumers still stick with one bank. In fact, many stay with the bank they opened their very first account with all their adult lives. Unsurprisingly, some banks take such misplaced loyalty for granted, and so may not offer you a great service as they know you won’t move your money elsewhere.
- There are a number of reasons why you might want to switch bank accounts. These can include:
- You aren’t getting a good rate of interest on your savings
- You are unhappy with the levels of customer service on offer
- Your bank has moved most of its operations online and you would prefer to have the option of visiting a local branch
- You regularly go overdrawn and have found a different account that won’t penalise you for this so much
- You have a mortgage or other product with another bank and want to bring them all together
Whatever the reason for you wanting to change, you are legally allowed to switch whenever you want, and your existing bank are legally barred from stopping or even deterring you.
Your Rights as a Consumer
Thanks to a law introduced in September 2013, switching bank accounts has never been easier.
By law, banks have a maximum of seven days to switch a customer’s account to another provider. As well as switching the main account, they also need to transfer any direct debits you may have as swiftly and stress-free as possible. In fact, if they don’t ensure your switch is ‘seamless’ and carried out within the seven working day limit, you may be entitled to compensation for any inconvenience caused.
For more information on your rights as a consumer when it comes to switching bank accounts, visit the website of the Payments Council, the body which runs the Current Account Switch Service.
Finding the Right Bank Account for You
Even though you are allowed to switch accounts as and when you like, and banks are legally obliged to make this as swift and pain-free as possible, you nevertheless want to switch only when it makes good sense. This means you should always take the time to find the very best account to suit your personal circumstances. Only when you have found the right account for you should you then get busy switching.
Just some of the things you should look out for when searching for a new account include:
- The AER: This is the amount of interest your money will earn over the course of a year. Obviously, the higher this figure is, the better.
- Account Fees: Most banks charge fees for going overdrawn without permission, so look out for these if you are often at your limit. Some banks even charge for regular use of their current accounts, and the amount you will pay for accessing your money abroad will also vary between banks, so shop around if you’re a regular traveller.
- Customer Service Levels: Obviously, all banks and building societies will say they offer the best customer service. Rather than simply taking their word for it, however, use online forums and review sites to see if they do measure up to their promises or instead if you will be let down.
- Ethics: Growing numbers of UK consumers are becoming increasingly concerned with their banks’ ethics. For instance, they want to be sure that their savings won’t be invested in arms companies or firms that are damaging the environment.
How to Switch Accounts: The Step-by-Step Process
Once you have made the decision to switch and shopped around to find the best new account for you, then it’s time to make the change. The good news is that the whole process should take less than ten minutes. Here’s what you need to do:
- Apply for an account with the new bank. They will process your application like normal, checking your ID and credit history and asking you to provide details of any regular income. At this point you will need to inform them that you are moving your money from another account. The new bank should then confirm that they will use the Current Account Switch Service to make this happen.
- Once you have a new account open, you need to go to the bank you wish to leave and inform them of your decision. Here you will need to complete a Current Account Switch Agreement form, as well as an Account Closure Form issued by the Current Account Switch Service.
- It’s up to you to choose the date you want to be able to use your new account from. All you need to do is complete the start date on the relevant forms. Note, however, that the start date will have to be at least seven days from the day you open your new account.
- Once you’ve filled in all the necessary paperwork, your new bank is obliged to confirm that the switching process is underway and pledge that it will be completed within the legal timeframe.
- Up until the start date for your new account you should carry on using your old account as usual. On the switch day itself, the new bank has to take care of everything and you should be able to use your new account without encountering any problems at all.
- Your new bank will then look after your direct debits for an additional 13 months. Should any direct debits be charged to your old account in this time, your new bank will make sure they are properly redirected.
It really is that simple. The bank you choose to switch to is legally obliged to take care of almost the whole process, so you just need to get things started and then relax and trust them to do their jobs.
Of course, sometimes things do go wrong, and a bank may miss the seven-day switching target. If this does happen, thanks to the Current Account Switch Guarantee, you can apply for a refund for any inconvenience, for instance for any interest you might have lost by not being switched.
- Need to get back into the black? The National Debtline offers free, impartial advice to help you get back on top of your personal finances
- To get the most from your money, you need to make sure you’re getting the very best returns on your savings. Check out this guide to the best savings accounts and find the best deal today