1.1 MILLION get the itch to switch banks
MORE people than ever are changing their current account in search of a better provider.
In the year to the end of March more than 1.1million people transferred to a new bank, an increase of 80,000 on the year before. Most of them elected to use the Current Account Switch Service. The serv- ice, which was launched in September 2013, takes the hassle out of moving current accounts by automatically shifting money, direct debits and standing orders to a new bank within seven working days of a request to switch. Payments made to or requested from an old account are redirected to the new one for three years and if a customer is penalised for a problem occurring during the switch, a refund is paid.
Most banks and leading building societies have signed up to the switching service. Exceptions are some smaller building societies, firms and credit unions.
With switching made easier, banks are increasingly making generous offers to attract new customers. They include up to five per cent interest on cash balances – causing these accounts to outshine savings accounts.
Other offers are based around cashbacks, ‘golden hellos’, low overdraft charges and cutting-edge banking technology.
Kevin Mountford, of comparison website MoneySuperMarket, welcomes the more competitive current account market, but believes more needs to be done.
He says: ‘While switching has increased, the numbers are not overwhelming. Banks should create more innovative products and drum up excitement to encourage people to switch.’
He says account number portabil- ity would boost switching. This would allow switchers to keep their account number – as mobile phone customers keep their numbers when changing deals. Portability is being looked at by financial regulators.
In the meantime, Mountford recommends consumers ‘keep banks on their toes and look to change if they are not happy with their current deal’.