Switching current accounts can be a great way to make some extra free cash with a switching incentive – but what does it involve, and should you do it frequently? Here are common questions about switching bank accounts to put your mind at ease.
If your current account is ticking along nicely, it can be easy to think you might as well stay put with it. However, switching can net you some benefits. First, incentives for switching can include money – up to £175 at the moment on the best switching offers. That’s free cash just for choosing the new bank account.
Second, if you have plans to use your overdraft but the charges are very high on your existing account, switching could give you a lower or zero rate introductory term. You might also benefit from other rewards the new current account offers that your existing one doesn’t.
For example, some accounts include bundles for home and travel insurance, which can save you a lot of money if you’re a frequent traveller. Other accounts come with apps and software, or apps that help you manage your money better.
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Banks often advertise incentives for getting a new current account with them, either if you have a different kind of account already or as a new customer altogether. When you apply for a current account, you’ll be asked if you want to switch. Selecting ‘Yes’ means the bank takes over all the paperwork for you – there’s nothing extra for you to do. The Account Switch Service Guarantee means all of your existing scheduled payments will be transferred to your new account, and so will your bank balance, with your old account shut down.
Under the Account Switch Service Guarantee, you’re protected from missing payments for the first year. If someone sends money to your old bank account, it will be re-routed to your new account. This means you might face a couple of days’ delay in receiving the payment, but you won’t lose it.
Make sure you update your new payment details with anyone who needs to send you money, such as your employer, as soon as possible.
Yes, you can transfer current accounts even if you’re in an overdraft – as long as you have been approved for the same or larger overdraft on the new account. Speak to your new bank before applying for the new account and switch. Be aware that your charges may differ on the new account, so make sure you do your sums before switching to make sure you don’t face large charges causing more debt.
You might be concerned about how you’ll make your regular payments or receive redirected payments if there is a delay in the switch. However, banks using the Current Account Switch Service include a guarantee that if there is a switch delay, any charges or interest made on the account will be refunded.
All of your Direct Debits and Standing Order payments, or scheduled debit card payments, will be transferred. However, if you set up any new payments within seven days of switching, these might not be carried over. Your payee details also may not be transferred. That means when you start making payments to existing payees on your old account from your new account, you will need to keep your card reader handy for the first time you set up a new payee.
When you get a new current account, you’ll be sent a new debit card and PIN. You’ll need to remember to update your new card details on any online payments, such as subscriptions, PayPal, Google Pay and Apple Pay. This will make sure your services aren’t paused or cancelled due to non-payment.
Yes, you can switch your joint account to another joint account with the same process as a sole account. However, you cannot switch a joint account to a sole account. This is to prevent people transferring joint account funds solely into their name with a fraudulent intention. You will both need to pass any credit checks and agree to the account switch for it to go ahead.
There are over 40 banks and building societies that adhere to the Current Account Switch Service, making it easy for most people in the UK to switch bank accounts. If the bank you want to switch to isn’t part of this service, you won’t be able to make the switch using the guarantee. That means if something goes wrong, or payments are sent to your old account by mistake, you could lose out.
Technically, no. However, switching accounts will require a credit check, so keep this in mind. Lots of credit checks in a short space of time can damage your credit score, and that impacts your ability to borrow money, open a credit card or phone contract, or could even affect a mortgage application. Most current accounts with a financial switch incentive also require you to hold the account for a specified period of time before you can claim the cash.
Most banks offer a basic current account that does not have a minimum income to open it. This means you can open and switch from your old account. However, if you’re switching to claim a financial incentive, check the fine print first.
You will often need to meet minimum monthly payment requirements, such as £1000 transferred in every month and three Direct Debits set up on the account. Sometimes, you can get around the minimum if the rules allow you to move money between your own account – but others are strict and the income must be from another source.
The Account Switch Service is only for current accounts. So, you can’t switch a savings account or ISA. However, when you’re looking at switching current accounts, check the savings accounts on offer at the same time.
Many banks offer linked regular saver accounts with high interest rates only for customers with their current account, or other favourable interest rates on savings account if you hold their current account. So, once you’ve switched, it could be worth setting up a new savings account and transferring your savings across, too.
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