Current Accounts Guide
We’re getting generally better at switching financial products and shopping around for a better deal. But changing current account provider is something that continues to elude most of us. In fact, an estimated six out of ten adults have never switched their current account.
There are 54million current accounts in the UK, making them big business for banks. And, as they know that once they’ve got your custom, they are unlikely to lose it, it can result in some uncompetitive deals and customer service.
The big four banks – Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland, which owns NatWest – control more than 70% of the current account market even though their standard current accounts pay paltry, and in some cases no, interest. Their overdraft rates can be uncompetitive too so why do so many people stay put?
The common perception is that switching current account is a lot of hassle for little gain but this isn’t the case. Many banks now have dedicated switching teams which ensure the transfer process runs smoothly. And from September 2013, the Current Account Switch Service comes into effect. Amid other consumer guarantees, this will ensure the process takes a maximum of seven working days. So now is the time to stop being loyal to your bank and get more from your current account.
What should I look for when choosing a current account?
The assumption many people make is that current accounts are all pretty similar so it doesn’t really matter which provider you bank with. But, especially these days, that perception is a long way from the truth.
Some of the major providers are battling to attract new current account business by offering some fantastic deals, including upfront cash incentives. However, the product that is best for you will also depend on how you use your current account. So we’ve come up with some common customer profiles that should help you identify the key things to focus on when choosing a current account.
- If your current account is usually in credit, look for a deal that pays a decent rate of interest – the choice of these is growing!
- If you are usually overdrawn, look for the cheapest overdraft rates. Some accounts now also offer fee-free overdrafts for a certain time period.
- Look at how you manage your bank account. Some current accounts are based only online for example so, if you prefer to transact face-to-face in a branch, these won’t be suitable.
- If you do require branch access, and see an account that looks attractive, think about where the nearest branch of that bank or building society is as there’s little point moving your current account over if you’ll have to travel miles to get to a branch.
- Think about whether you want to pay a monthly fee for a packaged current account which offers services such as breakdown cover and annual travel insurance.
- Finally, if you frequently travel abroad, check out any foreign transaction fees for using your debit card as these also vary.