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Premier account pays 0.50% on balances up to £2,500 and it includes free European travel insurance. Customers can also benefit from A&L's market-leading overdraft - you can borrow up to £2,000 interest-free for the first year. Thereafter you'll be charged 50p per day for being overdrawn although this is capped at £5 per month. To qualify for the account you must be 21 or over, pay in at least £500 per month and not be an existing Santander current account customer (Santander owns A&L and Abbey).
The £100 sign-up offer also applies to people who apply for Abbey's Preferred Overdraft account. Customers receive a free overdraft for the first year after which an annual rate of 12.9% is charged and the in-credit rate is 0.50% - the same as on A&L's Premier account. However, you must pay in at least £1,000 a month.
The Santander brands aren't the only providers currently offering a cash incentive for new current account customers. First Direct will also give you £100 if you switch to its 1st Account, although customers are required to deposit at least £1,500 a month in to the account and no interest is paid on balances in credit.
HSBC is the other provider with a switching offer. If you sign up for its Bank or Plus account before 4 October you'll receive a £50 reward. The Bank account is HSBC's standard current account and it pays no interest on balances in credit, while the Plus account offers extra benefits, but it has a £12.95 monthly fee, although this is reduced to £6.47 for the first three months. The benefits include Worldwide travel insurance, breakdown cover and access to preferential products such as a regular saver account which pays 8.0%.
But why do these banks need to offer people inducements to switch to their accounts?
The truth is that most current account customers are unwilling to switch banks because they believe the process is likely to prove complicated and potentially expensive.
Visions of hours spent toiling over paperwork and charges accrued due to missed standing order and direct debit payments convince them to stick with their current bank or building society - even if their account offers poor value for money.
However, a few years ago, banks gained the ability to automatically transfer standing orders and direct debits for you.
As a result - and because it is in their interests to attract new customers - most banks now have dedicated account-switching teams that will manage the entire process for you.
This includes transferring any funds in your old account to your new one, closing your old current account if that is what you require, moving across your standing orders and direct debits and even contacting your employer to give them the details of your new account.
So in reality, switching couldn't be simpler.
Another common argument, that switching current accounts is unlikely to have a significant effect on your finances, is similarly easy to discredit.
Many accounts pay you a pitiful 0.1% interest when you are in credit, and punish you with rates of between 15% and 20% when you slip into the red. Yet there are some great current account deals available. In addition to the switching offers mentioned above, A&L's Premier Direct account pays new customers 6.0% on balances of up to £2,500 for the first 12 months and the Halifax Reward Current Account pays you £5 a month for paying in £1,000 or more.
The message then is to vote with your feet and make sure you are getting the most out of your current account.
Here, we answer your questions about the switching process.
What will I need to open a new account?
Your new bank will need your existing account details and two forms of identification: one with a photograph and the other with proof of address. You'll be asked to sign a switching mandate which effectively gives your new provider permission to obtain details of all your direct debits and standing orders from your existing bank.
Do I need to do anything?
Once the new bank has received all the relevant information from your existing provider you'll be asked which direct debit and standing order mandates you want transferring over to the new account.
You'll also be asked for your employer's details so you salary can be paid into the new account (assuming you want it to be).
Apart from that, all you need do is just sit back and wait.
Do I need to close my old account?
No, but there may be no need to keep it open once your new account is set up. For ease of management, you many well find it best to close your old account, although it could be a good idea to keep your old account open for a few months after the switch just in case something is missed.
How long will the switch take?
It usually takes between four and six weeks for everything to be transferred over.
What will happen to my existing account benefits?
If you are getting benefits such as discounted travel insurance with your current account, these will stop when you close your account.
You will therefore need to check whether or not your new account will offer the same advantages. And if not, shop around for stand-alone alternatives. This can often prove cheaper than having a current account that offers a package of benefits, but charges for the privilege.
Don't put up with an uncompetitive current account any longer
You could literally be hundreds of pounds a year better off by taking out a more competitive current account so don't be put off by the switching process.
For more help on identifying which account will be best for you, see what moneysupermarket's head of banking, Kevin Mountford, has to say in his article 'What's the best current account' (this article has recently been updated so all the information is correct).
Please note: Any rates or deals mentioned in this article were available at the time of writing. Products underlined can be applied for directly.
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