KM: The new Current Account Switch Service means that, from September 2013, you will be able to switch current accounts in seven working days compared to between 18 and 30 days. You can opt for the switch date to happen later than seven days - but not earlier.
CF: Why has the 7-Day switch been introduced?
KM: At the moment, hardly anyone switches their current account provider – often because they think it won’t be worth the hassle. But the Payments Council, which is behind the new rules, wants to change this and make it easier for people to switch to a better deal. This should increase competition between banks too.
CF: Are the new 7-Day Switch rules mandatory?
KM: No – the Current Account Switch Service is a voluntary scheme, although virtually 100% of the UK’s current account providers have signed up to it.
CF: What do I need to do to switch my account?
KM: Firstly, shop around and see which current account suits you best. When you have found it, let your new bank know you want to switch and agree a switch date. To open your new account you will need to provide proof of identity, such as a passport and driving licence, as well as proof of address such as a utility or council tax bill.
CF: What happens then?
KM: Your new bank will then take care of moving across all outgoing payments, including direct debits and standing orders, as well as incoming payments such as your pension or salary, from your old account. This will all be carried out – and the switch completed – in seven working days, unless you have specified otherwise. On the agreed day of the switch, when your new account is ready for you to use, your old account will be closed.
CF: Will I need to do anything else?
KM: No. Then you can just sit back and wait for the switch to go through. Even if an individual or company tries to make a payment into your old account, it will be automatically transferred to your new one as part of a redirection service which is offered under the Current Account Switch Guarantee. This service will apply for 13 months from the agreed switch date and will ensure that any annual payments accidentally made into your old account, are covered. Your new bank will also provide the sender with your new account details.
CF: Will I be charged for any bank errors?
KM: No, you won’t end up out of pocket. You may incur a penalty if there’s a mistake because charges are sometimes triggered automatically. But if this happens you will be fully refunded. You will even be reimbursed for any interest you may have lost on credit balances too.
CF: Can I switch my account when I have an overdraft?
KM: Yes you can – but you will have to go through credit checks as part of the switching process so you won’t be offered one automatically. And if your new bank does agree to take your overdraft, it may not be to the same limit.
CF: Will it cost anything to switch?
KM: No switching is completely free.
CF: What are the benefits of the Current Account Switch Service?
KM: As well as being a quicker process with a clear end-date for the switch, changing banks will be simpler, hassle-free and backed by one clear guarantee.
CF: So what bank account should I switch to?
KM: This will depend on your own circumstances. If you are regularly overdrawn, you should look at overdraft costs as some banks charge considerably more than others for being in the red. And if you tend to stay in credit there are now some great accounts that will pay a decent rate of interest on your cash. Alternatively, it might be the case that you are just fed up with your bank’s customer service and want to vote with your feet.