You can be hundreds of pounds better off by switching your current account. Here’s why you should do it and how to.
I often write about the benefits of switching bank – but I know from chatting to friends that lots of people don’t know how to go about it.
Luckily I’ve switched around nine times (it could be more!) so I’ve got a good idea of what to expect.
So here’s a simple explanation of what it is, and a step-by-step guide to doing it.
Why switch bank?
You can get all sorts of bonuses from moving your banking. I’ve done it mainly for free cash in my current account but I’ve also switched twice for fee-free banking in my business account.
You might also choose to switch so you can benefit from things like cheaper overdrafts, access to a local branch, cashback on bills or fee-free spending overseas. Or you might just be fed up with the service provided by your existing bank.
I’ve got a regularly updated guide to some of the best offers available from each bank, which is a good starting point. Though it’s important to remember you don’t necessarily have to switch. It might be better for you to open up additional accounts.
Watch Andy’s video on how to switching your bank account
What is bank switching?
When you switch bank you’re essentially moving over all your money and payments (both in and out) from your existing current account over to a new account at a different bank. The bank will let everyone know the new details – from your employer (for salary) to gas company (for bills).
This is only for current accounts – you don’t switch savings accounts or ISAs – though it works for both personal and small business accounts. Joint accounts can only be switched with the permission of both account holders.
Types of bank switching
Most UK banks offer switching. There are two types of switch – the full switch and the partial switch.
A full switch will move everything over and close your old account. You often need to run a full switch in order to get incentives such as free cash.
A partial switch lets you chose which payments and money to move over. It won’t close your old account unless you chose to. This is handy if you’re opening a cashback current account to earn money on your bills and there aren’t any additional switching benefits.
The switch guarantee
If you opt for the full switch with a participating bank (99% of high street banks are signed up), then you’ll be protected by the Current Account Switching Guarantee.
With this, all switches will happen in seven working days, though you can make it later. The bank will also monitor payments into and out of your old account for 36 months after the last payment. So you could have a gap of 35 months with no money going in or out of your old account, but one payment in that 36th month will start another 36 months of monitoring.
The guarantee also means that you’ll be compensated if there are any problems which leave you out of pocket.
What happens to your old account?
If you’ve gone for the full switch, your old account will be closed. That means you’ll not be able to use online banking, get old statements or use your debit card. You don’t need to do anything yourself – the new bank deals with it all for you.
It makes sense to downloads any bank statements from your old account before you close it, and it’s a great opportunity to audit those direct debits and standing orders. This way you can make sure you don’t keep paying for services you don’t need or use.
Some connected accounts, such as regular savings accounts where you can only have one if you have a current account, will be closed too. However others such as credit cards and ISA that are open to anyone will stay open, so don’t forget about them.
What isn’t switched
Only regular payments made with your account details will be switched and continue. Any payments set up with a debit card number, such as a regular payment for a subscription such as Netflix, won’t. So you’ll need to pay for those again with your new debit card details.
How to switch bank
The start of this process shouldn’t take you too long. Say 10 minutes of research and 10 minutes to apply. Well worth it when you consider how much better off you could be as a result.
Not every bank will have the application process, so just bear that in mind when you get to that stage.
Find your new account
Whether it’s to get free cash or just a better banking experience, check all the options available to you. Here’s my guide to switching incentives such as free cash, high interest and cashback on bills.
If you want the switching service protection, look for the Current Account Switch Guarantee logo. A full list of those participating can be found on the CASS website.
Make sure you meet the criteria
Some account switching promotions require you have a couple of active direct debits – i.e. they can’t be cancelled or dormant, which generally means they’ve paid out in the last year. You might also not be eligible if you’ve previously held an account with the bank.
Other accounts require a minimum payment into the account every month. This money doesn’t need to stay there, so you can transfer it into another account straight away if you want. You can also usually pay this money in stages. So say £1,500 is required, this could be three £500 payments in the month. It could even be the same £500!
Apply for the account
You’ll need to fill in the application form, which will likely ask details about salary and expenses. You can do this online, over the phone or in a bank branch. Some of these are easier than others.
You’ll need to provide proof of ID, and you’ll also be credit checked for most current accounts.
Choose the date you want to switch
You can choose a day to switch to happen. This is good if you say want to avoid it happening until after you’d been paid. The earliest this can be is seven working days from when your application is accepted.
Sometimes you can start the switch during the online application process. At other times you have to wait until you have been fully accepted, which might require you to go into a branch with identification documents.
Check you get the reward and everything has moved
I’ve switched many, many times but twice I’ve not had the bonus paid in and once one of my direct debits was cancelled rather than transferred. Both were easily resolved, but just keep an eye on your new account to make sure everything is as it should be.