Does It Pay To Switch Current Accounts?

Do you ever stop to think about your current account? In many ways this is the most important financial product you own. It sits right at the heart of your finances handling all of the payments in and out – quietly sorting all those bills while you get on with your busy life.

While you may or may not be aware of all of the features of current accounts you might never really consider ‘getting a better deal’ when it comes to this. ‘Shopping around’ is something that is more commonplace for insurance or energy bills.

Yet this situation is rapidly changing. Banks and building societies have entered into a competitive bidding war in an attempt to win our current account custom and, four years ago, the Current Account Switch Service was set up in a bid to make switching current accounts smoother and, above all, quicker – with a guarantee to get the whole process wrapped up in seven working days.

Over time, awareness of this switching system – which is run by Bacs – has grown and now more than 3.7 million switches have taken place since 2013.

Almost a quarter of a million switches were completed in the first quarter of 2017 alone, with almost a million taking place in the 2016/17 financial year.

The fact that it’s easier to switch clearly helps, but it’s important to consider the other factors that cause people to move their money from one provider to another.

Many of the most common reasons for switching accounts are:

• That providers are willing to provide an attractive cash bonus for moving. In essence this really is ‘money for nothing’.
• That you can get a better overdraft. This might mean that you have a larger amount of money to fall back on if you run out of cash at the end of the month – or might just mean that the charges and interest rate associated with using an overdraft are better, saving you money as and when you need to dip into it.
• The ability to earn rewards – such as cashback on purchases or even loyalty points for store cards.
• The chance to get better interest rates which, in some cases, can even be better than those offered by savings accounts.
• The existence of extra perks such as free travel insurance or breakdown cover which allow you to save money elsewhere.
• The need to set up a joint account with a new partner or spouse.
• The desire to have an account with a provider who handles other products such as your mortgage to bring everything ‘under one roof’.

All of these points prove that is well worth adopting a different mindset when it comes to your current account. Simply sticking with an account ‘because you’ve always had it’ is an increasingly old fashioned mindset. If you can get a better deal – however you choose to define ‘better’ for your personal circumstances – then why not take it?

Photo: Ken Teegardin

Alexa Mason

Alexa Mason is a freelance writer and internet entrepreneur. She is also a parent to two beautiful little girls. She chronicles her journey as a single mom working on building financial security.