Don’t be Scared to Switch Banks

By Christina Jordan

Many people fear that switching their current account could lead to major problems with unpaid direct debits and missed payments. But it’s actually much easier than you might think.

Some high street banks pay paltry rates of interest on their current accounts – in many cases just 0.1 per cent. Surely you want your hard-earned cash to work a little harder for you than that, especially when the best current accounts pay up to 5 per cent?

Equally, if you are usually in the red but your bank charges you through the nose, why not make stop the punishment by moving to a current account that is designed for those who are overdrawn?

What about the hassle?

It’s little wonder that many people are worried about changing bank accounts. You may have heard stories about cash not being transferred over, or people going overdrawn or incurring bank charges because something has gone wrong in the process of switching.

Luckily, the process has improved enormously during the past few years, following new rules that make the banks responsible for doing most of the legwork for you.

The Banking Code clearly sets out what current account providers should do:

• Your old bank must give your new bank your direct debit and standing order details within three working days of being requested
• Your new bank must have a working account in place for you within 10 working days of approving your application
• It should also keep you informed throughout the whole process and let you know who is responsible for each stage of the process
• If you incur any charges as a result of unnecessary delay during the transfer process your new bank should refund them.

All banks should adhere to the above, and the chances are that you’ll have no problems switching whatsoever.

However, if you do find that either your new or old bank hasn’t adhered to any of these guidelines, or if you are unsatisfied in any way with their handling of the process, then you are well within your rights to complain. You should place this complaint firstly with the bank in question and then, if you are still unsatisfied with the outcome, you can choose whether or not to take it the dispute to the Financial Ombudsman Service for resolution.

Switching services

The majority of high street banks offer free dedicated switching services to make the process simple and straightforward. Each will spell out what their service offers on their website, but most are very similar.

They usually include the Banking Code requirements, as well as giving you an overdraft facility to tide you over in case of delays. Other help includes giving you template letters to give to your employer or pension provider to make sure credits are also switched into your account.

Moving your bank shouldn’t be a hassle anymore and banks will do all they can to make the process smooth. After all, they know that getting a reputation for a poor switching service is likely to deter people from joining them.

Our Best buys

So stop showing loyalty to banks that take your custom for granted and grab a great new deal today.

Below are the three best current accounts if you are in credit or overdrawn:

Top in-credit current accounts

Top overdraft accounts

All information correct as of 18/5/10