The latest current account switching numbers from Bacs reveal that 1.10 million people moved banks in the last 12 months, up by 4 per cent on the corresponding figures a year ago, but nonetheless disappointing with most customers choosing to stick with their existing provider.
Santander, Halifax, Nationwide Building Society and Tesco Bank are winning the biggest share of current account transfers whilst Barclays and NatWest continue to see the most customers walk out the door to join rivals.
New research this week from Aimia the marketing and loyalty analysts reveals that 33% of people say that loyalty rewards are the biggest influencers when choosing a current account and this marries up with the latest Bacs switching statistics where Halifax (£5 monthly reward) and Santander (cashback on utilities and up to 3% credit interest) are both beating the competition hands down.
One of the biggest problems is that even with the faster switching rules and switch guarantee in place, people are confused about which account to choose and are scared that they may end up with a product that isn’t any better than what they already have.
Although each bank and building society has its own tariff and rate details listed on its website and marketing literature, working out which account is best can prove a big headache.
The dilemma for consumers is that no two accounts are the same, and difficulty in trying to compare the different rates and charging structures is probably one of the major reasons that customers have remained loyal and put up with a below average service.
There is not one bank account that works out as the best for everybody, it’s more about weighing up the individual elements of that are most important to you.
For some people a low cost overdraft will be the priority, while for others interest payable on credit balances or a debit card offering low cost transactions abroad will be key.
We’ve carried out some research to try and establish which accounts are strongest in each of the different areas.
If it’s a cheap overdraft that’s most important, then it’s worth considering First Direct (first £250 interest free) or M&S Bank (first £100 free).
For those seeking interest on credit balances or reward for their custom, for balances of £2000 or less consider Halifax Reward or TSB Classic Plus and for £3,000 take a look at Tesco Bank.
Lloyds Bank and Santander 123 are tops for those with balances of £3,000 plus, with the latter clearly the market leader for balances over £5,000 – paying a very attractive 3% gross up to balances of £20,000.
Whilst some people may be put off the Santander 123 account because of the monthly £2 fee, remember it also pays cashback on your utilities direct debits, which in many cases will more than offset the cost.
If you’re seeking a cheap debit card for use overseas then Norwich & Peterborough Building Society offers this facility for free worldwide whilst Nationwide Building Society and Metro Bank are much cheaper than the main banks in this area.
Yet for others it’s not the nuts and bolts of the account that concerns them, all they desire is the ability to talk to a human being at a UK call centre 24×7 and to receive a good level of customer service, day in, day out. Consistently top performers for service continue to be First Direct and The Co-operative Bank.
If you think it’s time you gave your bank the elbow, make sure you do your homework before jumping ship and pick an account that reflects the way you run your finances – and try not to be swayed by the offer of short term incentives.