Published: 10/11/2009

The controversial new overdraft tariff soon to be introduced by Halifax has been a hot topic in the media over the last couple of weeks. The decision to replace existing authorised and unauthorised interest with simplified but more expensive daily flat fees has not gone down well with customers.

Anyone using an agreed overdraft limit will pay £1 per day on borrowing up to £2500 and £2 per day for balances over this figure. If you slip into unauthorised overdraft, the charge rises to a hefty £5 per day.

So if you're unhappy with your bank account, or perhaps are one of the fifty per cent of people that have never switched accounts, here's the low down on how to choose a new account and how the process works.

Firstly you need to weigh up what is most important to you with your bank account.

If you always keep a healthy credit balance you should be looking to earn some interest on your money, if you make regular use your overdraft facility then it's borrowing costs that are key, or perhaps you're a frequent traveller overseas and it's a debit card with low overseas charges that would benefit you most.

You'll find some suggestions for the best accounts for each category at the end of this article, but first let's look at the switching process.

Transferring your account used to be a big hassle, but many banks and building societies have smartened up their act as they seek to attract new customers and so have introduced dedicated switching teams to manage the process for you.

Even though it's easier now, it's not really something you'll want to do on a frequent basis, so it's worth doing your homework first.

Have a list of questions to ask your new bank - what are the branch opening hours, what are the fees and/or interest charges for authorised and unauthorised borrowing, do they offer internet banking what are the charges for using their debit card abroad?

The Transfer Process

Once you’ve chosen a new provider, you’ll need to complete an application form and provide proof of identity.

You’ll be asked to sign a form authorising your existing bank to transfer your account and all your standing orders and direct debits to your new bank.

The new bank will ask your existing provider for a list of your standing order and direct debit payments – and will then send this list to you for you to confirm that they are all still current.

They will then send updated direct debit and standing order mandates to all companies concerned with details of your new sort code and account number.

Your new bank will order cheque book (if required), and debit cards in readiness for when you start using the new account.

You will agree a date for the balance to be transferred to your new account – usually just after you’ve been paid – this gives you time to advise your employer/pension provider of your new account details in time for your next payday.

You will have to return any debit cards and unused cheques to your existing bank before the old account is finally closed.


Best accounts if you never go overdrawn

Halifax Reward - if you pay in at least £1,000 each month you'll receive a monthly credit of £5

Alliance & Leicester Premier Direct - 6% credit interest on balances up to £2500 for first 12 months



Best accounts if you sometimes use an overdraft facility

Alliance & Leicester Premier - 0% overdraft up to £2000 for first 12 months - then 50p per day max £5 per month.

First Direct First Account - if you pay in £1500 per month you get a £250 interest free overdraft. They also pay you £100 when you transfer your account to them. (This is an online account)



Best account if you regularly travel abroad

Nationwide Building Society Flex Account - only charges 1% on foreign debit card cash withdrawals and purchases outside of the Visa Europe region. Popular destinations including France, Greece, Italy, Spain, Portugal and Turkey are free. Charges with other banks are much higher with some charging 2.99% plus £1.50 per transaction.