Time to switch to a better bank account

24 Mar, 2016

Figures from Bacs reveal that more than a quarter of a million people moved banks in the last 3 months of 2015.

This means that 2.5 million customers have now used the official Current Account Switching Service to transfer to a new provider.

Santander, Halifax and Nationwide Building Society are still winning the biggest share of current account movers whilst Barclays and NatWest are losing the most customers to rival providers.

One of the biggest problems is that even with the new faster switching rules and switch guarantee in place, people don’t know which account to choose and are scared that they may end up with a product that isn’t any better than the one they already have.

Although each bank and building society has its own tariff and rate details clearly displayed 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’s the perfect fit for everybody, it’s more about weighing up the individual elements of an account 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.

I’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 being the market leader for balances over £5,000 – paying a very competitive 3% gross up to balances of £20,000.

Whilst some people may be put off the Santander 123 account because of the monthly £5 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.

Picking the wrong bank when it comes to debit card costs overseas can cost you a lot more than you’d imagine.

For many people there’s more money to be saved in this area than any other element of a bank account. Your two week summer holiday could easily see you shelling out an extra £50 or more in charges – for many customers that can save you far more than the amount interest you’ll earn on your bank account in a whole year.

Yet for others it’s not the nuts and bolts of the account that concerns them, all they want is the ability to be able 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, pick an account that reflects the way you run your finances rather than being swayed by a cash sweetener.