Current account guides

Switching current accounts

Looking for a better credit interest rate or a cheaper overdraft? Switching your current account is easy... (Updated 2/7/09)

Switching your current account has never been easier - you simply open your new account and your old bank will transfer the details of all your direct debits and standing orders. If you choose the right account, you’ll end up making your self money as well as getting an improved service.

Top current accounts

Company	% Typical APR
	The NatWest current account plus bank account offers a free flexible day to day bank account
	The Abbey bank account offers 6% AER interest on in credit balances up to £2,500.

So why isn’t everyone switching?

Switching your account hasn’t always been the easy process it is today, and customers are traditionally loyal to one account and bank for many years, if not their entire lives. However, many current accounts offer only 0.1 per cent interest when you’re in credit, they make millions from your money, and charge a high rate of interest every time you go overdrawn on your account.

But a new breed of current accounts is emerging, offering high rates of credit interest and very attractively priced overdrafts plus extra benefits.

Some people worry that switching their bank account will affect their credit rating but data sharing between banks is now far more sophisticated than it was and companies like Experian, CallCredit and Equifax, who help banks reach their credit decisions, will know if you’re on the electoral register and if you’ve previously held an account with another bank for several years - both of which will help your application.

Check your credit report online

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What are the benefits of switching?

The main benefit of switching your current account is that you can get far more favourable interest rates, which will actually earn you money, and you could also get yourself an improved service from your bank. While you might think that your current bank account suits your needs, you need to really assess the way you use it before finding the right account for you.

Whether or not you spend a lot of time in your overdraft will influence your decision, as will the amount of interest paid on in-credit balances if you’re a disciplined saver who is never overdrawn.

There are also a couple of other ways that you can make money by switching your account - some accounts actually pay you to switch, while others offer a cash reward for you and a friend if you successfully recommend someone to the account.

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What are the drawbacks of switching?

There is an element of hassle involved; while your standing orders and direct debits will automatically be switched to your new account, you will have to personally notify anyone who regularly pays money into your account.

It is a good idea to leave your old account open for a few months after you switch, just to be sure that nothing has been missed, and you might want to leave some money in it for that time too, in case there is anything still to be paid out of it, though this shouldn’t be the case.

Many introductory offers also have strings attached. For example, you may need to fund your account with a certain amount each month, so you need to ensure you can meet the criteria. The interest rate may only be fixed for one year - after which it may drop significantly - so you need to keep an eye on this and be prepared to switch again.

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What to consider when choosing your new account

There are a number of things that need to be taken into consideration when you choose your current account:

Monthly fees - Some current accounts, known as packaged accounts, charge a monthly fee and come with added extras such as travel insurance and breakdown cover. Some of these accounts offer good value, but you need to asses whether the benefits are worth the cost by looking at which services you would actually use and how much they would save you. Find out more about packaged accounts
Do you need online banking? Look at the services your online banking will offer - some don’t allow you to manage direct debits for example. Some also offer mobile banking through your phone via text, WAP or 3G.
Do you spend a lot of time abroad? If you use your card outside of the UK a lot, make sure that you’re aware of the charges you’ll be facing for using your card abroad.
Will you need a branch? Some high-interest accounts are online-only so take this into account when choosing. If you do need a branch you might also want to check where your local branch is, and its opening hours.
Statements - Will you receive your statements monthly or will they be online only? If this matters to you, make sure you know how your account works before signing up.
Unauthorised overdraft fees - If you spend a lot of time in the red, make sure you know what this will cost you so that any financial difficulties you might face don’t spiral out of control.

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How do I switch?

To apply for a new account you’ll need two forms of identification; one to prove who you are, such as your passport or driving licence and a second to prove your address, such as a gas, water or electricity bill.

Once your application has been approved, your chosen bank has 10 days to open your new current account. Then your old bank has just three days to transfer all your standing order and direct debit information to your new provider. In this time your new bank will also need to supply you with a cash card, pin number and, possibly, a cheque book.

You should note however, that the companies that you’ve lodged standing orders with - like telephone line and utility suppliers - may take longer to transfer your information.

Now that you know what to look for, compare current accounts.

Top current accounts

Company	% Typical APR
	The NatWest current account plus bank account offers a free flexible day to day bank account
	The Abbey bank account offers 6% AER interest on in credit balances up to £2,500.