Switching bank accounts got a whole lot easier on 16 September 2013 thanks to the Current Account Switch Service (CASS), brought in by regulators in a bid to boost competitiveness within the banking sector. Plus, there are now genuine incentives to change your bank or building society.
Previously, switching current accounts was seen as a nightmare, taking up to 30 days to complete, and there was little incentive to do so. It is perhaps unsurprising that consumers have typically only switched their bank once every 16 years. Yet banks are the biggest source of complaints to the Financial Ombudsman.
Switching current accounts is now quick and easy
Under the Current Account Switch Service, consumers are able to choose the date on which they want to transfer their current account and the whole process will not take more than 7 working days. Direct debits and standing orders will also be automatically transferred across to your new account, as will any payments sent to the old account (for a period of 13 months). If any payments are missed, they will guarantee to reimburse you in full.
Check who owns each bank before making a switch
The Financial Services Compensation Scheme (FSCS) protects your savings for losses up to £85,000 (£170,000 for joint accounts) should your bank or building society go bust, as long as it is authorised by the Financial Conduct Authority (FCA). However, the scheme protects your savings up to £85,000 per bank or building society providing the bank or building society has its own banking authorisation. Some banks and building societies share their banking license with other brands because they are part of a bigger group (for example, HSBC and First Direct).
In these instances, you will only be covered for £85,000 across both banking brands for accounts in your sole name (£170,000 for joint accounts). Therefore, it is important to ensure that you understand how switching bank accounts will impact your protection under the FSCS when viewed in the context of your existing accounts. This handy tool allows you to select the banks and building societies that you currently hold money with (or plan to hold money with) to see your level of protection under the FSCS if any of them were to go bust.
Best current accounts with an upfront bonus
Banks and building societies have previously offered some fantastic incentives in order to tempt customers away from rival banks. However, the recent financial crisis has meant that many banks are concentrating on existing customers, rather than investing in acquiring new customers.
Disappointingly, in the last month, we've seen switching offers withdrawn from Halifax, First Direct, and HSBC. Typically, in order to qualify for a switching bonus, you'll have to close your old account once you've made the switch and most banks require a minimum monthly amount to be paid into the account each month.
The current account with the best switching offer
| Bank | Switching Offer | Min Monthly | Small Print | Additional Benefits |
| Nationwide | £125 for existing customers, £100 for new customers | N/A | Must switch to or open a Nationwide current account to be eligible. Switches for new customers must be conducted using CASS with minimum 2 active direct debits to be eligible. Existing customers must use Nationwide's online bank - on desktop or via its app - to open a current account in order to qualify. Switches made using CASS must be completed within 30 days of request | Can choose from any of Nationwide's current accounts to qualify for the incentive, including the FlexAccount, FlexDirect, and FlexPlus. FlexAccount has unlimited branch access and telephone support, FlexDirect offers 2% AER interest rate on balances up to £1,500 for the first year, and FlexPlus comes with worldwide travel, mobile phone and European breakdown cover |
Nationwide - £125 for existing customers, £100 for new customers
To get the £125 cash incentive as an existing customer, you must:
- Use Nationwide's internet bank - available on desktop or via its mobile app - to open a current account
For new customers to qualify for £100, you must:
- Switch from your existing current account provider using the Current Account Switch Service
- Set up a minimum of two active direct debits
All of the above must be completed within 30 days of request.
Best current account with cashback
Banks and building societies are offering some cashback incentives to encourage customers to switch providers and bank with them. Below is a roundup of the best current accounts providing cashback.
The current account with the best cashback offer
| Bank/Building Society | Incentive |
Min Monthly Amount
|
| Santander 123 Lite | 1-3% cashback on bills (up to £15 per month) | £500 |
Santander 123 Lite current account
To get 1-3%* cashback on bills with a Santander 123 Lite account, you must:
- Pay £2 a month to maintain the account
- Pay bills via direct debit
- Pay in at least £500 a month
- Add two active direct debits to the account
- Log in to online banking every 3 months from account opening
*This is capped at £5 per month in each of the 1%, 2% and 3% cashback tiers, so you can get a maximum of £15 each month.
Best current accounts that pay interest
Banks and building societies are offering interest rates on your money up to the value of £1,500.
There are currently two options vying for the highest current account interest rate, offered by Nationwide and Virgin Money. The nearest competition comes from the Bank of Scotland, with its Vantage Current Account, although this is a significantly lower 0.60%.
For more high interest current accounts, head to our up-to-date savings best buy table.
| Bank/Building society | Interest Rate | Balance Amount | Min Monthly Amount |
| Nationwide | 2% (for the first 12 months) | £1,500 | £1,000 |
| Virgin Money | 2.02% | £1,000 | N/A |
Nationwide FlexDirect current account
To qualify for 2% interest on the first £1,500 of your balance, you need to:
- Pay in £1,000 a month (excluding transfers from other Nationwide accounts or Visa credits)
- Open an account for the first time solely in your name or a joint account with someone else
After the first 12 months of interest, the rate will reduce to 0.25% AER. If you open an account for the first time, you can also take advantage of 0% interest on your overdraft for the first 12 months, depending on your personal circumstances.
Virgin Money current account
There is no minimum monthly amount to qualify for interest on the Virgin Money account. Accounts can be opened over the telephone or in branch and the interest rate is paid monthly.
