From 16th September 2013 consumers have been able to switch current account within 7 workings days.
Previously, switching current accounts was seen as a nightmare taking up to 30 days to complete, plus 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 bank accounts got a whole lot easier thanks to the Current Account Switch Service 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.
Switching current accounts is now quick and easy
Under the Current Account Switch Service consumers will be 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 account 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. In the last month, however, offers are slowly creeping back and we have summarised the best current accounts with an upfront switching bonus in the table below. Typically, in order to qualify for a switching bonus, you'll you 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 | Incentive Fulfilled |
HSBC | £125 | £1,750+ | You'll need to apply and start a switch within 30 days of applying. You need to pay in at least £1,750 per month and set up two direct debits or standing orders. | Access to linked savings account paying 1% interest on deposits of up to £250 per month | Within 20 days of switch completing |
First Direct | £100 | £1,000+ | You'll need to switch and pay in at least £1,000 in three consecutive months to qualify for the £100 switching offer | Access to regular saver account paying 1% interest on deposits of up to £250 per month | Within 28 days of meeting all qualifying criteria |
Virgin Money | 15 free bottles of wine | N/A | Open account, download and register the Virgin Money mobile app and add two direct debits to the account. In addition, you'll need to add £1,000 to the linked savings account and keep it there until you receive your Virgin Wine code via email. | The Virgin Money account pays 2.02% AER on the first £1,000 in the account. It also pays 0.50% AER on the linked savings account | Wine code is emailed within 31 days of completing the qualifying criteria |
HSBC - Switching criteria (£125)
To receive £125 you must:
- Start a switch within 30 days of applying
- Pay in at least £1,750 per month
- Set up 2 x direct debit/standing order
Payment of £125 will be made within 20 days of completing the switch
First Direct - Switching criteria (£100)
To receive £100 you must:
- Switch and pay in at least £1,000 in three consecutive months
Payment of £100 will be made within 28 days of meeting the above criteria
Virgin Money - Switching criteria (15 free bottles of wine - worth up to £180)
To get the 15 bottles of free wine (reportedly worth up to £180) you must:
- Download and register the Virgin Money mobile app
- Add two direct debits to the account
- Add £1,000 to the linked savings account and keep it there until
All of the above must be carried out within 31 days of completing the switch
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 account switching cashback offers out there. You need to close your old account in order to receive the incentive and if you do this using the Current Account Switching Service (CASS) this is typically done for you. Most banks require a minimum monthly amount to be paid into the account to receive the bonus as well as at least 2 direct debits (over £2).
The current accounts with the best cashback offers
Bank/Building Society | Incentive |
Min monthly amount
|
Santander 123 Lite | 1-3% cashback on bills (for a £1p/m fee) | £500 |
Santander Cashback - Switching Criteria
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 2 direct debits
- 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 from May 2020 so you can get a maximum of £15 each month
Best current account that pays interest
Banks and building societies are offering interest rates on your money up to the value of £1,500. If you're looking to save more than this check out our savings best buy tables for the best interest rates on the market at the moment.
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 | No minimum |
Nationwide FlexDirect account criteria
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's 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.
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