Current account switching hits record high
A record 125,000 people switched their current account this March, with customers flocking to Santander, Halifax and Nationwide.
Some 310,000 people have ditched poor value bank accounts in the first quarter of this year, 20% more than in the final three months of 2015.
The latest figures from the Current Account Switching Service show more people are moving bank account now, following falling figures in 2015.
However, it’s still tiny minority compared to the 50 million current accounts out there.
Santander, Halifax and Nationwide appear to be attracting the most new customers, although the data showing which banks people switch to only goes as far as September 2015.
Santander’s flagship 123 Account helped the bank gain 227,000 customers in the year ending September 2015. It will be interesting to see if this trend continues, given the fees for this account rose 150% to £5 a month in January.
Halifax gained 118,000 customers, the second highest amount. Its Reward account pays £5 a month providing customers stay in credit, which is paid tax-free. It also pays £100 to people when they sign up for an account.
Meanwhile, 26,000 people joined Nationwide, and Tesco Bank gained a couple thousand customers.
“The challenger bank threat doesn't really seem to have materialised as it appears that consumers are still chasing accounts offering interest and rewards, particularly whilst savings rates are in the doldrums,” says personal finance expert Andrew Hagger.
Each of the other 13 named banks in the data lost customers. Barclays was by far the worst affected, losing 111,000 customers at a rate of 306 a day.
If you think it’s time to move to a better bank, our weekly updated Best current accounts guide shows the best sign-up offers and overdraft deals. We also roundup the current accounts that pay a better rate on savings – it’s possible to get 5%.
You’ll need to use the Current Account Switching Service to get the introductory offers most banks offer. It’s easy to use – simply ask the bank you’re moving to do the switch for you.
Under the scheme, you won’t be charged any money to move, and your old account will be closed automatically, on a date of your choice.
The process should take no more than seven working days, and any inbound or outbound payments will be transferred automatically.
Nothing should go wrong, but if you are charged or lose interest because of an error with the process you’ll be refunded.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.