If you’re tired of your current bank’s level of service, you might be considering switching banks. It’s a big step, and according to statistics, one that many British people have never taken. In fact, about 39% of British consumers have never changed banks in their life.
Clearly, there’s a lot involved in switching banks and it’s a decision that no one takes lightly. Taking a balanced look at what you need to consider before switching banks can help you decide whether it’s time to take the leap.
Read on for 8 things you need to consider when switching banks.
1. Check the Minimum Income Requirements
Most, but not all, UK banks set a minimum amount that must be paid into the account each month. If you’re switching current accounts, for most people this will not be a problem. They often set a minimum monthly income of £500 or £1000, which most people’s salaries will cover.
Be aware that the bank will expect you to continue to pay in this amount in the years to come. Can you anticipate a change in circumstances soon that could affect that? If so, consider choosing a bank with no monthly income requirement.
2. Compare Joining Bonuses and Offers
There are more retail banks eager for your business than ever before.
In the past, the high street was dominated by a few big-name retail banks, and most people stayed with them for life. Now lots of banks offer incentives such as free cash for opening accounts and even cashback on certain bills.
However, it’s also more common now than in the past for banks to charge a monthly fee. This doesn’t just apply to premium accounts that offer additional insurances or services. Even ordinary current accounts may charge a small monthly fee for banking with them.
A joining bonus may be very tempting. But it’s should be just one consideration. Calculate how the cashback, fees, and special offers would work for you before making your choice.
3. Understand Banking Charges and Interest
As well as monthly fees, banks also charge fees such as overdraft interest and usage charges and foreign transactions.
Look honestly at the way that you use your current account. If you move:
- Are you likely to face higher overdraft fees and interest payments?
- Do you regularly make foreign transactions?
- How much would they cost with the new account?
Take a close look at the small print before switching banks. This can help you to avoid any unpleasant surprises down the line.
4. Current Account Switch Service (CASS)
Many banks in the UK have signed up to the Current Account Switch Service (CASS). This free service makes switching current accounts much easier and even allows you to switch if you are using your overdraft.
This means that all your regular payments, such as direct debits and standing orders, will be switched over without a hitch. Your old bank will then take care of closing your old account.
Moving to a bank that has signed up for this service should make your move a lot easier. It should also eliminate the possibility of missed payments. This allows you to take advantage of better deals as they become available.
Moving to a new bank only takes 7 days using the CASS.
5. Check Out Their App
Nowadays, we all expect easy access to our bank account on the go. If you’re less than satisfied with your current bank’s app, this may be a reason you’re considering making the switch.
Just make sure that you don’t go from the frying pan into the fire. Not all online banking apps are very user friendly. Read online reviews to see what customers have to say about the app’s ease of use.
6. Consider Their Customer Service
Excellent customer service leads to happy customers that don’t even think about switching banks.
Recent surveys have shown high levels of customer satisfaction with three banks that have no brick and mortar branches at all. These are First Direct, which is a phone and online-only division of HSBC.
The other two rated highly by customers are Starling Bank and Monzo, both of which are online only. The survey was based on how happy they keep the customers – a key point to consider when making a switch!
7. Consider High Street Presence
Many retail banks have closed branches and reduced their high street presence in recent years. If you’re opening a new bank account and need to pay in cash regularly, this could be a challenge.
Investigate the options open to you for paying in cash and cheques. You may be able to pay in cheques using the bank’s app, but there may be a relatively low threshold for this.
Other banks allow you to pay in using the Post Office, but again the amount you can deposit may be limited.
8. Focus on Overdraft Charges
Many of us need to dip into our overdraft now and then. If that describes you, then it makes sense to choose a bank that allows you to do this as cheaply as possible.
Some provide an interest-free overdraft for a fixed period, which is ideal if you have a plan to pay it off before it ends. Others allow you an interest-free amount that stays in place as long as you have the account.
Make Switching Banks a Rewarding Experience
Opening a new bank account and closing a bank account may be things we don’t do very often. But follow these tips and a bit of homework, and switching banks will be easier than you think. Make a canny choice, and you should find that you’re better of by switching!
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