Should I change my bank account?

Have you heard the saying that you are more likely to get divorced than to change the bank account you had on your wedding day?

While we don’t know how true this is, it’s fair to say that as a nation we tend to stick to what we know when it comes to banking. In fact, nearly two in five of us say they only change banks once every 10 years or more (for a fifth of us it’s 20 years or more) and the number of us who switch current accounts has declined overall over the past decade, according to Statista.

But does loyalty pay off with your bank? In the face of the cost of living crisis, we’re all trying to make smarter money decisions, so we spoke to the experts to find out if it’s worth switching bank accounts.

Stick to the familiar

When it comes to the things that keep us from looking for a better deal on our checking accounts, research shows that there are often multiple factors at play. The first is that we are more likely to react to “push” factors. than to “pull” factors; in other words, we are more likely to think about changing banks because we feel dissatisfied with our current bank than about changing to take advantage of it.

“Evidence from the Competition and Markets Authority suggests that people generally don’t switch checking accounts until they have a problem with the one they’re using,” says Nick Hill, financial expert at MoneyHelper . less to gain financially, so people tend to think change is more of a hassle than it’s worth – another bit of administrative life to add to the pile.

“While it can be tempting to put this on the back burner when we’re busy with other things, it’s good to regularly review your finances and see if you’re getting the best deals – this includes reviewing your account. Putting a reminder diary in your calendar every few months is a great way to keep this on track.”

Second, research also shows that because we think of our checking account as a necessity, it doesn’t always occur to us that other accounts might come with frills that we might benefit from.

Moreover, despite initiatives such as the Current Account Switching Service (CASS), which aims to simplify the process of switching (see box on the right), we are more likely to focus on the perceived hassles of switching rather than benefits. These benefits can range from a better banking app (41% of recent users gave this reason why their new account is better than their old one) and better customer service (38%)* to rewards such as money or insurance coverage.

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Consumer psychologist Kate Nightingale says financial uncertainty surrounding the pandemic could also be playing a role. “The pandemic has thrown many of us into deep anxiety and made us turn to familiar brands,” she explains. “But with the cost of living rising, it’s important to ask whether this loyalty is preventing us from switching to a new provider that could help us save money.”

Almost one in five (18%) of us say that due to the cost of living crisis, we are more interested in checking account features, such as overdraft facilities that offer greater financial flexibility. And just over one in 10 (11%) say that as rising inflation puts more pressure on the monthly budget, we want banking services that help us better track our spending**.

Shop for the best deal

If you’ve had an account with the same bank for a while, it’s worth considering whether other account features would better suit your current needs.

“With a range of useful incentives and benefits offered by different checking account providers, it’s so important to make sure you’re getting the most out of your account,” observes Florence Codjoe of comparison site money.co. uk. ‘Does your current account still serve its original purpose? Could you receive better benefits elsewhere? Long-term customers may find they are on an outdated agreement and could get the most out of their finances with another bank.

To check current accounts in the market, price comparison sites such as money.co.uk, MoneySuperMarket or the bank account comparison tool on the government’s MoneyHelper website can help weigh the different options. Here is a summary of some of the main types of checking accounts you are likely to come across in your search to help you:

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High Interest Current Account

If your current account is always very creditworthy, an account that pays you a higher than normal interest rate on the balance could interest you. The interest rates on offer (2.02% was one of the best rates at the time of writing) will not approach today’s high rates of inflation, which means your money will lose value in real terms over time. over time, so this type of savings product is not a substitute for a longer-term savings product.

However, if you intend to hold cash in cash, it might as well work as hard as it can while sitting in your account. Carefully read the details of what’s on offer, as the overall interest rate you’re attracted to will probably only apply to the first around £1,000 in your account, with decreasing interest rates offered on sums over that. amount.

Packaged accounts

If you’re considering a packaged account, which includes a bundle of additional extras (mobile phone or travel insurance and car breakdown insurance are often included) and charge a monthly fee (often around £15), do your research thoroughly to make sure that’s really doing you a good job.

Work out how much you’ll pay in account fees over a year (a £15 a month account will cost £180 a year), then look through your bank statements to find out how much you’ve spent on extras offered with the account in that time frame and compare the two totals.

Do you already have – or could you get – the same level of coverage cheaper elsewhere, through benefits offered by your employer, for example? If insurance or breakdown cover is offered, check the fine print carefully. Does the level of cover offered suit you and are there any exclusions that would apply to you (age limits or exclusions linked to pre-existing pathologies, for example)? Also ask yourself if you really need the extras offered.

If you already have a pre-configured bank account and think you mis-sold it (because you weren’t fully informed of the fees, weren’t able to access certain benefits, or were told that you had to open one to apply for a loan, for example), use this Resolver tool to file a complaint with your bank.

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Cash back

While cashback isn’t a reason in itself to switch bank accounts, it’s a nice perk if offered on an account that ticks the right boxes in other respects. Sometimes cashback is offered upfront as a one-time reward for switching, but on some accounts you can earn cashback on an ongoing basis.

At the time of writing, several banks were offering a £150 discount to switch to one of their accounts through CASS. Check the terms and conditions carefully, as you will usually have to pay a certain amount of money by a certain date to be eligible. Other accounts may offer longer-term rewards such as 1% back on all purchases for a year or up to 3% cash back (capped at a certain amount each month) on customer bills. housework.

Should I change my bank account?

Of course, there’s absolutely nothing wrong with keeping your existing bank account, if you think it still serves your needs well. Likewise, you might find after shopping around for other types of bank accounts that a standard, no-frills, no-monthly-fee checking account is the best option for you.

However, when it comes to your finances, knowledge is power, and it’s always a good idea to regularly compare the offers available on checking accounts.

Is it worth switching bank accounts?

Once you’ve found a current account you want to switch to, the current account switch service should make the process easy. It will transfer all your payments (such as direct debits and standing orders) to your new account for you, as well as incoming money, such as your salary – and it guarantees that this will be done within seven working days and with one change. agreed. Date.

lIf errors are made during the transfer process, you will be refunded the interest you paid and fees incurred on your new and old account accordingly. The service is free and over 40 UK banks and building societies are registered.

*Pay.uk

**Broken