We use our current accounts far more than any other financial service, yet our bank accounts are also the financial service that offers the least competitive rates.
You would never accept a savings account that paid less than 1% interest or a credit card that charged you 19% for borrowing money (I hope), so why drop your standards when it comes to your current account?
It’s your money, and you should make sure all of it is working as hard as possible for you, not your bank. And with the competition for current account customers intensifying, the incentives for switching are higher than ever.
If you’re still not convinced, here are five good reasons to switch your bank account:
Get a high credit interest bank account
#1: Earn more interest
The average High Street current account pays interest at an insulting 0.1% AER. Put another way, if you kept £1,000 in your account for a whole year you would earn yourself a shiny £1 for your troubles.
Thankfully not all current accounts are this poor. In fact, recent research found that customers with a healthy balance could earn over £180 interest by switching accounts.
Probably the best option at present is the Alliance & Leicester Premier Direct Account, which offers an impressive 8.5%. But as with everything in life, there’s a catch. The rate is only valid for the first £2,500 you save (everything after that only earns at 0.1% AER), and it falls after one year to 1% below the base rate, currently 4.25%.
It’s fair to say that credit interest is not as important on current accounts as it is on savings products, as most of your significant outlays come early on in the month, meaning only a small portion of your money actually earns interest. But at the end of the day it’s your money and you should be earning decent interest on it.
Get a high credit interest bank account
#2: Lower overdraft
Having an overdraft facility on your current account can prove essential some months. The problem is some banks charge you a hefty rate of interest for this – Lloyds TSB is one of the worst offenders, with an 18.9% rate.
According to Moneyfacts, customers who regularly dip into their overdraft could save over £130 in charges, so there’s certainly a strong incentive for switching.
The Premier Direct current account is again ideal for this, charging 0% interest on authorised overdrafts for the first 12 months. After that time, the 0% overdraft continues but a usage fee of 50p a day (£5 max per month) applies.
Another option is the HSBC Bank Account Plus, which charges 8% EAR for the first year. Unfortunately it rises to 16.1% thereafter, so it gets a little more expensive long-term for those who regularly go overdrawn.
Get a low overdraft bank account
#3: Get loads of incentives up front
Current accounts might not make much money for banks, but they are extremely important to them, as they open the door to selling you numerous other products.
If you are in the market for a savings account, the first place you will look is ‘your bank’, and only if their rates are unacceptable will you look elsewhere. So in order to lure you into taking a current account with them, banks are offering higher incentives than ever before.
And we’re not just talking higher rates: First Direct promises to pay you £100 for choosing its current account, and a further £100 if you leave between six months and a year later.
Alliance and Leicester will give both you and a friend £25 for recommending an account. Keep an eye out for these attractive offers, but make sure you read the fine print before signing up - there’s little point in getting paid £100 if the account costs £10 a month to manage but offers no incentives.
Get a low overdraft bank account
#4 Switching is getting easier
A few years ago, switching mortgages was seen as such a massive undertaking that people were put off despite the savings on offer. Now changing deals is as simple as filling out a couple of forms, and it’s become common place.
And it’s the same with current accounts Banks want to attract more customers, but to do so they must make the switching process as seamless as possible. To achieve this, they have set up dedicated teams to take care of almost every aspect.
Get a high credit interest current account
#5: Don’t put up with shoddy service
While we are all-too familiar with the dreaded call centre woes, it seems banks’ online customer service is no better.
A recent survey by IBM found that over half (53%) of UK banks are failing to answer online customer queries, either by providing a wrong answer or none at all. A further third (35%) don’t provide an email address on their website, while 18% did not reply to an email enquiry at all.
If your bank is not offering you an exemplary service, then you should leave. It’s as simple as that.
Get a premium current account here
