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Switching your bank: the benefits & the ease of the process
Over the past couple of years, there has been a lot of talk about the benefits of switching banks for your financial future. Every 6 months or so, figures are released detailing how many people have switched banks over the last few months.
Recently, the Competition and Markets Authority (CMA) released some proposals to make switching your account easier. These new plans are in response to customers viewing switching accounts as complicated and the banks adding charges in a way that is difficult to understand.
The proposals put forward by the CMA include developing an online comparison app to help customers find the best bank account for them. Also, banks will have to publish information on their customer service feedback on their website. There will be prompts to you from banks when charges increase and text alerts to warn you when you are about to go into your overdraft.
All these proposals will make it easier for customers to bank, decrease the risk of unnecessary charges to customers and promote the simplicity of the bank account switching procedure.
All the proposals are set to come into effect in 2017/18 but in the meantime, what are the benefits of switching your bank account. Find out below:
It is quick and hassle free
The bank account switching process only takes 7 days with minimal effort from yourself. Since the 7 day switching service was introduced in 2013, it has made the process much more efficient. You can visit your nearest branch of the bank you’d like to switch to or in many cases, you can apply online or over the phone.
Simply get in contact with the bank you would like to move to, state your interest and intentions and it will be taken from there. The bank will ask you all the information they need to know and they’ll get on with everything else. All transactions, those in and out of your account, they will move across for you and they will inform your old bank of your decision to leave them. Seven days later, you will have a new account at a new bank with your new card and PIN ready to go.
Improve the interest rate on your account
This is particularly beneficial for savings accounts so you don’t tie yourself down to meagre interest rates. Moving your money to a different account with a different bank offering you a better interest rate is beneficial to you in the long run.
The whole point of saving your money or locking it away in an ISA for many is to gain interest and reap the rewards on it over the months and years. If you don’t think you are getting enough interest and you know you can get a better deal elsewhere, move your savings to an account where you will get a better reward for your investments.
Save money on fees and overdrafts
If you are often overdrawn, you should focus on a bank’s current account overdraft facility when deciding which bank to switch to. You should be on the lookout for a bank that charges you as little as possible for using the overdraft you have been given. However, you should still try to tackle your finances to reduce your time in the red.
Some accounts also charge you a fee for a current account but some current accounts on the market are free. If you can see no benefit to paying the fee for your current account you should probably switch to a free account.
Improve the service you receive
On some occasions, you may simply feel the service you receive from your bank is not good enough. In this case, you don’t just have to put up with this, you can move banks to a provider with better service. There are many banks out there on the market so there will be one to suit your needs and offer you improved service.
Get yourself some benefits – free cash, savings interest, vouchers etc.
Many banks now offer benefits and incentives in order to encourage people to switch to their accounts. When switching first became popular, banks were offering £100 of free cash for you when you switched to them. Since then it has grown to around £150 with some bank account providers.
Providers such as M&S offer gift cards to spend in store while Tesco offers to pay up to 3% interest on up to £3000. There is a wealth of different benefits to be had by switching your account which is a nice added extra.
First and foremost, you should pay attention to the account that offers you the best service and facilities for your needs. But having an extra £150 or £100 gift card is a nice bonus too.
So now you are aware of the benefits of switching your bank account to a provider more suited to your needs. But how exactly does the switching process work?
On day 1, you inform the bank you have chosen to switch to that you would like to open a current account with them. You can do this in branch, online or by phone. They will ask any questions required, forms will be signed and a credit check will be performed on you. If you go in branch, you will need to take some identification, such as a passport and a recent utility bill addressed to you at your current address. Once all this is complete, the switching procedure will begin.
The second day will see your new bank informing your old bank that you have requested to close your account with them. They will also sort out payment arrangements for direct debts, wages and your balance to move across to your new account.
On days 3 to 6, all payments will be switched across and checked thoroughly. Any information required for your new account, such as cards, PIN numbers and account numbers, will be checked and sent out to you for use as soon as the switch is complete.
Your switch will be complete on day 7. Your balance will have been transferred, your payments rearranged to go in and out of your new account and your old bank account will have been closed. You should now have your card, PIN and any other information required with you ready to be used.
And that’s it! It’s a simple process that really could benefit you and your finances in the future. It is something worth looking into if you have never switched banks before and are unhappy with your current provider for whatever reason.
If you are concerned, unsure or just need some help before switching, consult a regulated independent financial advisor (IFA) for free. They can help you with any questions or queries you may have about this before making your decision.