Switching Bank Accounts Could Earn You Up to £220

Many British savers are missing out on hundreds of pounds by staying with the same bank for years. Competitors are offering incentives to switch, with the largest bonus being £220.

Switching bank accounts could earn you up to £220, as several banks compete to change your mind.

Many of us have been with the same bank for years, potentially missing out on hundreds of pounds that rivals are offering us to move to them. Whether it's loyalty, laziness, or fear it'll be a faff that keeps us from switching, banks are competing to change our mind.

According to research from Hargreaves Lansdown, almost two thirds of British savers have been with their bank for more than a decade. The survey found that 34% of British adults have moved their money in the last 12 months.

The Price of Staying Put

Staying put costs British savers around £12bn in missed interest every year, based on analysis of Financial Conduct Authority data. This is according to Simon Belsham, Hargreaves Lansdown's chief client officer, who says doing nothing might be easy but "often leads to poor returns".

Millions leave their cash with the same bank by default and that inertia is worth a fortune to banks, while costing British savers billions of pounds a year. Savers clearly care about rates: when they move their money, the overwhelming reason is to secure a better return. What holds them back is the effort of repeatedly finding, opening and juggling different accounts.

What You Need to Know

Many deals are dependent on conditions such as a minimum amount of money into your account in the first few weeks, or minimum number of direct debits leaving it. Switching banks will show up on your credit report, which is what lenders will look at when deciding how much money you can borrow for a mortgage.

Opening lots of accounts in quick succession could dent your record, but closing an old one may boost your score. If you're planning to apply for a loan or mortgage in the next 12 months, you may want to wait until the deal is done, says Sarah Coles, head of personal finance at AJ Bell.

If you decide to switch, you don't need to worry about individually transferring over every direct debit or bills payment, thanks to the free Current Account Switch Service (CASS). Over 50 UK banks and building societies are signed up.

Tell your new bank your chosen switch date (allow seven working days) and your old account details - and behind the scenes it will transfer payments, move the balance, and redirect incoming payments, such as benefits or salaries. Your old bank will close your account. If anything goes wrong, you'll be refunded any interest and charges made on either your old or new account.

People will need to transfer any recurring card payments, such as subscriptions, manually. Information such as old bank statements won't be accessible after the move, so people might want to download these before they switch.

Note: The source does not provide a comprehensive list of banks offering incentives, but mentions that more than five banks are currently offering incentives to switch.

Source: bbc.co.uk