These days, you don't need to be loyal to your bank or building society because it can actually pay to switch banks. So, if you're not satisfied with your current bank, than maybe it's time to explore other options? And the good news is that you can switch banks over and over again.
What types of bank accounts can you switch?
You can switch any account you hold with a financial provider, including:
Current accounts
Packaged accounts
Basic accounts
Joint accounts – providing both parties agree
Student and graduate accounts
Savings accounts
Cash ISAs
How often can you switch banks?
You can switch banks and current accounts as often as you like. But, you might be ineligible for certain joining current account switching bonuses and incentives if you move on too quickly or don’t deposit enough cash before leaving.
It’s slightly different with savings accounts, particularly if you have a fixed-rate savings account. In this case, switching might not be worthwhile as you would have to pay an exit fee or lose some of the interest you’ve earned.
Why would you want to switch bank accounts?
The banking sector is always changing; this week’s best-buy current account might not top the chart in a week, month or year.
For example, your bank might offer an introductory overdraft interest rate of 15% annual equivalent rate (AER) that reverts to 39.9% after a year. If you rely on your overdraft, you would be better off switching to another account with a lower rate. Likewise, if your finances improve and you no longer use your overdraft, you’d be better off switching to an account that pays interest or offers cashback.
And then there’s customer service. One long wait on the phone might be irritating, but if the reason for your call is resolved, you’ll probably think no more about it. But if you persistently come up against a brick wall with a bank that’s making money with your cash, you’ve every reason to look elsewhere.
How soon after opening a bank account can you switch?
Under the Current Account Switch Service (CASS) guarantee, transferring from one current account to another won't take more than seven working days. This means you can start the whole process again after day eight.
However, there are some very good reasons why you shouldn’t switch that often.
For example, if you’re a new First Direct customer, you could be eligible for a £175 joining bonus. But you need to put £1,000 in your new current account within the first three months to receive it.
How do you switch bank accounts?
If you’re keen to switch current accounts, the good news is you can use the CASS system, which covers 99% of UK banks. You can check whether the bank or building society you’ve set your sights on is covered by visiting the CASS website.
When you’re ready to switch, check you’re eligible for the current account you want, then follow these four steps:
Apply online, via the bank’s app, in branch or over the phone. You’ll be asked to provide information about yourself and your finances. You’ll also be asked to present a form of photo ID
Give consent for a credit check. This is to verify that you are not a credit risk if you want an overdraft
Choose a switch date. You can select when your old account closes and your new one becomes active. On this date, your balance, overdraft, Direct Debits, standing orders and incoming payments, such as your salary or benefits, will be set up in your new account
Sit back and wait: Your switch date won’t be for at least seven working days, as the banks need time to process your application. You can continue to use your old account in the meantime, but don’t attempt to set up or cancel any Direct Debits or standing orders
How to switch savings accounts?
The CASS scheme can only be used to transfer current accounts. If the bank account you want to move to is a savings account or ISA, contact the provider you want to move to. You’ll need to fill in a transfer form, and they’ll do the rest.
Warning: Don’t withdraw money from your ISA if you want to switch to a new provider. If you do, you won’t be able to reinvest that portion of your tax-free allowance again.
Does switching banks affect your credit score?
Switching banks will leave a trace on your credit report that shows a financial organisation has been checking up on you. While these traces will disappear from your credit report after a while, it’s one reason why you should think carefully about switching. If you plan to take out a loan or mortgage within the next 12 months, you should avoid frequent switching.
Switching banks often can be even more of a problem if you intend to bring overdraft debt with you, as this will be flagged up on your credit report. Banks and other financial providers may be reluctant to do business with you if they conclude you’re a credit risk.
