IS your current account up to scratch? If not, switching might be more worthwhile than you think
It’s easy to assume it’s not worth your while switching your current account.
After all, there are so many different charges to weigh up, and many current accounts don’t charge a monthly fee in any case, so why bother?
Well, new findings from the competition watchdog have revealed why we should be concerned about the deal we’re getting.
The Competition and Markets Authority (CMA), which is part-way through an investigation into the banking sector, has found that current account customers could be between £70 and £260 a year better off by moving to a deal that really suits their needs.
The watchdog found that by switching to the cheapest personal current account product, customers would save £70 a year on average.
People who often use an overdraft could be even better off by moving to another deal, the CMA found.
Overdraft users could save, on average, £140 a year - while those who use their overdraft heavily would be around £260 a year better off.
While overdraft users tend to have the most to gain from switching, they’re also often the most reluctant current account switchers.
This might be because they’re worried about settling their debt with their existing provider or that another bank would not allow them to have an overdraft of the same size.
Even if you have a current account that doesn’t charge a monthly fee, it’s wrong to assume that means it’s “free”.
In reality, you could be losing out because you’re paying more than you need to in overdraft charges, or you’re not making interest on a balance that you could be getting if you shifted your money elsewhere.
Current accounts are big business for banks, which use the relationship they have with their customers to cross sell them other products.
Personal current accounts generated revenues of around £8.7 billion in 2014, according to the CMA.
The watchdog is expected to produce a full report on the market next spring.
:: In the meantime, if you are considering switching, how can you go about it?
A current account switching scheme was introduced in 2013 to make the process easier.
Under the scheme, the new bank or building society you move to transfers all your outgoing incoming payments from your old account, to your new one, so you don’t have the hassle of doing it yourself.
You can choose the date you want to switch and the process will take up to seven working days.
The new current account provider will be held responsible for managing the switching process in full, meaning there is a single point of contact if any problems crop up.
A guarantee under the scheme also means that if anything goes wrong, you should not be left out of pocket as a result and will be reimbursed for any charges or lost interest.
Under the switching scheme, your old bank or building society account closes automatically after you make the move.
Any payments that continue to be made to, or collected from, the old account will be automatically redirected to your new account for 36 months.
:: So that’s made the process of switching easier, but how do you know if you might be better off changing your provider?
Well, major current account providers have signed up to a Government-backed service, launched in March, that enables current account customers to see in pounds and pence exactly how much better off they could be by switching provider.
The “midata” current account switching tool is available on price comparison website Gocompare.com.
People using the tool need to log on to their own online banking and click the midata button to download 12 months of their statements.
They will need to upload the information to Gocompare’s website.
To protect people’s personal details, the information is encrypted and data is not stored.
The tool will present the consumer with a table, showing in pounds and pence which accounts could better suit them.