Switching Bank Accounts | comparethemarket.com

A simples guide

Switching bank accounts explained

Switching bank accounts used to be a difficult process and it might seem scary, but you really don’t have to worry about the process anymore. Now all you have to do is sign up with a new bank and they take all the hard work off your hands.

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Switching Bank Accounts Explained

The whole process should take just seven days with most personal accounts, thanks to the seven-day switch agreement that was introduced in September 2013. Simply put, it was too difficult to switch banks and this agreement put the power back in the customer’s hands

If you aren’t already considering switching, are you sure you couldn’t benefit from doing so? We can help you make that call by comparing leading providers for you.

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Why do people switch bank accounts?

If you’re getting everything you need from your bank and you’re happy with the service, you probably won’t want to switch. A lot of people stick with the same bank their whole life, but in doing so you may well be missing out on some great saving/incentives.

Banks need new customers, it’s really that simple. This means that they often offer attractive terms to bring in new customers, the deals on offer can be enticing to say the least. If all you have to do is switch banks to get a cash bonus, better terms or even a gift voucher, that can be all it takes for some people to make the move.

Interest rates have been pinned to the floor for so long that some banks have become creative and offered rates of up to 5% on the first £2000 of savings in a bid to bring in new clients. It’s a smart move to grab a bigger market share at a time when many savers are tired of getting less than 1% return on their money.

You may also have an overdraft and be tired of getting clobbered with charges. Every relationship can sour over time and if you are tired of incurring charges and think your bank’s charges are excessive, you might simply want to review your options.

If another bank will give you an interest-free overdraft as a ‘signing on’ bonus, then it could make good sense for you to switch bank accounts. Of course you should look at the penalties that the new bank will impose, too, as it might simply be a case of the grass being greener on the other side of the fence.

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How to switch bank accounts

So now you know why people do it, but how do you switch bank accounts? Well the good news is that your new bank will do most of the work for you. You need to complete your sign up with two forms of identification and proof of address to make sure you comply with money-laundering regulations.

When you open the account you just have to tell your new bank that you want to switch and they’ll go to work for you . All you’re required to do is fill in the Current Account Switch Agreement and the Account Closure form and then you can even specify a date more than seven working days later and the banks will deal with the nitty gritty between them.

You do not need to worry about any of this. You just need to do your paperwork at the new bank and then get on with your life. You do not need to know the first thing about how to switch bank accounts, that’s the point of the new rules.

Just continue to use your old account until the agreed switch date, by which time you should have a new card and the banks work together to transfer any funds and loans that are included in the deal between themselves. You will just need to acknowledge the confirmation sent to let you know the whole process is complete.

How long will it take to switch bank accounts?

The 7-day switch says it all. It takes a minimum of seven working days to switch accounts and generally a maximum of 10. You may however find that business accounts can take longer to transition across to different banks.

This is the theory at least, in practice it can potentially take a little longer, especially if one of the banks involved in the chain is not signed up to the 7-day switch process that is a voluntary agreement between the banks rather than an actual regulation.

Are there any implications with switching bank accounts?

Of course, switching bank accounts can come with some consequences. Just because you can switch accounts easily, that doesn’t necessarily make it free. Any charges you incur for example missed payments will be covered by the bank. Your previous bank will redirect your payments to your new bank account to try and ensure ‘missed payments’ are avoided – this is often known as the payment redirect service. It is often in place for 36 months but you should check your BACs payments and the bank requirements to ensure you don’t miss any vital information.

Make sure you check everything carefully before making the jump, because you might find you lose a lot of benefits with your former bank.Make sure you are aware of the fees and charges in advance.

You may find that as a new customer to the bank which you have transferred to, you are not yet able to acquire all of their services. This is just another good reason to make sure you do your due diligence before signing up.

There could be problems with direct debits and even getting paid from your employer in the first month, so be sure to make plans just in case your account isn’t up and running in time and that you have covered all your bases.

Whilst we have touched upon some of the risks associated with changing banks, you can source some fantastic incentives and protect yourself by taking the time to review your decision. Banks are competing for your business, so let them work a little harder and provide you with more benefits.

You can compare some of the leading industry names in our comparison tables. You’ll just need to work out what level of service and benefits you want from an account and we’ll do the rest for you. So get comparing and see how much you could save!

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