There are 54 million current accounts in the UK, and they are big business for the banks. According to research from the Alliance & Leicester, six out of ten adults have never switched their current account and 84% said they have no plans to do so over the next twelve months. The banks know that once they’ve got your custom they are likely to keep it and since you seem to be unlikely to move elsewhere, offering competitive rates for current accounts is not a priority.
The big four banks – Barclays, HSBC, the Lloyds Banking Group and the Royal Bank of Scotland, which owns NatWest, control more than 70% of the current account market. If their standard current accounts generally have poor rates of interest (in the case of Barclays and HSBC, no interest at all) and their authorised overdraft rates are relatively uncompetitive, why do so many current account customers remain with them?
It is becoming easier to switch financial products and we are becoming better at shopping around and finding better deals, but switching our current account provider seems to lag behind. Perhaps in the current economic climate we are scared to change our bank, either because of long-term concerns about the new bank being a safe haven for our money or because we think that in the short-term, during a switch-over, standing account arrangements, credits and debits could go wrong.
The current account switching process has become easier. Many banks now have dedicated switching teams who ensure the transfer process runs smoothly and, once they have a signed switching mandate and basic information about you, your existing current provider and any sources of incoming funds, including salary, do all the hard work for you. They will check with you that all the direct debit, standing orders and credit arrangements and even overdraft facilities that you require, are put in place. Most will ensure that during the transfer, which can take between four and six weeks to complete, no charges are incurred, due to the process, if for example, payments in are delayed whilst direct debits are not.
There are three possible reasons why we do not switch a current account for a better deal – loyalty, which the banks count on and may be misplaced; being locked-in, which we think we are, but are not; and laziness – it’s one of those things which might be a hassle and we just can’t be bothered to do!
If you want to find out more or need advice about switching your current account, contact one of the team who will be happy to help.
