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Could you save £70 by switching bank?

How long have you been with your current account provider? Research by the Competition and Markets Authority (CMA) has discovered bank customers could save an average of £70 a year by switching their current accounts to another provider.

If you are often overdrawn, you may find you could save even more money. In fact, the CMA found that heavy overdraft users could save as much as £260 per year.

Despite this, 57% of us have stayed with our banks for more than 10 years. Perhaps even more surprisingly, 37% have stuck with our accounts for more than 20 years.

With the potential to save so much money, what’s stopping you switching?

Switching bank accounts – easier than you thought?

According to the CMA, bank customers fear that switching their current account to a new bank will be complicated, time-consuming and risky.

But it doesn’t have to be.

Banks and building societies offer a free seven-day Current Account Switch Service. It’s backed by a guarantee that means you’ll be refunded any interest and charges on your old and new accounts if anything goes wrong.

This seven day period doesn’t include weekends or Bank Holidays, but means you could have a brand new bank account in just over a week.

All it takes is five simple steps.

  • Once you’ve chosen a new account, the new bank or building society will ask you to fill in two forms: a current account switch agreement and an instruction to close your old account
  • You pick a date when you want the switch to happen. This has to be at least seven working days after your new account is opened
  • Your new bank will arrange for all your incoming and outgoing payments to be moved to your new account
  • You can carry on using your old account up until the day of the switch. Your old account will then be closed
  • Any payments accidentally made to your old account will be redirected to your new account for 36 months, so there’s no need to worry about missing payments

 

How can you pick the right bank account?

But how do you know which account is for you?

A lot of this is to do with how you manage your money.

For example, if you regularly spend more money than is in your account, choose one which will give you an agreed overdraft limit without charging fees or with a low interest rate.

If you never go into your overdraft, you may be more interested in looking at the interest rates on your account.

Sometimes banks offer incentives for switching, such as a cash sum. Make sure you look beyond the short-term benefit of these though and consider whether they are really right for you.

 

 

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