With so many different bank accounts available these days, it’s worth checking to see if you can find a better one - you could save hundreds of pounds with an account that better suits your needs. Whether you’re looking to set up, switch or close your bank account, this guide has all the information you need.
Opening a bank account
Choose a bank account
First things first. Make sure you know what bank account you’d like to open.
How to open a bank account
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Now that you know what bank account you want it’s time to speak to the bank.
You can do this in branch, over the phone or online.
The bank will run a credit check to find out your credit history.
This will tell them, for example, whether you’ve had problems with credit repayments in the past.
You’ll also be asked to provide a:
- Proof of identity (for example, a passport or driving licence).
- Proof of address (for example, a recent utility or phone bill).
If you don’t have any of the above, speak to the bank about alternative documents you might be able to use.
Fee-free basic bank accounts
If banks turn you down for a standard account, you can always apply for a fee-free basic bank account.
Launched in January 2016, these accounts don’t charge fees, don’t provide overdrafts and won’t charge you if a Direct Debit fails.
How to switch bank accounts
Almost all banks and building societies now 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.
During the switch process, you’ll be asked about your current overdraft. As long as you can prove your overdraft limit, for example with a bank statement, your new account might match your current limit.
How to choose a current account
Comparison websites are a good starting point for finding a current account tailored to your needs.
You can start by thinking about some basics.
You’ve often got a positive balance in your account - look for an account that pays a generous interest rate to increase your savings.
You’re often getting charges for using your overdraft - look for an account with lower overdraft fees. Here are some tips for controlling your overdraft.
You can also then look at other features of accounts such as do they offer linked higher interest savings accounts, cashback, switching bonuses.
We recommend the following websites for comparing current accounts:
Go Compare – This also allows you to use the government-backed Midata tool to securely upload your past transactions and get customised current account recommendations.
Money Saving Expert.
Which? – You can use the Which? quality rating to find the banks with the best customer score.
In Northern Ireland, you can also try the Consumer Council Comparison Tool.
Switching bank accounts if you have an overdraft
You can switch using the Current Account Switch Serviceopens in new window, even if you have an overdraft. The service will:
- Switch your current account.
- Move money from your old current account to your new one or if you’re in your overdraft it can move it into the new current account. Your overdraft will need to be agreed with your new bank or building society for it to be switched. Alternatively, they may be able to offer you a way of helping you pay off your overdraft, as long as you meet their normal lending requirements. If this isn’t possible though, you’ll need to repay your existing overdraft before you switch.
- Move all your payments going out (for example your Direct Debits and standing orders) and those coming in (for example benefits or salaries) to your new account.
- Close your old account.
- Make sure any payments accidentally made to your old account will be automatically redirected to your new account.
The switching service takes seven working days. Plus, because of the Current Account Switch Guarantee, if something goes wrong, any interest or charges you incur as a result of any problem with your switch will be refunded.
What do I need to be aware of when trying to switch with an overdraft?
It’s up to the new bank or building society to decide if they’ll accept your overdraft, and different providers will have different rules. They may turn you down if you have a very large overdraft or have been in your overdraft for a long time.
The decision could depend on lots of factors. For example, if you’ve been using an overdraft previously, and have always paid it off, this sends a good signal to your new bank or building society because it shows you’ve been able to pay off debts in the past.
When you find a better account, speak to the account provider to find out if you can get it.
Bear in mind that your credit score is a factor when switching accounts. You’re more likely to get the account you want if you have a good credit score.
Even if you can’t get the new account you wanted you should shop around to find a loan with better rates than your current account.
How do I switch my current account if I have an overdraft?
The steps are the same as with a current account without an overdraft, above.
Make sure you’re getting a better deal before switching your account. Shop around using comparison tables to help find accounts with overdrafts and make sure you check and understand the charges and overdraft rules for each account.
How to close a bank account
You can close most bank accounts whenever you like without being charged a fee or penalty.
It’s usually just a case of getting in touch with your bank.
However, if you’re overdrawn you’ll have to pay off what you owe.
If you’re not using the Current Account Switch Service to shut your account, make sure any Direct Debits or payments are transferred to your new account.
If your bank decides to close your account
If your bank decides to close your current or instant access savings account, you’ll generally be given two months’ notice.
For other accounts, it must give you ‘reasonable notice’, so that you can make alternative arrangements.
The bank can delay the closure if you have made payments that have not yet been taken from your account, for example a cheque or card payment.
If things go wrong
If you’re unhappy about something your bank has done, the first thing to do is to talk to someone at the bank about it.
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