There's never been a better time to switch bank - the 10 need-to-knows
Banks are rarely mentioned in glowing terms. Whether for PPI mis-selling, market-rigging or allegations of aiding tax avoidance, they have a bad name. So it's simple.
If your bank's a b*****d, don't bitch, just switch.
Yet in the last year, only 2% of accounts were switched. Thankfully, you can do it right now, and it's quick and easy for most. Here are the 10 need-to-knows (incl our latest bank customer service index).
Seven-day switching means it's mostly no hassle. Seven-day switching is now almost 2yrs old. Within seven working days, your new bank will.
- Switch your direct debits and standing orders for you.
- Close your old account & ensure all payments to it go to the new one.
Earlier this year, we did a snap Facebook poll on switching - 82% who'd switched using 7-day switching found it 'easy and hassle-free'. Only 4% had problems. And we often get emails such as Keith's: "Switched to Halifax. Very easy, good service, excellent benefits, £100 paid quickly plus £5/mth."
What counts as switching to get the perks? Full account-by-account info in Top Bank Accounts. For most below, to get the perk and fee-free banking, you must switch using the bank's switching service and.
a) Pass a credit check, though these aren't normally too harsh.
b) Most require a 'min monthly deposit'. In reality, it's just how they ensure you pay your income in. A £500/mth pay-in = £6,000/yr salary. If this may be tricky for you, see point 4 .
c) Many require you to have two or three direct debits/standing orders.
Ending. Free £240 for switching. Some banks want you so much they pay you to switch, and this bribe is tax-free. Here are the main players.
- LAST CHANCE. Free £120 + £120 to save: HSBC Advance gives £120 (apply by Mon), plus £10/mth for one year to ISA savers too.
- Free £150: Clydesdale's* Current Account Direct pays the biggest one-off switching bribe. It also pays 2% AER variable interest on up to £3k.
- Free £100 + No. 1 service: First Direct* also offers a £250 0% overdraft and 6% linked savings.
- LAST CHANCE. Free £100 + 5% interest: To get the £100, apply for the TSB* Classic Plus by Tue 1 Sep & get 5% AER variable on up to £2,000 (worth c. £100/yr pre-tax).
- Free £100 + £5/mth: Halifax Reward* also pays you a flat £5/mth (after basic tax) if you're in credit.
- Free £100 + £25 to charity: Co-op* gives £25 to one of seven charities.
- Free £100 M&S gift card + £10 Dine In voucher: M&S Bank* also has a £100 0% overdraft and linked 6% regular savings.
Top for savings interest: 3% on £20k or 5% on £2k. The alternative to suck in customers, rather than cash bribes, is to pay loss-leading interest rates for those in credit. As with normal savings, interest is taxed.
- 3% interest + up to 3% cashback: Santander 123* pays 3% AER variable interest if you've £3,000 to £20,000 in it - almost double the best-buy normal easy-access savings. Couples can open one each and a joint one, provided they meet all the criteria, so that's a max £60,000 between two. No other easy-access account pays well on anything close to that.
There's a £2/mth fee, but for most that's easily covered by the cashback it pays on direct debits: 3% on mobile, phone & b'band; 2% energy; 1% water, council tax & Santander mortgage payments. As Hannah tweeted: "£260 cashback yearly. Mortgage, broadband, phones, TV, utilities." Alternatively.
- Earn 4% on £4,000-£5,000: Club Lloyds* pays 4% AER variable.
- LAST CHANCE. Earn 5% on up to £2,000 + £100: TSB* pays 5% AER variable and gives £100, though only till Tue 1 Sep.
- Get £5 each month you stay in credit (+£100): Halifax Reward* pays this regardless of how much you have. As it's after basic-rate tax, it beats TSB for most averaging under £1,500 in their account.
- Saving monthly? Two free £100 accounts, First Direct* & M&S* (free gift card), have linked 6% regular savers for saving up to £300 & £250/mth.
Can you open more than one for large sums? Yes, but it's tricky. For how to combine top bank savings, see the 5% Savings Loophole .
Free £100 for switching and you needn't pay in owt. Many with low or uncertain incomes tell us they worry about banks' 'minimum pay-in' terms. This doesn't mean you must be in credit, only that you need to pay in a set amount. It's banks' way of ensuring your income/salary goes through the account. Eg, £1,000/mth equals a £13,200/yr pre-tax salary.
M&S Bank*. which gives a £100 M&S gift card + a £10 Dine In voucher for switching, a £100 0% overdraft & linked 6% savings, is the only top pick with no minimum pay-in (though you need 2+ direct debits). Here's what each bank requires:
- £1,000/mth pay-in (£13,200/yr): Clydesdale* and First Direct* (With First Direct, you can get it with less, but there's a £10/mth fee.)
- £1,500/mth pay-in (£22,000/yr): Club Lloyds* (£5/mth fee if less.)
- £1,750/mth pay-in (£26,400/yr): HSBC Advance
Can I jemmy the pay-in? Usually. The rules say you need to pay in a set amount from external sources. So let's say you want a £1,000 pay-in but only have £500 coming in. Get the £500 paid in, withdraw it either as cash or to another bank, then pay it back in, and BINGO, you've qualified.