How to pick the best current account

The slew of incentives to switch banks can be confusing. Joia Shillingford offers tips on how to untangle the offers

Major banks and building societies are offering up to £300 - or other incentives like free overdrafts or good savings rates – if you switch your current account to them. Why are they waging a price war for your business, what are the best offers and what strings are attached?

Click HERE to view 'switching incentives' graphic

The emergence of new banking players such as Metro Bank and Virgin is shaking up retail banking. Besides that, banks have always been keen to acquire new current accounts as they see them as the gateway to a customer's personal finances.

Andrew Hagger, of price comparison website Moneynet.co.uk, says: "The deals banks are offering will be seen as loss leaders. Once they have your current account, they may be able to sell you a pension in the long run."

Promises, promises

Among the best incentives for switching accounts is HSBC's offer of 6 per cent interest on balances of up to £2,500. First Direct, which has a good reputation for customer service, is offering £100 if you switch, plus the possibility of another £100 if you are not happy with their customer service in the first six months.

Halifax pays £100 upfront, whereas with many of the other cash offers the customer receives the money after three months once they have paid in the monthly amounts required.

Spanish-owned bank Santander has had its offer available for a while. They call it 300, 200, 100. To qualify for £300, you must already have a mortgage with Santander and switch £10,000 of savings plus your current account to it. For £200, you must already have a mortgage with it and switch your current account. And for £100, you need to switch just your current account to Santander.

Not all lures come in the form of cashback. Some financial institutions simply offer above-average rates on savings or below-average rates on loans, such as 0 per cent on your overdraft once you have switched your current account.

Sometimes there are incidental benefits to switching accounts. In doing so, you may leave a bank whose customer service you are not happy with – the usual reason for changing accounts. Or it might make you take a long, hard look at your finances; not a bad idea at the beginning of the year.

There may be fringe benefits. John Lord, 63 and his wife Angela opened a joint Privilege Premier account with The Co-operative Bank last October. He says: "My wife and I had banked with NatWest for years and stumbled across the Co-operative Bank's Privilege Premier current account when looking for car insurance. We noticed that the account came with comprehensive travel insurance, mobile telephone cover and RAC breakdown. Combined with the £200 switching offer, that made us think switching would be a good idea.

"We found the process really easy and have no intentions of leaving the bank now we've received our £200."

The problems

Rachel Springall of Moneyfacts.co.uk says: "When choosing a current account, customers need to decide its main purpose – whether it is for earning interest, or an overdraft they can dip into at low cost – as well as considering the incentive package."

Also worth taking into account is that some banks have started to add steep extra charges for minor items, rather in the manner of budget airlines. One example is the £5 that Clydesdale Bank charges for a duplicate statement, up from £2.

Bear in mind, too, that special offers on savings or loans tend to end after 12 months, so work out which of the accounts will give you the best combination of interest, convenience and low charges in the long run.

It isn't always obvious and you may need to look at the terms and conditions. For example, check what the unauthorised overdraft fee is.

Transferring accounts

Once you have decided to move, the good news is that switching accounts has become easier. "A lot of banks have dedicated switching teams in place," says Mr Hagger. Direct debits can usually be switched across automatically but you will have to inform your employer and other people who pay money into your account that you have moved.

"Some people are reluctant to change because things weren't so slick a few years back ," says Hagger "Nevertheless people are going to have to go through some minor inconvenience, such as having to get new cards and PIN numbers and learn a new layout of internet banking."

Ms Springall urges those who have found a new deal that suits their lifestyle or who were planning to change current accounts anyway, not to wait too long. She says: "Switcher offers tend not to stay around for long, so customers need to consider whether it's a good time to move and, if so, act quickly."

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Suggested Topics
PROMOTED VIDEO
Arts and Entertainment
Babysitter Katie and Paul have terse words in the park
tvReview: The strength of the writing keeps viewers glued to their seats even when they are confronted with the hard-hitting scenes
News
i100
Arts and Entertainment
American singer, acclaimed actor of stage and screen, political activist and civil rights campaigner Paul Robeson (1898 - 1976), rehearses in relaxed mood at the piano.
filmSinger, actor, activist, athlete: Paul Robeson was a cultural giant. But prejudice and intolerance drove him to a miserable death. Now his story is to be told in film...
Sport
England’s opening goalscorer Alex Oxlade-Chamberlain battles with Scotland’s Charlie Mulgrew
FootballEngland must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Life and Style
Make-up artists prepare contestants for last year’s Miss World, held in Budapest
fashion
Sport
Wigan Athletic’s back-of-the shirt sponsor Premier Range has pulled out due to Malky Mackay’s arrival
Football
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Carlton Senior Appointments: Director, Private Bank - San Francisco, CA

    $175 - $200 per annum, Benefits: full benefits: Carlton Senior Appointments: P...

    Carlton Senior Appointments: San Diego, CA – Tier 1 House - Senior MD FA

    Not specified: Carlton Senior Appointments: Senior MD Financial Advisor - San ...

    Day In a Page

    US immigration: President Obama ready to press ahead with long-promised plan to overhaul 'broken system' - but will it get past a Republican-controlled Congress?

    Immigration: Obama's final frontier

    The President is ready to press ahead with the long-promised plan to overhaul America's 'broken system' - but will it get past a Republican-controlled Congress?
    Bill Cosby rape allegations explained: Why are these allegations coming out now? Why didn’t these women come forward earlier? And why has nobody taken legal action?

    Bill Cosby rape allegations explained

    Why are these allegations coming out now? Why has nobody taken legal action? And what happens next for the man once thought of as 'America's Dad'
    Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain

    You know that headache you’ve got?

    Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain
    Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?

    Scoot commute

    Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?
    Paul Robeson: The story of how an American icon was driven to death to be told in film

    The Paul Robeson story

    How an American icon was driven to death to be told in film
    10 best satellite navigation systems

    Never get lost again: 10 best satellite navigation systems

    Keep your vehicle going in the right direction with a clever device
    Paul Scholes column: England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil

    Paul Scholes column

    England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
    Michael Dawson: I’ll thank Spurs after we win says defender as he prepares to return with Hull

    Michael Dawson: I’ll thank Spurs after we win

    Hull defender faces his struggling former club on Sunday ready to show what they are missing. But he says he will always be grateful to Tottenham
    Frank Warren column: Dr Wu has big plans for the professionals yet he should stick to the amateur game

    Frank Warren column

    Dr Wu has big plans for the professionals yet he should stick to the amateur game
    Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

    Terror unites Jerusalem after synagogue attack

    Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
    Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

    'How do you carry on? You have to...'

    The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
    Isis extends its deadly reach with suicide bombing in Kurdish capital

    Isis extends its deadly reach with suicide bombing in Kurdish capital

    Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
    Underwater photography competition winners 2014 - in pictures

    'Mysterious and inviting' shot of diver wins photography competition

    Stunning image of cenote in Mexico takes top prize
    Sir John Major: Negative West End portrayals of politicians put people off voting

    Sir John Major hits out at theatres

    Negative West End portrayals of politicians put people off voting
    Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

    Kicking Barbie's butt

    How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines