Money Insider: Consumers in no rush but an itch to switch banks accounts will come

 

Figures released this week by the Payments Council showed that around 89,000 people have switched bank accounts since the enhanced switching service and guarantee was introduced last month.

That number is up by around 10 per cent on the same period last year, so despite the big advertising drive and joining incentives on offer from the banks, it's been a fairly muted start.

Some of the price -comparison sites have been boasting of a sharp increase in the number of visitors to the current account sections of their websites. However, the actual number of completed switches suggests that many consumers are still merely at the browsing stage.

It hasn't helped that some media outlets have done their best to put a spanner in the works by digging around for isolated and obscure cases where the transfer timescale of seven working days hasn't been met.

I think it's going to be slow but steady progress and that numbers will increase when people hear from friends or family that transferring their bank account was a simple, speedy and rather painless transaction – and that they wish they'd made the move years ago.

One of the major obstacles that is yet to be addressed is helping consumers work out which is the most suitable current account based on the way they usually manage their day-to-day banking.

There's a baffling array of overdraft charging tariffs to consider for those who dip into the red, and a range of credit/reward options for people who always maintain a credit balance, so it's no big surprise that hordes of people haven't rushed to switch providers in the first four or five weeks.

With all the price hikes in the energy market during the last fortnight, it's highly likely that consumers have been more focused on finding a cheaper gas and electricity tariff than a new bank account.

One of the aims of the improved switching service was to increase competition in the market, and more evidence that this is happening was provided this week as Yorkshire Bank/Clydesdale Bank unveiled details of a very competitive new current account.

The new Current Account Direct offers attractive terms for both overdrafts and credit balances.

Credit interest of 4 per cent is paid on balances up to £3,000 until March 2015, at which time the introductory rate is reduced to 2 per cent – still much better than many of the instant access savings accounts currently available.

To break this down into hard cash terms, if you maintained the maximum £3,000 in the account, a 4 per cent rate would earn you £96 per year after basic-rate tax. When the rate dropped to 2 per cent, your reward would be £48 per year or £4 per month.

Some people will point to the Halifax Reward account, which pays £5 per month net as long as you remain in credit. If you go overdrawn, however, the daily fee is very expensive when compared to the new Yorkshire/Clydesdale offering.

The interest rate for agreed overdrafts is 9.9 per cent EAR – by far the lowest around, with some banks charging almost double this figure.

You need to pay in at least £1,000 to qualify for this account, which is designed to be operated via "direct" channels – internet and telephone – although you can still pay in cheques and cash in Yorkshire/Clydesdale branches.

The new switching service has removed the main fears that stopped many account holders changing banks. The service is guaranteed to be swift, all payments are automatically redirected, and if for some reason your account goes overdrawn in the process then there's a promise in black and white that any charges incurred will be refunded.

If you're one of the millions of customers who put up with a sub-standard service or poor deal at your existing bank, there's never been a better time to start afresh with a new provider.

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

News
peopleChildren leave in tears as Santa is caught smoking and drinking
Arts and Entertainment
A host of big name acts recorded 'Do They Know It's Christmas?' in London on Saturday
musicCharity single tops chart
Arts and Entertainment
Steve Backshall has become the eighth celebrity to leave Strictly Come Dancing
tv
News
people
PROMOTED VIDEO
Arts and Entertainment
tvStrictly presenter returns to screens after Halloween accident
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
News
i100
News
Boxing promoter Kellie Maloney, formerly known as Frank Maloney, entered the 2014 Celebrity Big Brother house
people
Sport
Dwight Gayle (left) celebrates making it 1-1 with Crystal Palace captain Mile Jedinak
premier leagueReds falter to humbling defeat
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

    Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

    Reach Volunteering: Charity Treasurer

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

    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...

    Day In a Page

    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible
    Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

    Look what's mushrooming now!

    Meat-free recipes and food scandals help one growing sector
    Neil Findlay is more a pink shrimp than a red firebrand

    More a pink shrimp than a red firebrand

    The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
    Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

    Oeuf quake

    Bill Granger's cracking egg recipes
    Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

    Terry Venables column

    Wayne Rooney is roaring again and the world knows that England are back
    Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

    Abject leadership is allowing football’s age-old sores to fester

    Those at the top are allowing the same issues to go unchallenged, says Michael Calvin