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; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
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

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    As in 1942, Germany must show restraint over Greece

    As in 1942, Germany must show restraint over Greece

    Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
    Britain's widening poverty gap should be causing outrage at the start of the election campaign

    The short stroll that should be our walk of shame

    Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
    Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

    Homeless Veterans appeal

    The rise of the working poor: when having a job cannot prevent poverty
    Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

    Prince Charles the saviour of the nation?

    A new book highlights concerns about how political he will be when he eventually becomes king
    How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

    How books can defeat Isis

    Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
    Judith Hackitt: The myths of elf 'n' safety

    Judith Hackitt: The myths of elf 'n' safety

    She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
    The open loathing between Barack Obama and Benjamin Netanyahu just got worse

    The open loathing between Obama and Netanyahu just got worse

    The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
    French chefs get 'le huff' as nation slips down global cuisine rankings

    French chefs get 'le huff' as nation slips down global cuisine rankings

    Fury at British best restaurants survey sees French magazine produce a rival list
    Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

    Young carers to make dance debut

    What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
    Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

    Design Council's 70th anniversary

    Four of the most intriguing prototypes from Ones to Watch
    Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

    Dame Harriet Walter interview

    The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
    Art should not be a slave to the ideas driving it

    Art should not be a slave to the ideas driving it

    Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
    Bill Granger recipes: Our chef's winter salads will make you feel energised through February

    Bill Granger's winter salads

    Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
    England vs Wales: Cool head George Ford ready to put out dragon fire

    George Ford: Cool head ready to put out dragon fire

    No 10’s calmness under pressure will be key for England in Cardiff
    Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

    Michael Calvin's Last Word

    Time for Old Firm to put aside bigotry and forge new links