Money Insider: It's easier to switch banks - but which one is best?


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The Independent Online

With the new Current Account Switch Service set to launch on Monday there is hope that more customers will finally have the confidence to up sticks and move their accounts to a new bank.

Too many people have put up with sub-standard service from their bank for too long, because of the difficulty in switching, but now it will be much easier to vote with your feet and switch to an account that mirrors the way you manage your money.

The concern, however, is that even with the new faster switching rules and switch guarantee in place, people still won't know which account to choose and may end up with a product that isn't the most appropriate for their needs.

Although each bank and building society has its own tariff and rate details clearly displayed on its website and marketing literature, working out which account is best can still prove a big headache.

The problem for consumers is that no two accounts are the same, and the difficulty in trying to compare different rates and charging structures is probably one of the major reasons that customers have stayed put.

Of course there is never going to be one bank account that works out as the best for everybody. It is more about weighing up the individual elements of banks and accounts that are important to you.

For some people a low-cost overdraft will be the priority, while others will be looking for interest payable on credit balances or a debit card offering low cost-transactions abroad.

I've carried out some research to try to establish which accounts are strongest in each of the main areas.

If a cheap overdraft is most important, then look at First Direct, Metro Bank or the FlexAccount from Nationwide Building Society.

The Post Office is currently running a pilot in 29 branches across East Anglia with a further roll out of branches expected in 2014. If it keeps the existing tariff as it is; the overdraft rate of 14.9 per cent AER is a very good deal when compared with the rest of the market.

For those seeking interest on credit balances or rewards for their custom, then for balances of £2000 or less take a look at Halifax Reward.

Lloyds TSB with Vantage and Santander 123 are tops for those with balances of £3,000 plus, with the latter being the market leader for balances above £5,000 – paying a very competitive 3 per cent gross on balances of up to £20,000.

If you're seeking a cheap debit card for use overseas then Metro Bank and Norwich & Peterborough Building Society offer this facility free, while Nationwide Building Society charges but is still much cheaper than the main banks in this area.

Picking the wrong bank when it comes to using a debit card overseas can cost you a lot more than you might imagine. For many people there is more money to be saved in this area than in other element of a bank account.

Your two-week summer holiday could easily see you shelling out an extra £50 or more in charges – for most customers that far outweighs the amount of interest you'll earn on your bank account in a whole year.

Yet for some it's not the nuts and bolts of the account that matters; all they really ask is for the ability to talk to a human being at a UK call centre 24/7 and to receive a consistently good level of customer service. Regular top performers for service are First Direct and The Co-operative Bank.

The decision to switch is not something people will undertake lightly and it is essential to choose an account that mirrors the way you run your finances rather than being swayed by short-term sweeteners.

Andrew Hagger is an independent personal finance analyst with

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