Switching bank accounts: which is the best deal?

Working out which account is best can prove a big headache so Andrew Hagger has researched which accounts are strongest in each different area

Click to follow
The Independent Online

Figures from the Payments Council reveal that 1.16 million people moved banks in 2014, up 120,000 on the previous year but still disappointingly low, with most people sticking with their existing provider.

Santander, Halifax and Nationwide Building Society are currently winning the biggest share of the UK's current account switchers while Barclays and NatWest are losing the most customers to rival current account providers.

Even with the new faster switching rules and switch guarantee in place, people are confused about which account to choose and are scared that they may end up with a product that isn't any better than the one they already have.

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 prove a big headache.

The dilemma for consumers is that no two accounts are the same, and the difficulty of trying to compare the different rates and charging structures is probably one of the major reasons that customers stay and put up with a below-average service.

There is not one bank account that works out as the best for everybody. It's more about weighing up the individual elements.

For some people a low cost overdraft will be the priority, while for others it will be 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 different area.

If it's a cheap overdraft that's most important, it's worth considering First Direct (first £250 interest free) or M&S Bank (first £100 free).

For those seeking interest on credit balances or reward for their custom, for balances of £2000 or less consider Halifax Reward or TSB Classic Plus, and for £3,000 take a look at Tesco Bank.

Lloyds Bank 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 competitive 3 per cent gross up to balances of £20,000.

While some people may be put off the Santander 123 account because of the £2 monthly fee, remember that it also pays cashback on your utilities direct debits, which in many cases will more than offset that cost.

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

Picking the wrong bank when it comes to using debit cards overseas can cost you a lot more than you'd imagine.

For many people there is more money to be saved here than in any other area of a bank account.

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

Yet for others it's not the nuts and bolts of the account that concerns them, but the ability to talk to a human being at a UK call centre and to receive a good level of customer service.

Consistently top performers for service continue to be First Direct and Co-operative Bank.

If you think it's time you gave your bank the elbow, do your homework and pick an account that reflects the way you run your finances, rather than being swayed by short-term incentives.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk

Looking for credit card or current account deals? Search here

Comments