Seven-day switch could see millions change bank account
New switching rules could see one in five change their bank account, according to research from independent market researcher Consumer Intelligence.
From Monday 16 September legislation comes into place that means switching bank accounts can take no longer than seven days.
Figures from Metro Bank suggest the number of people who switch accounts could increase by a massive 90% in the next decade as a result.
In 2012 a modest 1.3 million people switched their current account (according to the British Banking Association, at the end of 2012 there were more than 141 million UK bank accounts in existence), but Metro Bank is estimating this will rising to 2.5 million people in 2023.
But Consumer Intelligence thinks many people will still see little benefit. Its analysis of more than 1,000 adults found 28% saw little point in switching "because most account accounts are very similar". Some 15% said they would be concerned about transferring their direct debits, and 11% are worried they wouldn't be offered an overdraft if they moved their account.
Reluctance to switch
David Black, banking specialist at Consumer Intelligence, says there is a lot of reluctance to change, but many of the reasons that put people off should not do so. "The new rules guarantee that direct debits and payments will be transferred to the new account correctly, for example, putting the onus on the banks to carry out the switch promptly and without error," he explains.
He points out that the research also found that of those who had previously switched accounts, three quarters had done so without any problems and 71% said they would recommend switching to others.
This article was written for our sister website Money Observer
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.