Five million expected to switch current account
As the new seven-day current account switching scheme launches on Monday, five million people are expected to switch in the next 12 months, according to analytics company SAS.
Two in five current account holders said they wouldn't switch if they felt the new service was too time consuming.
However, as from Monday, providers will have to open new accounts within seven business days.
Matt Sanders, banking expert at Gocompare, said the new service is great news for customers. "It will bring down the barriers for people to move accounts and should make the whole experience hassle free."
Sanders believes the ease at which consumers will be able to switch should bring about an improvement in customer service. "It will, hopefully, be a wakeup call to the banking sector that if a customer isn't happy with the service they receive they are more likely to speak with their feet and change providers."
The majority (57%) of current account holders feel the UK's banks are failing to improve customer service, and one in four don't think any bank are the best at providing customer service.
To encourage consumers to switch, banks have launched new incentives to try to reel in new customers. Both First Direct and Halifax are offering switching bonuses, of £125 and £100 respectively, and RBS, Santander, and Halifax have launched cashback debit cards that offer up to 20% money back on purchases in certain shops.
However, Sanders warns consumers to ensure they know what they are signing up to when getting a new current account. "Although the incentives to switch seem attractive it's really important to check the terms and conditions. In some instances you might have to hit a certain credit level for a defined amount of time, or you might have to pay a monthly fee for an account."
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.