There's never been a better time to switch banks

Following the introduction of new rules to make it easier for people to switch current accounts - which most leading banks and building societies are signed up to – it should now take no more than seven working days to move to a new account.

Previously it could take anything up to 30 days for a switch to complete, even longer in some instances.

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Seamless service

Furthermore, the new service promises that anyone switching should experience a seamless transfer as all direct debits, standing orders and salary or pension payments are redirected to the new account.

Once the switch has been completed, for a period of 13 months, any stray payments deposited into the old account will be redirected into the new one. Similarly, demands for payments from the old account will be forwarded to the new bank.

All rather comforting and reassuring. And all better than what prevailed before when mayhem and banking incompetence ruled the waves.

Early days

Although it's still early days, the new 'current account switch service' seems to be encouraging more people to up sticks and move banks or building societies.

According to the Payments Council, which oversees the service, more than 306,000 people moved bank accounts in the last quarter of last year, a 17% increase on the same quarter in 2012. Some 99.6% of these switches were completed within the required seven working days, confirming the new regime is delivering on its promises.

Again, all good stuff, but many people are still reticent to switch as evidenced by the fact that only 58% of people are confident in how the new service works, according to the Payments Council.

Switching incentives

Certainly, the new current account switch service has stirred many of the banks and building societies into action, offering switching incentives to entice new customers their way. At the time of writing, Halifax (part of the mighty Lloyds Banking Group) and First Direct (part of HSBC), were both paying newcomers £100.

Co-operative Bank, desperate to restore its reputation after serious financial challenges, is also giving a £100 'golden hello' to people who switch their current account over to it. It will also make a £25 donation to one of seven charities: Action Aid, Amnesty International, The Carers Trust, Help the Hospices, Oxfam, Water Aid or the Woodland Trust.

Meanwhile, Nationwide is paying £50 to any of its existing customers who persuade friends and family to open accounts.

Credit interest is also an increasing feature of the current account market with the likes of Santander (123) and Nationwide (FlexPlus and FlexDirect) paying interest rates that beat most high street savings accounts. As are account rewards with Santander (123 again) and Halifax (Reward) leading the way.

We are also seeing a little bit more choice in the current account market with the likes of Metro Bank (in the South East predominantly), Handlesbanken and the Post Office joining the fray. Waiting in the wings is Tesco Bank.

Should you be tempted by the cash incentives on offer? Certainly not in splendid isolation. There's no point in switching if your new bank is renowned for its indifferent customer service or it is not prepared to match your existing overdraft facility.

Get a better deal

What's key is that you move to an account that offers you something you don't get already – whether it's credit interest, cash rewards or all-important loving customer service.

I don't think you can go far wrong in opting for current accounts Moneywise readers have recognised as 'trusted' in the Moneywise Customer Service Awards. That means accounts offered by the likes of Co-operative (and its online provider Smile), First Direct and Nationwide.

Happy switching!  

Your Comments

When I joined First Direct I got the hello money. I also opened their Regular Saver. That saving account pays 6% interest. I have also joined Nationwide and this is good for paying in a little extra money to my morgage. I get 5% interest on this current account in my first year. I have got so much more from switching my two current bank accounts. It is so lovely to get to the end of the savings year and see how much money has built up in my First Direct Regular Saving Account. I suggest switch accounts if you can do better elsewhere.