Monzo attracts the most current account switchers for the first time

30 April 2020

Nationwide gained just 14,000 net customers, its worst performance in five years

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A near-record number of people are switching their current account, with Monzo attracting the most new customers for the first time.

The digital-only bank had 20,843 switchers between last October and December, taking the top spot away from Nationwide, according to the most recent figures from the Current Account Switch Service (Cass).

Nationwide came second with 14,959, then Lloyds on 13,243 and Starling Bank with 9,247.

Nationwide had its worst performance since 2015, with the number of people switching to it up by just 6,000 on the previous quarter.

This may be because it was one of the first high street banks to hike its overdraft rate from 18.9% to 39.9% in November last year, ahead of regulatory changes to these fees.

It was also a bad quarter for Halifax, which lost 22,130 customers, its worst performance for six years.

Halifax's sister lender, Lloyds Bank, had its first quarterly net gain since the switching figures were first published in 2014. This is likely to have been caused by its generous £125 incentive to swap current accounts, which launched on 1 October 2019.

Cass says there were 113,037 switched accounts last month, the most since March 2016 and the third-biggest month on record.

Challenger banks such as Monzo and Starling are becoming increasingly popular with people looking to switch their current accounts.

Both banks are good for spending and cash withdrawals abroad and are well rated for customer service by their users.

New overdraft rules

Andrew Hagger, personal finance expert at Moneycomms, says the surge in switching was a result of the banks bringing in new overdraft charges that can top 49%.

Hagger says: “This increase in people moving accounts will have been fuelled by the banks announcing massive hikes to their overdraft charges. Their first quarter figures for 2020 will make interesting reading and show which banks have suffered the most for charging rates of up to 49.9% for agreed overdrafts.”

New regulatory rules mean banks must charge a simple annual interest level for overdrafts, without additional fees and charges.

Fixed daily or monthly charges, and fees for having an overdraft facility, have been banned in a move to make overdrafts simpler and easier to compare.

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