A record number of customers switched their current account provider in the last three months of 2023, new figures have revealed. We look at when NOT to switch your bank account in this blog. Read on to find out more.
Between October and December, 433,701 people switched using the Current Account Switch Service (CASS) – the highest number since the service launched more than a decade ago.
According to CASS, cash incentives, promotional offers, and mobile and online banking are some of the main reasons for switching.
But there may be some instances where switching isn’t the smartest move. Consumer champions Which? have collated six reasons why.
You need to apply for a mortgage soon
Opening a new bank account can lower your credit score temporarily. This is because banks may do a credit check if the account has an overdraft facility. Ideally, you should spread out credit applications, so if you’re applying for a mortgage or car finance it may be best to wait until you’ve secured this before switching.
It’s also worth downloading the statements you need from your current bank account as they may be difficult to access once you have switched banks, and a lender may need them in the future.
It has no mobile banking or physical branches
Four in 10 people said online or mobile banking was the main reason for switching last quarter, according to CASS. If these factors are important to you, it’s worth checking out what the provider offers first.
Alternatively, if physical branches are more important, a digital bank won’t be suitable. One in five switchers said that the reason they were moving was due to the location of branches.
You have overdraft debt
If the new account offers an overdraft, that you’re eligible for, your existing overdraft debt will be sent from your old bank and you’ll owe the overdraft balance on the new account instead.
If the new provider won’t let you move your existing overdraft across, you can still switch, but you will need to discuss a way of paying off your overdraft with your old bank.
You’re only switching for the cash
Don’t just think about short-term perks, consider things that will impact your experience in the longer term such as the fees and customer service.
If you are tempted by the cash, you could keep your main account for everyday banking and open a new account just for switching. You’ll just have to keep on top of jumping through the hoops required to meet the switching criteria to qualify for the bonus.
You’ve previously switched to the provider
If you’ve held an account with a provider in the past, you’ll still be able to switch, but it might stop you from benefitting from any new switching deals. Many providers say that you can’t have received an incentive from them in the past two years or so.
You must pay for perks you won’t use
If you’re switching to a new bank account with fees, make sure any premium perks that come with the account are worth it.
Some packaged bank accounts have fees as high as £21 a month, which could be a waste of money if you won’t be taking advantage of all the benefits, including travel insurance.