High Street Retail Banks are now facing high rise competition with their current accounts. As more and more customers are now switching their current accounts.
The figures show that 802,036 switches have taken place since January 2016, an increase of 3% compared with the same period in 2015. This means that a total of 1.06 million switches have been completed in the last 12 months – up from 1.03 million in the same period a year ago – with 234,359 switches recorded in the last three months alone.
Overall, the switching engine has now seen 3,311,803 successful switches since its launch in September 2013, with an impressive success rate of 99.5% – which means that pretty much all accounts have been switched within the promised deadline of seven working days. Awareness of the service is on the rise too, as by the end of September, 74% of people were aware of the initiative, up by 16 percentage points since 2013.
Similarly, 76% of respondents said it would be easy to switch banks and 73% said it would be quick, highlighting the level of confidence in the service – and given the overwhelming success rate, it looks as though they're right to be so confident.
The figures highlight the growing uptake of the service and its associated guarantee, but a 3% rise is still fairly minimal – surely there are more people dissatisfied with their bank accounts? Some may be reluctant to switch due to loyalty to their current provider, or perhaps a fear that switching will be too complex, something that the success rate will hopefully allay somewhat.
Or maybe you just don't see the point in switching? Well, a quick look at our current account best buys should reveal some benefits – from high interest accounts to those that offer cashback and additional rewards, and even those that come with preferential insurance deals and mortgage rates, the list of potential benefits is vast!
Some may be concerned about the recent high-profile announcements that some accounts will be reducing their benefits over the coming months, such as TSB, which is cutting the interest rate on its Classic Plus account from 5% to 3% in January, while Halifax will drop its £5 monthly reward to £3 from February.
This makes it all the more important to take a close look at your options, whether you're considering switching to these accounts, or have one already and are wondering whether the benefits are still strong enough.
"Clearly in the current environment, these current account perks can not be sustained forever, which is why anyone sitting on the fence as to switch or not must work out if they would be better off by moving right now," explains Rachel Springall, finance expert here at Moneyfacts. "Anyone with an account that is soon to change might want to revisit how they use their account and if the new changes will have a huge effect on them or not."
But all is not lost. There's still interest to be gained from the top-paying high interest current accounts, and they may still prove a refuge in the low-rate environment – after all, they'll certainly pay more than any savings account currently available!
For example, Nationwide is still paying 5% on its FlexDirect on balances of up to £2,500 for 12 months, and Tesco Bank continues to pay 3% on balances of up to £3,000 on its Current Account. So, if you maxed out both accounts – which could be possible if you're organised and can cope with moving funds between accounts to meet their individual criteria – you could still earn £215 in one year!
Being organised is key to the whole thing. Just make sure that you'll earn enough through interest to justify the account, particularly if it charges a monthly fee, and be aware of things like minimum funding requirements or the need to set up direct debits. Remember, too, that it isn't advised to move to an account just for its perks – "it must be a cost-effective choice that suits most needs", added Rachel, so make sure you do the necessary research and you can be confident you're getting an account that fits the bill.
*** Based on MoneyFacts
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