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There are many reasons why you should consider switching bank accounts. You may be encouraged to move by online fraud problems, such have recently hit Tesco Bank or that customers of NatWest and RBS have had to endure several times. But there’s a much more powerful reason to switch – you could end up better off. That’s because there are hundreds of pounds of savings on offer, either through lower charges, or getting interest on your cash if you’re lucky enough to have a credit balance.
So, what’s stopping you switching? Do you have feelings of loyalty to your bank? If so, that’s totally misguided. It’s been many years since banks were trusted financial advisers, on the side of consumers. For the last few decades, banks have been profit-hungry businesses eager to squeeze every last penny out of hard-pressed customers. Why do you think it is that some charge so much to those who go into the red? Surely a decent and moral business would realise that it’s when people go overdrawn that they need the most help to get their finances back on track. Struggling folk don’t need to be slapped with outrageous charges and exorbitant interest, but that’s exactly what most banks do. Why? Because they care more about making profits than helping customers.
Surely a decent and moral business would realise that it’s when people go overdrawn that they need the most help to get their finances back on track.
Bear in mind that in the last decade banks were responsible for the biggest-ever misselling scandal to hit the UK when they flogged millions of unsuspecting people useless and expensive payment protection insurance. The bill for compensating all their victims has so far cost the big banks more than £30billion.
In short, your bank has no loyalty to you, so you should have no loyalty to it. Instead, you should focus on making the most of your money and finding the best deal for you. I can’t tell you what that is, you need to find out for yourself. To do that you need to be honest about how you use a bank account. Are you always in the red? Or do you keep a healthy credit balance? Seek out the account which has the lowest overdraft charges if you’re the former, and find the highest interest-paying account for the latter. If you’re a really savvy spender, you could even look for an account which pays cashback, although check carefully on the deal as some major banks are busy reducing the value of their offers.
You can find tables of the different offers at moneyfacts.co.uk.
You should focus on making the most of your money and finding the best deal for you.
If the reason you haven’t switched is that you think it’s too much bother, think again. It may take a little time to find the right account, but once you’ve done that then switching should be simple. Banks have all signed up to a seven-day switching agreement and if they fail to switch you in seven days – or mess up your direct debits or standing orders – they must compensate you. You simply need to contact your chosen bank and hand over your details, then they should be able to do the rest.
Soon after that, you should be feeling the financial benefits of lower charges, higher interest, or even cashback when you spend. The only question is, what will you do with that extra money?
Simon is a money writer and broadcaster. Former personal finance editor at The Independent, he also helped families make better financial decisions on the BBC1's Right On The Money.