The hassle is being taken out of current account switching with the new 7-day switching scheme, which starts today. Here is how the new system will work.
Switching current accounts is something many of us avoid as it is notoriously stressful. But from today the new 7-day switching scheme is about to make it a whole lot easier.
So rather than stick with a rubbish account that's all take and no give, you can quickly and easily move to ones that offer everything from cashback to interest, rewards points to interest-free overdrafts.
How will the 7-day switch work?
As the name suggests, the main feature of the switching scheme is the guarantee that your current account will be switched to your new bank within seven working days. This includes everything from moving the money over to changing any direct debits and standing orders within that timeframe.
Previously it could take anything between 18 and 30 days, so this is a marked improvement.
There will also be one centralised system which every bank has to follow. Anyone wanting to change current accounts will be able to do so on the date they choose.
Why is it happening?
Traditionally we as a nation don’t like switching accounts. This means most people are stuck with a pretty poor deal from their bank. As banks and building societies rely on this apathy, they rarely offer existing customers anything special. And it’s also harder for new entrants in the market to gain customers.
The hope with the new Current Account Switch Service (to give it its official title) is that we will all feel more empowered to switch banks if we’re not happy and want a better service. New entrants, such as Metro Bank, will also have a better chance at competing with the big high street names.
How will online payments be moved?
All banks will be required to move over online payments. Customers will also be given a guarantee that they will be refunded any interest and charges made on either account because of the switching.
What if the money is taken out of the old account after the switch?
The new service will make sure these are redirected to the new account for 13 months and the person trying to pay in or out the money will be notified of the changes.
Who is in charge when you switch?
Your new bank is the main port of call for the switching service. It will manage any problems or questions you have so you won’t have to go back and forth between both banks.
So if you decide to leave a bank, you won’t have to call them up to say you're leaving, which should serve as a real push to get people to start switching.
Will my current account be safe in the 7-day switch service?
Fraud is a major worry for most current account holders and most of us know someone who has been a victim. The Payments Council, who is behind the scheme, says robust protocols will be in place to make sure the 7-day switch is secure.
When someone tries to open a new account and switch an old one over, they will need to go through ‘rigorous and long-established’ checks to ensure they’re not a fraudster. They will also need to provide details to prove their identity, such as utility bills and a passport.
Will I always have the same current account number?
During the consultation stage for the 7-day current account scheme, there was some talk of people being given one current account number which will stay with them for life – a bit like a National Insurance number. The thought was this would make switching easier and there would be a lot less paperwork.
While this hasn’t been completely ruled out, the Payments Council says it would mean a complete replacement of the bank and branch system because everyone – even those not switching – might need to have a new number.
How to switch current accounts with the 7-day switch
All banks will automatically use the new service. If you want to get a better deal and change current accounts, you’ll need to research the kind of account you want and when decided you approach the new bank. This can be done by phone using a comparison tool, like ours at Lovemoney.
You choose the date you want to switch, which must be at least seven working days after the new account opens, and then sign a Current Account Switch Agreement form and a Current Account Closure Instruction form.
As soon as the switch begins your bank will get in contact and will also confirm the date the switch will be concluded. Until it’s switched over you can carry on using your old account if you need to, but when the switch happens everything will be moved over and your old account will be closed.
Choosing the right current account
Making sure you get the right current account is vital. And as the number of people switching increases, hopefully the deals on offer from the banks will improve too as they try to lure in new customers.
And there are plenty of decent accounts worth a look. If you're just interested in a welcome bonus, First Direct pays £125 for opening its 1st Account. It's so confident you'll love it, you can get another £100 if you decide to leave after a year. Meanwhile, Halifax is paying £100 if you take out one of its main current accounts.
If its interest you're after, then Nationwide's FlexDirect account is worth a look as it pays 5% on balances of up to £2,500 in the first year. However, after that the rate drops significantly, so if you're after a more consistent return then you might prefer Santander's 123 World current account, which pays 3% on balances between £3,000 and £20,000. It also pays cashback on a range of direct debits, though there is an annual fee to consider.
For a full run-down of the current accounts that offer the best returns over the short- or long-term, check out Current accounts: short-term gains vs. long-term value.
Will you be switching?
Is the 7-day switch enough to get you to leave your old bank account behind? If so, where will you be switching to? Do cashback deals tempt you, or are you more worried about a decent overdraft? Let us know your thoughts in the comment box below.
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