Is it worth switching current accounts?

Read advice from the experts at MoneySuperMarket

Updated: 
Collage of UK based bank branches, England, UK

Millions of us stick with the same current account year after year, despite the fact we might be missing out on much better deals elsewhere.

Current account providers have really upped their game in recent years, with many now offering high rates of interest as well as generous switching incentives.

Here's what you need to know...

Interest

Several current accounts pay returns which are higher than those provided by many savings accounts.

However, there are usually certain criteria you have to meet to qualify. For example, some providers require you to set up two Direct Debits from your current account, and you must also pay in a minimum amount each month.

If you have a regular income then this is unlikely to be a problem, but it can be more of a challenge if, for example, you are self-employed and the amount you earn fluctuates from month to month.

It's also worth noting that while the returns on offer are very attractive, they are often only payable on balances up to a certain amount. Alternatively, rates are often tiered and so will vary depending on how much you hold in your account.

Think about how much you typically tend to keep in your current account, and try and choose an account which pays you the maximum interest possible based on that balance.

Cashback and rewards

Some current accounts pay cashback on your spending, as well as paying you interest.

Often this cashback is only payable on certain outgoings, typically household bills, so if you tend to spend a lot on things like travel and energy, this type of account is worth considering.

Other accounts don't pay interest but instead pay a cash reward each month if you meet certain criteria.

Switching incentives

Lots of current account providers will try to tempt you with switching incentives, often £100 or £150.
You can't just sign up to lots of current accounts to get these though. You'll usually only qualify for a switching incentive if the current account you're moving to is going to be your main account, and if you agree to pay in a certain amount each month.

You can only receive one cash incentive per bank too, regardless of whether you open an account in joint or single names.

Overdrafts

Don't forget to look at overdraft charges if you tend to dip into the red regularly.

You may either be charged a daily fee for using your overdraft, or you may be charged interest on what you owe.

If you opt for a daily fee, many providers cap the number of these you can be charged each month, although costs can still mount up quickly if you're not careful.

If you only tend to go overdrawn by a small amount regularly, look for an account which offers an interest-free overdraft up to a certain amount, or a buffer which you can reach without being charged.

Switching is simple

If the reason you've been putting off moving your current account is because you think it'll take too long or be too much hassle, you don't need to worry.

The switching process is now simpler than it's ever been thanks to seven-day switching rules.
These mean that when you move your current account, the provider you are switching to has to ensure the switch doesn't taken any longer than seven working days.

They have to transfer all of your standing orders and direct debits, as well as payments into your account.

The only information you'll need to supply to your new bank is proof of your identity and address.

There's also a guarantee, which means if there are any problems during your switch, you won't suffer any financial loss.

Under this guarantee, for the first 36 months after your switch, the bank you've moved to must arrange for any payments that accidentally go into your old account to be redirected to your new account. It must also refund any interest or fees you've been charged if any mistakes are made during the switch.

You can compare a range of current accounts with MoneySuperMarket.