Millions of us stay loyal to our same current account provider year after year, despite the fact we might be missing out on much better deals elsewhere, does loyalty really pay?
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.
High Interest Current Accounts
Many people look to savings accounts when thinking about high returns, several current accounts provide a higher return than many savings accounts.
However, there are usually criteria you need to meet in order to qualify. For example, some providers require you to set up two or more Direct Debits from your current account, as well as depositing a certain amount each month.
If you have a regular income then this is unlikely to be a problem, but it can pose a bit 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 sometimes only payable on balances up to a certain amount. Otherwise, rates are often tiered and this will vary depending on how much you keep in your account.
When thinking about which current account to switch to, try and choose the account that will pay you the maximum interest possible based on the balance you have.
Some also charge a monthly fee - so do check all the conditions of the accounts.
Featured Interest Current Accounts (T&C's Apply)
|TSB||Classic Plus Account||5% AER interest (variable) on balances up to £2,000.||Apply|
|Nationwide||FlexiDirect||5% AER interest (fixed) on balances up to £2,500.||Apply|
|Santander||123 Account||3%* AER interest (variable) on balances up to £20,000.|
*Rate to be reduced to 1.5% AER from 1 November 2016
Rewards and Cashback Current Accounts
Some current accounts pay cashback on what you spend. Usually, this cashback is only payable on certain expenditures, typically household bills, so if you tend to spend a lot on things like travel and energy, these types of account is probably worth considering.
Other accounts don't pay interest but instead pay a cash reward each month if you meet certain criteria. Who doesn't love the notion of 'free cash'.
Featured Cashback & Reward Current Accounts (T&C's Apply)
|First Direct||1st Current Account||£100 cashback when you switch your current account using the Switch Service.||Apply|
|Co-op Bank||Current Account||£150 cashback when you switch your current account using the Switch Service.||Apply|
|Natwest||Reward Account||Receive 3% Cashback on household bills.||Apply|
Many current account providers out there at the moment will try to tempt you with switching incentives, often throwing cash at you.
You can't just sign up to lots of current accounts to get these though. You'll usually only qualify for the 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.
To be eligible, you will need to complete the automated switching process.
Something forgotten by many, remember 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.
How easy is switching?
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.
If you're interest in having a look at how switching works, check this infographic out.