How to switch your current account in 7 days

The hassle is being taken out of current account switching with the new seven-day switching scheme. Here is how the new system will work.

Statistics witching current accounts is not something most of us . But from Monday 16th September the new seven-day switching scheme is about to make it a whole lot easier.%VIRTUAL-SkimlinksPromo%
This will mean that instead of sticking with an account that doesn't pay you a penny in interest, just because it's too much hassle to switch, you could easily move to an account and start earning interest rates of 3%, 5% or even one that pays cashback.

How does the seven-day switch work?
As the name says, the main feature of the scheme is guaranteeing your bank 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 the timeframe.

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 a date they choose.

Why is this happening?
Traditionally we as a nation don't like switching bank 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.

Now we have more power to switch banks if we're not happy and want a better service. New entrants, such as Metro Bank, 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 any payments 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.

This means 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 seven-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 seven-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 seven-day current account scheme, there was some talk about people being given one current account number which will stay with them for life – a bit like a national insurance number. The thought behind this was it would make switching easier and there would be a lot less paperwork.

Although 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 seven-day switch
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 using a comparison tool like AOL's.

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 it'll be finished by. 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
Several banks and building societies have improved their current account offerings to coincide with the launch of the seven-day switch. For example, there's cashback on direct debits and up to 3% interest from the Santander 123 account and 5% interest from Nationwide's FlexDirect account.

Or if you fancy £125 just for moving banks, why not switch to the 1st Account from First Direct? As well as the free cash, you'll be with a bank that consistently tops customer service surveys.

Compare our top current accounts and see if you could move to a better bank account in seven days

Beware the small print
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How to switch your current account in 7 days

It is reasonable to assume that if you take out a mobile phone contract at £30 a month for 24 months that's exactly what you'll pay unless you exceed the tariff. Yet mobile phone providers have come under fire for a snag buried in the small print – a clause to allow mid-contract price rises.

Prices are rising by a median of 81p a month and 70% of consumers are completely unaware off this sneaky move, according to Tesco Mobile, so be sure to check any new contracts before you sign the dotted line.

Financial service providers always refer to 'typical APR' in advertising to attract customers with favourable rates of interest.

Yet the typical APR on loans and credit cards is only available for those applicants who have a squeaky clean credit record, everyone else could end up with a much higher rate. For example, under EU rules, credit card providers only have to provide the typical APR advertised to 51% of applicants.

So always consider this when applying for accounts and products, and if approved – look out the actual APR that you will be charged.

The highest paying savings accounts on the market tend to come with a string of strict terms, which if you fall foul of, result in a drop in interest. Common requirements include paying in a set sum each month and not making withdrawals during a set period.

Make sure to fully understand these terms before opening a savings account and if you choose an account with a six or 12 month bonus, remember that this will plummet when the bonus period ends.

Cashback credit cards that pay you a small percentage each time you spend on the card are full of loopholes in the small print. All have a maximum spend, but many have a minimum spend too.

For example, the Sainsbury's Cashback Low Rate card advertises that it offers users 5% cashback for the first three months. However the 5% cashback is capped at £50 a month. A further 5% cashback is subject to you spending £500 a month on the card (£250 of that at Sainsbury's).

Attempt to repay your mortgage early and you may be greeted with a hefty fee in the form of an early repayment charge. These penalties vary from lender to lender and even deal to deal, but are typically be around 10% of the outstanding balance.

Details of any early repayment charges should be clearly outlined in your mortgage contract but it is worth double-checking with your lender before you try to make a payment.

Insurance is an incredibly complex area of personal finance and different forms of cover are riddled with different hitches that make it crucial to read the small print. Failure to do so could lead you to pay for a product you would be never be able to claim upon, or unknowingly do something that invalidates your claim.

Always buy the right level of cover for your needs and pay close attention to any exclusions in the policy wording. For example, many travel insurance policies for winter sports won't pay out for treatment of injuries incurred while under the influence of alcohol.

Think a credit card can't do any damage at home in your drawer? Think again. Some credit and store cards charge a dormancy fee if you don't use them regularly.

For example, all Santander-issued store cards, including Topshop and Laura Ashley cards among others, charge a fee of £10 if you remain in debit for three consecutive months.

Exceed the monthly usage allowance in your broadband deal and you could be hit with a huge fee. Common with the cheapest broadband deals on the market, penalty charges for going over your contracted limit can push your bills up even higher than if you paid for a deal with unlimited usage.

According to Talk Talk, some households are being forced to pay an additional £40 per month for exceeding their usage allowance. BT for example, charges £5 per every 5GB extra used.

Familiarise yourself with the download limit in your package and the penalties for exceeding it, decide whether you are better off with an unlimited deal.


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Celebrities who fell foul of the tax system
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How to switch your current account in 7 days

She may have won five Grammys and sold more than 19 million copies of her solo album, but that didn't save her from being jailed for failure to pay her taxes. She was sentenced to three months in jail, then three months confined to her home, for failing to pay tax on £1.2 of earnings between 2005 and 2007.

Hill told the court that she had meant to pay the taxes, but she had withdrawn from public life in order to raise her six children, so had been unable to pay the tax bill. She has since paid the money back, but must still spend three months at Danbury open prison.

Dolce and Gabanna were given jail sentences in June for failing to declare 1 billion euros of income. They were sentenced to a year and eight months in jail, but said they would appeal.

Heidi Fleiss was sentenced in 1997 to seven years in prison for failing to pay tax on profits from the prostitution ring she ran. She eventually served 20 months in jail, and 10 months in a halfway house - and was released in 1999.

Judy Garland was wrong-footed by a tax bill in 1967, she had her home repossessed by the IRS and was forced to live in a hotel. She died two years later.

Richard Hatch is a relatively minor celebrity, but makes the list for sheer stupidity. He was the first winner of Survivor, and its £1 million prize, but failed to declare it to the tax man. He was sentenced to jail and home confinement for more than three years.

The rapper and actor admitted he hadn't paid tax on his earnings between 2004 and 2006. He was ordered to repay $1 million and spend two years in prison. He is actually serving it concurrently with a New York sentence for possession of a weapon.

Lester Piggott was sentenced to three years in jail in 1997, after failing to declare income to the taxman. At the time it was thought to be Britain's longest-ever sentence for personal tax fraud.

Richard Pryor served 10 days in jail in 1974 for failing to pay his taxes. He told the judge that he had simply forgotten about it.

Wesley Snipes owed an impressive $17 million in tax after failing to file returns from 1999 to 2004, and was jailed for three years. On release he still had to pay the cash back.

Sophia Loren was sentenced to 30 days in prison in 1982 for failing to pay tax. She served 17 days in a Naples jail.

Nicholas Cage was never given any jail time, but after failing to pay his taxes, he was ordered to pay more than $14 million in back tax and charges. He blamed his ex-manager and accountant, and has been selling his assets to pay the taxman back.

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