With Valentine’s Day approaching, romance is in the air, but figures indicate for many of us a break-up is on the cards – with our current account provider. Vicky Shaw reports
AS spring moves closer, this is traditionally a time of year when love blossoms – but for those whose feelings towards their bank or building society are less than warm and fuzzy, giving them the elbow has become much easier.
A new consumer guarantee to take the hassle out of changing your current account provider was launched in September, and figures released by the Payments Council, which is overseeing the initiative, show the number of people ditching and switching has surged.
A total of 306,240 switches were made in the last three months of last year, marking an increase of nearly one-fifth (17 per cent) on the same period a year earlier.
A central redirection service has already swapped more than 900,000 payments over to new accounts since it was launched.
Under the guarantee, a customer’s new bank or building society arranges for all existing incoming and outgoing payments, such as direct debits and wages, to be transferred over, and their old account’s automatically closed.
It has also cut the length of time it takes to switch, from up to 30 working days previously to seven – and 99.6 per cent of switches are being completed in this timescale, the Payments Council said.
After the switch has taken place, payments accidentally made to, or requested from, the old account will automatically be redirected to your shiny, new one.
If anything goes wrong, you are entitled to be refunded interest and charges on your old and new accounts.
The figures also reveal that while many people were busy wrapping their presents during the festive season, others were busy seeking out a new current account. In December alone, 83,729 people changed current accounts, showing a 54 per cent increase on the same month a year earlier.
The success of the scheme is not being measured on sheer numbers of switchers but against three criteria – customer awareness of the service, customer confidence in using it and how smoothly the service performs.
So, if you are perfectly happy with your current account, that is fine, but you should know that it is quick and easy to switch if you want to. And if you are thinking about switching, it pays to do your homework and shop around.
Think about how you use your account. Is keeping overdraft charges to a minimum your priority, or are you more after a decent rate of in-credit interest? Lots of current accounts nowadays also offer cashback rewards. Research from consumer group Which?
underlines how charges for some current accounts can baffle even brain boxes.
Which? asked 18 volunteers, including a principal inspector of taxes and a retired headteacher, to calculate from a mock statement what the cost of slipping into an unauthorised overdraft would be by looking at banks’ and building societies’ charging structures on their websites.
The volunteers got only ten out of 72 calculations correct between them, with the tax inspector getting only one of his four calculations right and the former headteacher getting them all wrong.
It also took people ten minutes on average even to find the charges on current account providers’ websites – and in some cases it took longer than half an hour.
Variations in language used by providers to describe unauthorised overdraft charges caused further confusion. The different terms for this were found to include informal, unplanned, unarranged and unapproved.
Which? wants the Government to force banks to release the data they have about how customers use their accounts, which could be used to develop comparison tools that would allow consumers to rank providers by cost, based on their own personal needs.
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