Switching bank accounts is an easy way to boost your savings: careful selection of the right deal for you can result in accumulation of extra cash, simply for having an account with that provider.
Despite this, the number of people who look for new deals each year is surprisingly low. In fact, out of every 200 customers, just five a year will open a new current account.
This is chiefly down to the worry that direct debits and regular payments will go off course in the process of switching, leaving them with more problems than benefits.
However, new rules that make it easier and safer for consumers to switch bank accounts are due to come into force later this year.
From September, direct debits which are not moved automatically from an old to a new account will be bounced for 13 months, which eliminates the chance of missed payments and alerts companies that they need to update that customer’s account details.
Banks will also be made to pay up if they make any mistakes with the changeover, and will have to adhere to a strict seven-day deadline (as opposed to the current 18-30 day deadline) when switching a customer’s current account to that of a competitor.
Fully aware of the future changes, banks are desperately trying to persuade customers to open a new current account with them now – by offering them cash rewards in some cases – in the hope that they will be less likely to switch in September.
It is therefore very important to read the small print before signing up to a current account offering what looks like a good incentive on the surface.
Justin Modray, founder of financial advice website CandidMoney, said: “Don’t be seduced by cash incentives without first checking potential account charges, especially if you’re likely to go overdrawn.
“Take your eye off the ball and a bank could soon claw back this money and more.”
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