We have been urged by many financial experts – including Martin Lewis on TV – to “switch”. This doesn’t mean only bank accounts, but also electricity and gas suppliers and insurance. Switching is quite a good thing for consumers to do because it keeps firms doing what they ought to do – namely supplying good services at a competitive price. However, doing good for other consumers might involve trouble and hassle for the individual. It does seem to be an easy process, but there are one or two aspects that need greater thought.
I have several bank accounts and I keep it that way because when a bank misbehaves, then it is easier simply to move your money than to open a new bank account (which can be a longer process). Because of my multiple bank accounts, I have done several switches. It has not always been my choice to switch – sometimes a bank closes, and you don’t have much choice. On other occasions, you find yourself out of step with the morals or behaviour of your bank.
Switching costs nothing
On the whole, I have found that the banks do what they promise under the “Switch guarantee”. This means that it doesn’t cost you anything to switch amongst 99% of UK banks and building societies. The banks do most of the work and move all your money and payments (Direct debits etc.) and money coming in. When you have chosen your switch date, your money becomes available in your new bank account. Any payments made to your old account after the switch date will be transferred to your new accounts. ©I have not tested out their guarantee that anything which goes wrong with the switch will be put right and any charges refunded.
I recently went through this process with a bank account which I had regarded as my main bank account for over 30 years. I was pleased that they had transferred all my direct debits and was worried that they might not have transferred all the bank account details of people that I regularly pay – but I needn’t have worried. Furthermore, when some payments came in, they were duly transferred to my new bank account. I wasn’t able to test what happened to overdraft facilities, but you probably need to do that before you switch. Some banks are offering bonuses if you switch to them – so it might definitely pay to do so.
To switch is not without its headaches
What went wrong for me was payments from my investments – eg NS&I (National Savings and Investments). On most of these you have to specify a bank account into which either your interest or withdrawals are paid. Some investment companies do not give you the option to change your bank account, or it is very difficult to do so – without jumping through several hoops. One even sent me an old-fashioned letter giving me a code which I then had to type into the bank change system. I don’t know why they couldn’t do it the usual way – where a code is sent to your mobile phone.
My other problem was that as soon as the switch had happened, I could no longer log into my old bank account (although some money was still coming in). I had also decided to keep my credit card from that bank, but it was being paid off by the new bank account. I am still unable to look at my credit card account online and furthermore I cannot send them any messages. No wonder you can’t get through to banks and building societies on the phone these days. They keep telling you that you can do everything online – without realising that you wouldn’t be phoning them if you could have done it online!