An investigation by the Competition and Markets Authority (CMA) has found that small businesses could save around £80 annually by switching to a bank account better suited to their financial needs, whilst customers could save themselves an average of £92 a year by doing the same. However, the figures for switching accounts are still remarkably small, with only 4% of businesses and 3% of personal customers choosing to change banks every year.
Despite the introduction of the current account switching service in 2013, it seems that many customers are still anxious about doing so. The service has made improvements for those wishing to switch, such as reducing the amount of time it takes to just seven working days, as well as automatically moving all outgoing and incoming payments to the new account. Whilst any accidental payments to the old account are redirected for at least three years, it seems this has done little to alleviate customers’ worries, with payments accidentally being made to their old account remaining their top concern.
Bacs, the payments body which owns and operates the switching service, has therefore pledged to the CMA that the service will be improved within the next twelve months. This will include raising awareness of the service, with a focus on those who could see the most benefit from switching, including customers who are overdrawn as well as those with considerable sums of cash in their current account earning minimal interest. Bacs has also agreed to work with current account providers on making sure any decisions regarding overdrafts are made before customers go ahead with switching, as the fear of a reduced overdraft is another key factor in preventing customers from going ahead with changing their account.
Whilst the potential savings are one good reason to consider switching, another is the opportunity to move your money to a higher interest investment account. As average savings rates continue to dwindle, with no sign of improvement on the horizon, moving some of your savings as well as your monthly income to a source of higher growth, rather than a current account, could make good financial sense.