All you need to know about switching bank accounts

       

James Smith

Almost every adult has an active bank account, with many having more than one. Unless you want to store your money under your mattress, it makes sense to have an account as you need somewhere to keep your money safe. There are numerous banks out there, each giving you several options to choose from when deciding to open an account. The decision for moving banks could be made for a number of reasons. You may find a bank which has lower penalties for missed payments, meaning an unexpected failed direct debit payment will cost you less. Whatever the reason, in the following guide, you're going to find out everything that you need to know about switching bank accounts.

Get the right advice

Before switching accounts, you should ensure you get the right advice you need. You could begin by searching online for customer reviews, and checking what existing customers are saying about their experiences with your bank. You could also check with independent comparison sites to get a factual list of what the banks are offering (e.g. interest rates, account fees etc.).

Ensure you also know the process of closing an account with your current bank. You can contact your bank's customer service department to have them explain the process, and any implications closing your account may have. Ensure you are clear in your reasons for leaving, as it is likely your current bank won't want to lose your custom. They may offer you what you are looking for, meaning there is no reason to switch.


Getting information on your bank account

Research is your friend

Once you've got the right advice about switching banks, the next practical thing to do would be to shop around and see what your options are, ensuring you have a clear list of what you are looking for. This is the exact same advice as you would follow when shopping around for the best payday loan for your situation. You can begin by drawing up a list of banks and looking at what benefits each offers. Again, an independent comparison site would be of benefit here. In addition to this, you also want to know that your money is secure, so ensure they have all the relevant licences and protections in place. Don't just think about the attributes of the bank account itself, take into account branch location, where the bank's ATM's are, so accessing your cash is as convenient as possible for you.

Top reasons why people switch bank accounts

  • Attraction
  • Proximity
  • Extra perks
  • Better service
  • One-off incentives

Take note of benefits

As mentioned above, when switching accounts, it's key that you look around. Banks often advertise benefits for switching an account to them. Opening a certain account may come with free vouchers, or an attractive introductory rate. Some banks also offer cash for referrals, so if you have a friend with the same account, you could both benefit. Ensure you also take into consideration what offers come with savings accounts, such as competitive interest rates which could help boost your savings. Remember that savings are important, as this could be used to help cover unexpected expenses rather than payday loans.



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Create a checklist

Once you have made the decision to switch your account, it would be helpful to create a checklist that consists of all of the required steps for a smooth transition. Below, you're going to find a few key elements that you should include in your checklist.

It would be wise to cross-check your outgoings in the month you intend to switch. Ensure all important bills are paid prior to the switch, or make arrangements to pay an alternative way to ensure your accounts are up to date.

As well as ensuring money is paid out correctly, you need to ensure you are receiving money into the correct account also. Ensure you update your details with your employer, benefit provider, customers, and friends and family – anyone who regularly pays money to you. Forgetting to do this may result in your money being sent to the wrong account, which may have a serious effect on your financial circumstances until this is resolved. It would be wise to ensure you have enough money kept away somewhere in case of a payment emergency, or you could consider payday lenders until your money arrives in the correct account.

Some banks offer a payment switching service, whereby your regular automated payments are automatically switched to your new account. If you use this service, ensure you still check all payments, as you will be liable if a payment is not set up correctly.

If this is not a service your account offers, or you want to do things yourself, you are responsible for resetting your payments from your new account. Standing orders are straightforward, as you simply need to arrange this in branch, or through your online banking. Direct debits may pose a slight risk - you must ensure the company you are paying have your new account details. Standard banking procedures allow at least 10 days for a new direct debit to be set up, and around 5 days to request a payment. Giving plenty of notice to your providers will reduce the possibility of a missed payment.

Link accounts

When switching bank accounts, ensure you link your old and new accounts by adding each to your online banking transfer list (usually by "Add New Payee"). This may be necessary if you need to transfer funds between your old and new accounts to prevent missed payments, or if your wages are paid into the wrong account.

Conclusion

Switching bank accounts might not be as hard as you think and great steps have been made in the banking industry to facilitate this. However, it may be more difficult to decide which bank you want to switch to.

Do your research and ensure that you have all the right information to make an informed decision just as you would do when considering online loans.