Switch current accounts without fear

A new promise that should make current-account switching less of a gamble.

Many banks are still messing up when you switch current accounts, but some offer adequate compensation for the risks. The simplest method is to give you better interest rates and pay you large bribes to move to them.

Nationwide Building Society has just announced it is approaching this differently. If you open a Nationwide Flex Account, it'll pay £100 not as a bribe, but if it doesn't get started on transferring your direct-debits in a timely manner. This incentivises the building society to get it right from the start.

Nationwide claims its service is proving attractive to many switchers. This may be especially so today, when you combine the society's reputation for treating its customers better than the banks, and for its status as one of the safest banking institutions in the world, with few institutions operating in the UK coming in higher: HSBC and first direct, Santander, and Clydesdale Bank and Yorkshire Bank.

In order to fulfil its promises, Nationwide is now guaranteeing to contact switchers’ direct debit companies within 10 working days or, if not, give the switcher £100. It says it will also:

• Refund any overdraft and interest charges in the first three months caused by mistakes by Nationwide during the transfer process.
• Keep customers informed of the status of transfers via text message.
• Monitor your account to check when payment companies have updated their records. If they don't, the building society will call you to let you know and to advise you on what you need to do.
• An interest-free overdraft buffer for three months (subject to checks).

Although Nationwide promises to refund charges, if any bank makes a mistake that causes you to lose money, it should refund you.

Of course, it might also be that the bank you're leaving makes a mistake. The fact is, if any bank makes a mistake during the switching process, you should be awarded compensation. Complain and, if it refuses, threaten to go to the free Financial Ombudsman Service, which could force the bank to compensate you, and even to remove black marks related to the incident from your credit record. Just the threat of going to the ombudsman can be enough to get a bank to pay up.

And, as it costs banks around £500 per complaint to go to the ombudsman, if you have an open and shut case of a clear mistake or an unnecessary delay which has caused you serious financial damage or stress, bear this in mind when they offer you a paltry goodwill gesture. Get your complaint bumped up to a manager or ‘the complaints team’, who are likely to have the best understanding of the bank’s obligations to provide you with a good service and can offer more than the usual £25 or £50 as compensation.

Alternatives to Nationwide

Another service that is also particularly incentivised to get your switch right is first direct. The online bank (with in-branch access at HSBC) will pay you £100 for joining but, if you're not happy with it in the first 12 months, it'll also pay you £100 when you leave. It's got to be pretty confident of its service to do that, and positive customer feedback supports this. It also offers a £250 interest-free overdraft, which protects further against switching problems.

Santander's approach is to bribe even more upfront. It'll pay £100 to everyone who switches to its Preferred Current Account, or up to £300 for some using other Santander products, plus either 5% interest or an interest-free overdraft for a year. The interest on positive balances could be worth an extra £30 to £80 perhaps, and the overdraft could save you several hundred pounds on your existing debts. Santander has earned itself a bad reputation for service, but has recently cut complaints by a third.

There are terms and conditions for these accounts, and for getting the incentives, including crediting your account with minimum amounts each month, but all those terms are pretty clearly outlined when you click through to the products individually. You can also read more details on the Santander account in Make £300 by switching current accounts and on the Nationwide account in Free travel insurance with your current account.

Together, these are possibly the top three current accounts available online, although lovemoney.com deputy editor, John Fitzsimons, gives his top nine recommendations. Offline, Co-operative Bank is offering £200 for those opening an account in branch, after this week closing the offer to online customers.

More: Compare current accounts through lovemoney.com | Five reasons a balance transfer card isn't for you | Savers: Earn 11% on your money