The number of people changing current accounts has shot up since the launch of the seven-day Current Account Switch Service.
More than 300,000 people have successfully switched their current accounts since the new Current Account Switch Service, designed to take the hassle out of changing banks, was launched.
The Payments Council – the body involved in implementing the new initiative – has published the first substantial set of figures on the scheme, which covers the period from October to December 2013.
A total of 306,240 switches were made in the last quarter of 2013, marking a 17% increase compared to the same period a year earlier. In December alone there were 87,729 switches, which was a 54% increase on the same month in 2012 when there were 54,329.
The Payments Council said the numbers were an ‘encouraging start’ to the new service, which it hopes to build on.
Current account switching
The Current Account Switch Service was introduced in September last year to help make changing bank account simpler, quicker and hassle-free.
It was also hoped it would increase competition among banks and building societies as customers realised it was easy to move on if they were unhappy or wanted a better deal.
[SPOTLIGHT]A total of 33 banks and building societies signed up to the scheme and agreed to the customer guarantee, which promises to: move all incoming and outgoing payments across; and provide a redirect service for 13 months to ensure no money is lost in the transition (a central redirection service has moved more than 900,000 payments over to new accounts since launch). Most significantly, it promises a switch will take no longer than seven working days – previously it could take up to 30.
The guarantee means that if anything goes wrong, the customer is entitled to be refunded interest and charges. According to the data once the switch process is initiated, 99.6% successfully complete in seven working days. Our very own Simon Ward was one of the few that didn’t have things run so smoothly. Find out why in My seven-day current account switch took 11 days!
Feedback from the banks and building societies involved in the scheme say the process would be smoother if switchers prepared by keeping their details up to date.
This is because the process can be delayed if personal details provided by the customer to the new bank don’t match those held by the old bank, which can be the case if you were recently married or moved home.
Compare current accounts with lovemoney.com
Measuring success
After a slow start in September, where only 12,750 changed their current account, the figures between October and December are far more promising.
But the success of the scheme is being measured on other factors, such as customer awareness of and confidence in the service, rather than just switching levels.
The Payments Council has been conducting monthly consumer awareness surveys across the UK involving around 2,200 people each time.
The findings show that by December 59% of the general public were aware of the new service and 58% were confident of how it works.
The Payments Council plans to build on this momentum with further advertising campaigns.
Current accounts worth switching to
If you’re fed up with your current account, there are a few worth switching to. Some come with decent bonuses.
First Direct, which has built up a reputation for great customer service, is offering £100 when you switch to its 1st Account and if you aren’t satisfied after six months and within 12, First Direct will pay you £100 if you decide to leave! The account also comes with an interest-free overdraft of £250.
Halifax is also offering £100 if you choose to switch to any of its current accounts. One that stands out is the Reward current account, which pays £5 a month when you deposit £750 and offers up to 15% cashback when you shop at certain retailers online.
Meanwhile, some current accounts now pay decent returns on your in-credit balances.
The Nationwide FlexDirect offers 5% on balances up to £2,500 for 12 months, so long as you pay in £1,000 each month. That’s a better return than any savings account is offering right now.
Elsewhere, Clydesdale and Yorkshire Banks are paying 4% on balances up to £3,000 with their Current Account Direct until March 2015.
For bigger sums there is the Santander 123 Current Account. It pays 3% on balances between £3,000 and £20,000. It also pays up to 3% cashback on household bills.
While the RBS Select and NatWest Select accounts are both offering 1% cashback on everyday spends at participating retailers like BP and Cineworld.
More on current accounts:
The best debit cards to use on your travels
lovemoney Awards 2013: best current account provider
The added extras you can get with fee-charging packaged bank accounts